Carriers Vodafone and Safaricom will partner with the Western Union Company to pilot a cross-border mobile money transfer service between Britain and Kenya.

This service will let customers send cross-border remittances from select locations directly to Safaricom mobile subscribers in Kenya generally in minutes. The initiative uses Western Union's global hub for processing cross-border remittances.

"There are more than 3.6 billion mobile phones active worldwide, and close to 90 percent of Western Union's customers in developing and developed countries have mobile phones," said Gail Galuppo, executive vice president/chief marketing officer for Western Union, Englewood, CO.

"Those facts, combined with the fact that 5 billion of the world's 6.6 billion people lack access to traditional financial services, make the mobile channel a compelling platform for financial services," she said.

The pilot program expands on M-PESA, a mobile money transfer service in Kenya offered by Vodafone and sister company Safaricom.

M-PESA has attracted more than 4 million customers since its launch in March 2007.

The pilot will take place through a select number of Western Union agents based in Reading, Berkshire, Britain.

That city was chosen specifically because of the high density of Kenyans there.

Consumers can send funds to any Safaricom mobile subscriber in Kenya in a matter of minutes.

Receivers can use their funds in a variety of ways, including visiting one of 4,000 M-PESA agents in Kenya to withdraw their cash, or forwarding it on to another mobile phone in Kenya.

There are many benefits of using mobile phones for micro-transactions in a country like Kenya, where few people have bank accounts and more than 10 million people have mobile phones.

Furthermore, increased global migration has led to a significant increase in the flow of funds from expatriate migrant workers who send money home.

Last year, for example, Kenya received approximately $1.3 billion in international remittances, according to the World Bank.

"M-PESA has been so successful in Kenya because it filled a gap where there wasn't anything else," said Caroline Dewing, spokeswoman for Vodafone, Newbury, Britain. "Mobile is leapfrogging existing infrastructure and computers in emerging markets, because it's quicker and cheaper to install a mobile network.

"Mobile has become very popular -- there are many more mobile users in Kenya and other emerging markets than there are people with bank accounts," she said. "The economy is driven by small amounts of cash, and this is a way for people to get cash home in a safe and convenient way via their handset."

The popularity and reach of mobile in emerging markets have caught the attention of many.

"The goal is to enabale people to transfer money safely, securely and quickly over a large distance, and this deal with Western Union allows us to extend the M-PESA service internationally," Ms. Dewing said. "Consumers can send money from a Western Union store to a mobile phone, which is much more convenient."

The partners will gauge the results to decide whether or not to expand the pilot and roll out the platform commercially.

"We're going to test how people respond to sending money from the U.K. back to a mobile phone in Kenya," Ms. Dewing said. "We hope that it will be successful and that we can offer it as a product in the next six months to a year."

The Western Union Company specializes in global money transfer services.

Together with its affiliates Orlandi Valuta and Vigo, Western Union operates through a combined network of more than 365,000 agent locations in more than 200 countries and territories.

Western Union has grown its international presence agent agreements -- distribution contracts with partners who have convenient physical locations, such as banks, post offices and grocery stores, where cash can be sent or received by consumers.

In partnering with mobile operators, Western Union is beginning to extend its distribution network to digital partners -- companies capable of crediting or debiting funds to electronic accounts.

Western Union is also running a mobile money transfer pilot program with U.S. prepaid mobile virtual network operator Trumpet Mobile, which operates on the Sprint PCS Network.

The pilot, which is now winding down, allows Trumpet's current customers to send funds from their prepaid mobile phones for payout in cash throughout Latin America and the Caribbean.

Western Union also has live pilots with other carriers, including Globe Telecom and Smart Communications in the Philippines.

The company has also scheduled pilots with Cairo, Egypt-based carrier Orascom Telecom and India-based carrier Bharti Airtel.

"Today we consider the services pilots, because we are introducing capability in select send and receive corridors," Ms. Galuppo said. "Customers can visit select Western Union Agent locations in the United Kingdom, United States (Hawaii), the United Arab Emirates, Singapore and Hong Kong to send funds to the mobile phones of our partners."

Vodafone claims to be the world's largest mobile operator by revenue, with approximately 269 million proportionate customers as of June 30, 2008.

Vodafone currently has equity interests in 26 countries across five continents and over 40 partner networks worldwide.

The carrier has recently expanded the M-PESA service to Tanzania and Afghanistan.

The purchaser is Vodafone International Holdings B.V., a wholly owned subsidiary of the Vodafone Group.

Safaricom claims to be Kenya's leading mobile operator.

During the last six months, the carrier has introduced its Hot Spot range of products, including 3G routers for its business customers and prepay modems, both using a 3G network, giving its customers access to email and the Internet.

Despite much recent activity, mobile finance -- and mobile money transfers -- are still in a nascent state.
In addition, that space will develop at a different pace in developed and emerging countries.

"Most developed markets are introducing some form of mobile banking, which typically represents an extension to online or ATM services that bank account-holders already have access to," Ms. Galuppo said. "The transformative initiatives we follow most closely involve the expansion of basic phone-based financial services to populations in developing markets that are traditionally unbanked.

"There is no question that mobile financial services will take form with the tremendous role that mobile technologies play in the U.S. market," she said. "The questions for most developed markets are 'What services will capture the imagination or fill a need for a consumer population with so many service options?' and 'Which ones are likely to endear themselves to consumers?'"

As always, the pace of adoption will be largely determined by consumer demand.

"We anticipate mobile financial services differing greatly for banked customers and unbanked or pre-banked populations," Ms. Galuppo said. "What an economic migrant needs and what a high school or college-age teen may want are likely to be quite different."