Mobile money transfer services: The next phase in the evolution of person-to-person payments

Cynthia Merritt, Assistant Director, Retail Payments Risk Forum, Federal Reserve Bank of Atlanta

Abstract
Money transfer schemes have evolved to the next generation of electronic payments — the mobile channel. Money transfer services for both domestic and international remittances are shifting from traditional providers to wireless carriers who are able to compete for consumer market share on the basis of technological ubiquity and lower-cost services. This article reviews developments in mobile money transfers, the emerging ecosystem, and its participants and business models. It also examines the implications of payment systems roaming across geographic borders with their respective legal and regulatory jurisdictions, as well as the emergence of mobile airtime as an alternative currency. The risk environment for mobile money is examined in the context of both developed and emerging countries and in light of the participation of banks and non-bank telecom firms.

Keywords
mobile money transfer schemes, person-to-person payments, environment, technologies, risks, security

Cynthia Merritt is the assistant director of the Retail Payments Risk Forum at the Federal Reserve Bank of Atlanta, where she is responsible for managing research initiatives focused on emerging risks in legacy and alternative retail payments systems. Cynthia helped launch the Retail Payments Risk Forum as a new department and special initiative at the Atlanta Fed in 2008 in response to the recognised growth in electronic payment adoption and new innovative payment schemes. Prior to assuming this role, she worked as a senior bank policy analyst in the Policy and Supervisory Studies Group in the Atlanta Fed’s Supervision and Regulation Division, where she was responsible for research and analysis of trends affecting the banking industry. Prior to joining the Federal Reserve in 2004, Cindy worked in various capacities for the Comptroller of the Currency as an analyst and a senior national bank examiner. Her career with the OCC spanned 14 years and included extensive work with problem and complex national bank organisations, with a specialised focus on commercial real estate, wealth management and capital market activities. She received a BS degree in finance with a banking concentration from the University of South Carolina. She also completed the ABA’s National Graduate Trust School at Northwestern University.

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