We all use money everyday.  Cash, checks, credit, debit… mobile?  Outside of the U.S. people are making payments on their mobile phones daily.  What you wouldn’t guess is how ingenious they are at inventing new ways of using money.  What do the innovative uses of money mean for banks, regulators, and nations?  Does mobile money restructure the role of money in society altogether?

Bill Maurer, from University of California-Irvine’s Institute for Money, Technology, and Financial Inclusion, spoke at a USAID sponsored Microlinks event yesterday, July 25, 2011.  I attended the event and was intrigued by Maurer’s anthropological approach to mobile money, a subject dominated by economists.  Maurer emphasized the cultural complexities of money in all its forms, and then spoke especially about mobile money.

To summarize, Maurer first explained that money is perceived differently in different cultures of the world.  In Nigeria, family members engage in money spraying, tossing money at brides during the wedding dance.  In East Asia, mothers send their children on long trips with money inside of small hand sown pockets, believing that the money will protect them, and that they can use it to get settled once they arrive.

The various uses of mobile money are equally diverse.  For one, those who make mobile money transfers using SMS technology skip traditional banks altogether, as their telecommunication service providers act also as banks.  Second, what about people who own multiple mobile phones or SIM cards in order to maintain different accounts?  Some hide certain accounts from others; others separate the accounts for organization.  Third, there are some cross-border money transfers.  Often, if the service provider is the same, then the transfer may be made.  Fourth, there is a possibility of mobile money remittances, as Ericsson launched two weeks ago?  Still others trade their money from one currency to another to another, eventually “getting to the dollar,” and ensuring the value of their money.  All of these actions change relationships between banks, individuals, government regulators, and telecommunication service providers.

In a way, the elimination of banks from money transfers makes it appear that transfers should be a “public good,” freely and widely available.  The policy implications for regulators, then, are immense.  Who can take a cut of transaction costs?  What rules should be in place about currency transfers?  How are regulatory agencies from different nations going to communicate with each other?  These questions, with a host of others, set the stage for mobile money’s impact on the global economy.

Though I was thoroughly engaged by Maurer’s presentation, I could not help but wonder what the policy implications were.  When Maurer responded to one attendee request for a summary of the lessons learned about mobile money, he originally responded, “I have shied away from the lessons learned because I am open as to what they may be.”  Thankfully, though, he followed up this response with three key regulatory innovations that he recommended for policymakers: proportionate due diligence, non-bank e-money issuance, and non-bank deposit taking.

USAID and other international organizations, then, should be careful in their rollout of mobile money projects.  Though over 80% of the world has access to a mobile phone, the impacts of mobile money programs are far-reaching—they affect the financial, political, and social sectors, either for the better or the worse.  If nothing else, the anthropological research by Maurer shows the complexities of mobile money.  Before a list of best practices and lessons learned can be compiled, policymakers should tread carefully, but they should still step forward.  As evidence and data is gathered through experiments, best practices can be ascertained.  Once best practices are identified, then USAID and other aid organizations should scale mobile-based development projects.