Friday, June 18, 2010

Money Orders

Transfers of money otherwise than through post offices or banks is not new to India. In fact, it predates them. But more than that this parallel facility of transferring money not only nationally but also internationally still obtains and is going strong. In fact, it is resorted to more than these official venues especially where the money that is changing hands is Black Money.. So implicit is the faith among this fraternity that inspite of the fact there is no record of either receipt or transfer or receipt at the other end of the money being transferred and consequently no remedy available in case of accidental or deliberate default there is no remedy available except through the ‘Dadas’.The private mail carriers, an institution which has come up recently, is also a good medium for the purpose. However, there are specific indications on the acceptance of a mail for carrying that the maximum liability of the carrier is restricted to a mere hundred rupees in case of delay or failure in delivery or even loss in transit. Consequently resort to these services for transfer of money is subdued. Moreover even the legal validity of the mail carrier service is also problematic as sometime ago the Department of Post Offices was thinking of these services as an encroachment on their monopoly of the carrier business. Besides this the charges for the mail carrier services are also quite high vis-à-vis the proverbial penny postage also acts as a deterrent to its use. The availing of these services is restricted more of less to business houses.

For money transfers banks, which are spread all over come in very handy. With their efficient internal mechanism they are in a position to effect transfer of money from one end of the country to another quite efficient and quick.

However, with the introduction of Mobiles and its quick spread all over was destined to help the talkers not only in having a heart-full of talks(if that is humanly possible) but also come in actually handy(which it certainly is) in helping the jaw-jaw with also not only making oral promises but also actual transfers of money.

Of all countries it is Kenya from the so called Dark Continent of Africa, has pioneered this movement. It is almost like magic. By clicking a few keys on your mobile phone ,money can be rapped from one part of Kenya to another in seconds. For city workers wanted to send money home to their villages formerly they had to queue up before banks for hours. Similarly town-dwellers even where the municipal dues and school fees could be paid through bank had to similarly queue up. No wonder this service is used by 95 lakh people or almost a quarter of Kenya’s GDP each year. The service is run by Safaricom.

However, this apparently frictionless transfer of money through air needs a good deal of backstage effort. The basic idea of his scheme known as M-PESA is that one lakh small retailers who sell mobile phone airtime (Scratch cards) can also register themselves to be mobile-money agents. taking in and paying out cash. Approximately twenty thousand retailed have signed dup as M-PESA agents.When a registered customer he has to exchange physical money for the virtual sort called ‘e-float’.The money is credited to his mobile-money account He can then transfer the money by his mobile.It can then be exchanged for cash by the recipient by visiting other agent.

It is quite simple enough for the customer but the agents, especially in cities where most transactions are deposits accumulate cash and risk running out of e-float. At that point they cannot take in any more deposits. On the other hand the agents in rural areas where most of the transactrions are withdrawals accumulate e-float and risk running out of cash. This necessitates the agents to manage their liquidity .by regularly swapping cash for e-floatd or vice versa. This involves visits to banks affiliated with Safaricom.. In fact the whole point of the system or systems like it is to reach where banks cannot. For this purpose the organization relies on intermediaries between agents and banks. Through their own networs these intermediaries take onmuch of the work of ferrying cash around the country.On an average each M-PESA agent now handles almost one hundred transactions every day.

Organisations like Safaricom have sprung up elsewhere.The biggest among them is MTN. It is rolling out such scheme in severalAfrican countries. In Uganda they have signed up almost 10 lakh users within almost a year. And the number may reach 20 lakhs by the end of this year.

The use of mobile phones in increasing by leaps and bound in India. Can we make a better use of it than just jaw-jaw as above?

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1 comment:

Payday loans said...

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