Financial Times

Mobile phones for inward remittances, awaiting guidelines


A recent study indicated that using mobile phones for inward remittances had potential among Sri Lankan migrant workers. However, regulators need to set out clear guidelines for mobile operators to develop this concept.

“Mobile payment facilities have great potential for remittances,” says a study conducted by LIRNEasia, on Tele-use at the Bottom of the Pyramid. LIRNEasia is a non governmental organisation involved in information and communication technology policy and regulation capacity-building.

“However, without clear guidelines, mobile operators cannot develop, test and deploy such services to cater to this important market,” says the study. The study that targeted 106 recently returned Sri Lankan migrant workers belonging to the lowest socioeconomic segments, says the system also needs credible organisations involved in the transactions, for migrant workers to trust the concept.

“The research shows that the credibility of the service provider is key; many would prefer to have an established organisation like a bank, mediating potential mobile money transfers (as opposed to an unmediated situation, where they could be played out by the other party),” says the study. Operators also need to ensure that applications are simple to use, given the low level of education and English among some categories of migrant workers.

“The challenge for mobile operators is to make a remittance service as simple as handing over the money and a slip, with hand-written transfer details, to a bank clerk,” said the study. On average, a Sri Lankan migrant sends home US $ 137 per month. The most common method of remittance is through the banking system. In addition, some either carried money home as cash, or sent cash or cheques, in the post. However, these methods were used by less than 25% of migrants. As much as 84% of Sri Lankan migrants had bank accounts. Over half of Sri Lankan recent migrants surveyed (54 %), also owned a mobile phone.

However, at this point, remittances are rarely made through mobile-payment facilities. This is owing to a lack of cross-border services in Sri Lanka. But even now, mobiles play a key role in coordinating remittances. Phone calls and SMSs are commonly exchanged when sending money and transaction codes are often sent via SMS. Sri Lankan migrants spend, on average, US$ 38 to keep in touch with home, compared to US$ 15 by Indian migrants. However, migrant workers are not willing to pay large service charges and commissions to transfer remittances.

Nearly 10% of Sri Lanka ’s population comprises migrant workers. The number of recorded migrant workers leaving Sri Lanka has grown from 18,428 in 1988 to 1.8 million in 2008 according to the Central Bank. In 2008, these citizens sent home more than US $ 2.9 billion.

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