Monday, May 05, 2008

Airtime as Currency

I should have blogged on this before, as this is a hot topic. Many examples of schema that utilise airtime as an alternative to real currency can be found. These solutions either provide for person to person payments and also for remittance solutions in a number of cases. The question now arises if this is not the way to go.

My take on this, is an emphatic NO! This is for one just not sustainable (see some of my comments below), but also potentially extremely hazardous to the underwriter of this currency (the mobile operator). If this approach really takes off and more and more currency needs to be produced to support the demand (money supply), serious problems like inflation, run-on-the-bank etc. could materialise. Mobile Operators are not in a position to deal with this. If they fully assess the potential implication on a devaluation of their airtime stock, I believe that they would put measures in place to stop it immediately (like elapse dates on pre-paid airtime). They should be apprehensive to ever start treating their airtime like money in the hands of consumers.

In addition, I think that using airtime for money in any format is totally unsustainable, because I believe that using airtime as money would be:
  • Very expensive
  • Totally inefficient as compared to proper e-money solutions
  • Does not provide security to the client
  • Would be illegal in any properly regulated environment
If airtime is being used as currency, it should be seen as an absolute indication of banks failing to
provide in an obvious need.


Unknown said...

I like the title "airtime as currency", but as you say in your article it's not so easy. May be for some people there is confusion between money/airtime and the technical tools for airtime (especially top up)which can be usefull (whith proper additional security) for technically managing a part of the mobile (e)money job.
Best regards.

Anonymous said...

I love your conclusion, that's a fact.

Unknown said...

"Airtime as currency" is very possible.
In developing countries People send money to far away distant relations by send valued recharge cards. These recharge cards are sold at a discount. It is the most liquide form of small cash investment/money transmition.This process circumvent the Banks.

Anonymous said...

It is the only form of real-time purse for those in developing countries where access to plastic cards is a preserve of the few. In fact we are trialing out the scheme with a local MNO at a percentage. Use of airtime is for micropayment. It works!