Will Rural Areas Become Early Adopters of Mobile Payments?

Mobile payments appear to be the future means of currency exchange. Tech blogs and business journals follow each new standard and each new start-up aimed at defining this space. While Silicon Valley and Wallstreet may be responsible for the evolving look and feel of mobile payment platforms, the future market for mobile payments may be America’s farm towns.

In the developing world, the growth of mobile payments has been tremendous. In Africa, only 10.4% of the population is connected with a traditional financial institution. This lack of financial inclusion has generated an enormous demand for financial services and thus fueled the growth of the mobile payments industry in Africa.

While the number of retail banking locations has grown in the US in recent years, these locations are becoming increasingly concentrated around urban centers. Rural banking customers are increasingly finding themselves without a local branch, or with only a sole option for financial services.

Mobile payments in the developing world has created an important link between rural areas and the banks that serve them. When accessing a physical location is not an option, mobile payments offer an attractive alternative for customers and banks alike. Compared to branch services, the costs of servicing mobile accounts is considerably less. In Kenya, M-Pesa has over 40,000 locations via local agents distributing funds using their mobile payment network. With a mobile phone and access to an ATM, customers can gain access to many of the same financial services that would be offered at any community bank.

In total, 25% of African banking customers are using some form of mobile banking. Combining a market providing cheap phones with a proliferation of ATMs, Africa telecom business and banks are the model for mobile payments.

Farm Town, USA is certainly not a mirror image of a Kenyan village, but access to financial services is a real issue for anyone without access to a physical bank. Trends usually start in urban centers, but this trend, may take hold in a farm town instead.