Ingenious means of transferring money by cell phone.

During a 2006 field study in Uganda, Chipchase and his colleagues stumbled upon an innovative use of the shared village phone, a practice called sente. Ugandans are using prepaid airtime as a way of transferring money from place to place, something that’s especially important to those who do not use banks. Someone working in Kampala, for instance, who wishes to send the equivalent of $5 back to his mother in a village will buy a $5 prepaid airtime card, but rather than entering the code into his own phone, he will call the village phone operator (“phone ladies” often run their businesses from small kiosks) and read the code to her. She then uses the airtime for her phone and completes the transaction by giving the man’s mother the money, minus a small commission. “It’s a rather ingenious practice,” Chipchase says, “an example of grass-roots innovation, in which people create new uses for technology based on need.”

It’s also the precursor to a potentially widespread formalized system of mobile banking. Already companies like Wizzit, in South Africa, and GCash, in the Philippines, have started programs that allow customers to use their phones to store cash credits transferred from another phone or purchased through a post office, phone-kiosk operator or other licensed operator. With their phones, they can then make purchases and payments or withdraw cash as needed. Hammond of the World Resources Institute predicts that mobile banking will bring huge numbers of previously excluded people into the formal economy quickly, simply because the latent demand for such services is so great, especially among the rural poor. This bodes well for cellphone companies, he says, since owning a phone will suddenly have more value than sharing a village phone. “If you’re in Hanoi after midnight,” Hammond says, “the streets are absolutely clogged with motorbikes piled with produce. They give their produce to the guy who runs a vegetable stall, and they go home. How do they get paid? They get paid the next time they come to town, which could be a month or two later. You have to hope you can find the stall guy again and that he remembers what he sold. But what if you could get paid the next day on your mobile phone? Would you care what that mobile costs? I don’t think so.”

Taken from New York Times April 11. 2008: Can the Cellphone Help End Global Poverty?

Read Jan Chipchase's blog on the future with (not of) the cell phone...Good stuff