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Introduction

Entrepreneurship is one of the factors that have helped communities to progress. Equally,

innovation has opened doors to methods and devices that have ultimately made life and work

easier. One of the unifying factors of innovation and entrepreneurship is that the two must work

together for the innovated product to become a success. In the recent history, the world has

experienced numerous innovations with some changing the life of communities and at the same

time assisting the economy to grow significantly. There have also been some innovations that

have created a lot of job opportunities created. However not all innovations lead to a positive

economic change to the community, there have been cases where innovations have caused more

harm than benefit for example the nuclear bombs which were used in the much regretted

Hiroshima and Nagasaki incident.

The mobile money transmission is an innovation that has both merits and demerits that

range from easy access to money and cost saving to consumers and banks. However, the

innovation has also been characterized some demerits like increased in cash theft and loss of jobs

as financial institution especially banks no longer require hiring so many tellers. There have also

been increased cases of money laundering and unauthorized access to subscribers and bank

customer’s money. With the attached characteristics the innovations have passed the test of time

and have managed to have a global presence with every bank adopting this mode of cash

withdrawal and consequently revolutionizing the banking sector.

Mobile money transfer

Mobile money transfer that is also referred to as online wallet is an innovation that has helped

consumers to access their money from the comfort of their phones. Currently, there are four

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models of mobile money transfer services namely, premium transactional payments that are SMS

based, the direct mobile billing, direct web payments and contactless near field communication

(Feig, 2007). Currently, there is a new model of mobile money transfer service which was

developed in Haiti. The model works by direct collaboration with the financial institutions like

banks as well as credit card companies and Internet companies like Yahoo. It also works together

with telecommunication companies and operators like Vodafone and telecommunication vendors

like Samsun to establish a mobile payment platform that supports various features like banking,

insurance payment of goods and services, foreign exchange services and billing services.

The premium transactional short messaging service payments are the most common mode,

especially in developing economies. The model works when the consumers pay for goods using

his or her electronic wallet and get a confirmation message that is also sent to the merchant who

consequently releases the goods paid for. The model is convenient and has enormously been

adopted in most continents like Europe, Asia, and Africa. In all these continents the success of

the model has been as a result of cloud-based payments that has significantly improved the

reliability and security.

When paying for goods, the mobile money transfer service SMS model requires the consumer

to send a payment request(Jenkins,2008).There are also other modes of applications like the

short codes or the USSD, which the users can use. The consumer is also provided with an

opportunity to prove his or her authenticity by putting in a personal identification number that is

unique to only him or her. The personal identification number is widely used as one of the

security checks in a bid to minimize unauthorized access and other unethical practices like

personification and line hacking.

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The direct mobile billing model is useful mostly in the electronic commerce site where the

consumer uses the mobile billing option to make payments for services like purchasing songs

and software. The authentication process is a two-factor one with one requiring the personal

identification number (PIN) and the other a one-time password to discourage unauthorized

access. The consumer, however, incurs the money transfer costs from his mobile account to that

of the electronic commerce site. The model also has an advantage as it’s a payment method that

does not require credit cards or even prior registration with an online payment solution like the

Paypal method making it more preferable than banks or even the credit card companies due to its

accompanying convenience. The mobile billing model is also faster and secure due to the two-

factor check out processes. The two merits have enabled the service to be very common

worldwide with 70% of digital contents being purchased online (Jack, 2010).

The mobile web payment model uses the cell phone downloaded and installed applications.

The model also uses the wireless application protocol (WAP) as the supporting technology. The

method, however, must also use the debit or credit card to finish the process although it is a

faster and more convenient method as compared to the other models. The direct operator billing

model, on the other hand, has prerequisite network operator integration. The method is however

very convenient and secure thus making it very accessible.

The mobile banking technology also enables bank customers to send money to individuals of

their choice within a very short time. With continuous upgrading, the technology has also

allowed individuals to send money across borders (Au & Kauffman, 2008). The mobile money

transfer service works when the bank customer links his or her bank details with the mobile

phone via is or her telecommunication service provider. After that, the customer can comfortably

withdrawal is savings, access credit, and loan, pay for services and bills like hotel bills, food and

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drinks using the service. The innovation also enables the customer to access is bank statement

from wherever he or she is and, therefore, saving him or her movement to the bank. The

innovation also saves bank customers time and money.

Mobile money transfer has also made banking easier as most consumers can deposit their

money directly by first depositing it to their mobile phones and then sending it directly to their

bank accounts. In other economies especially in the developing countries, mobile money

transfers have enabled unbanked communities to access easily banking services and at the same

time allowed them to obtain loans and other essential services like insurance and trading in

stocks.

Contribution to economic development

Mobile banking and mobile money transfer have successfully enabled communities to access

credit facilities that have led to investments when they invest the money they borrow. With easy

access to banking, the community has also managed to save their money especially the unbanked

population who can know save their money for future use or even for intended investments

(Pickens,2009). The technologies have also enabled easy and faster flow of money within the

economy which is helpful to economic growth. With enhanced money circulation, consumers are

motivated to demand products and services that consequently make customers register high

sales. Under economic principles, the velocity of money has for a long time been a stumbling

block to economic growth and other underlying economic drivers like investment opportunities.

With mobile money transfer, all these factors have been enhanced leading to economic

development.

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The mobile money transfer service has also created a lot of job and investment opportunities.

There have been numerous individuals who have invested in mobile money transfer shops

earning lucrative commissions when subscribers make deposits and withdrawals. Consequently,

the investors have also offered a lot of employment opportunities to a lot of individuals who are

employed as shop attendants, supervisors, and customer care representatives.

With secure mobile banking methods banks have managed to cut operating costs by almost

half as most of their clients can access crucial banking services like withdrawals, deposits, and

loans. The customers can also repay their loans from their mobile phones thereby saving

transport costs to banks and time. The banks are also offered with the opportunity to serve a large

number of customers at the same time thanks to the mobile banking technology.

According to Mihasonirina and kangni (2012), mobile money transfer also has profoundly

contributed to reducing cash in the economy. Ideally, the technology embraces the cashless

payment system that also helps in financial audits and keeping of financial data. The remitters

also get the advantage of easy monitoring g money trail as the money usage is more visible. The

systems have also enabled the community to move away from informal money payments to more

formal ones.

Money securities have also been enhanced with the mobile money transfer. The system has

enabled mobile money subscribers to send and receive money via a very secure platform that is

also very convenient. The platform is also regulated by the central bank making consumers

deposit their money with fewer worries. In the same way, because the platform is also is also a

faster way of remitting money it has enabled people to save others in times of dangers, therefore,

assisting in disaster management.Ng´weno (2010) asserted that in Kenya with the help of a

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mobile money transfer service known as MPESA, Kenyans were able to make a lot of

transactions in good time and, therefore, avoiding scenarios like hunger, lack of medical care and

children being out of school due to lack of school fees. Other tangible contributions to economic

development include lowering the cost of doing business and substantial capital accumulation by

the population. The business environments have also been improved with an easy capital flow

and convenient payment method and, therefore, offering the much needed economic

development boost.

Conclusion

The mobile money transfer service has positively contributed to both social and economic

development in all the countries it is present. Despite the few pointed out challenges like

increased money laundering the innovation is still viable and have also been widely adopted

making it one of the greatest innovations in the recent times. Their impacts have also been felt

worldwide with most central banks using the technology to improve the economic and social

statuses of their respective countries. However, there is the need to address some underlying

challenges like network failure and costs charged when sending and withdrawing money as they

are still very high in most countries.

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References

AU, Y. & KAUFFMAN, J.(2008). The economics of mobile payments: Understanding

stakeholder issues for an emerging financial technology application. Electronic Commerce

Research and Applications.

FEIG, N.2007. Mobile payments: Look to Korea.Banktech.com

JACK, W.2010. Monetary theory and electronic money. Reflection on the Kenyan experience:

Economic quarterly volume 96.

JENKINS, B. 2008. Developing Mobile Money Ecosystems. Washington, DC: IFC and the

Harvard Kennedy School.

MIHASONIRINA, A. & KANGNI, K. (2012) Mobile phone financial inclusion and growth .

Review of economic and institution .Vol 3, article 4

NG´WENO, A.2010.How mobile money has changed lives in Kenya. Bill and Melinda Gates

foundation: Global savings forum

PICKENS, M.2009. Window on the unbanked: Mobile money in the Philippines. CGAP brief.

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