We pay for things every day, but rarely spend much time thinking about what happens whenever we swipe our debit card at the grocery store, or when our paycheck gets deposited into our account. This project explored the regulatory and industry debate over a new means of payment—mobile phone-enabled money transfer and savings services. Dubbed “mobile money,” such services have taken off in Kenya and are gathering steam in other parts of the developing world. Mobile money in the developing world also inspired new payment services in the US. Over the past few years scores of new services have been launched (Square, LevelUp), as have partnerships between existing services (MCX) and heightened interest in new payment technologies that blur the line between money itself and payment infrastructure (Bitcoin).

This project was motivated by the potential for electronic payment systems, using mobile devices and networks, to contribute to poverty alleviation. It focused on the legal conundrums that new digital systems for payment posed. When funds are in a mobile money service, what is their legal status? Are they "savings" if they sit in an account for more than a day? two days? a month? So-called “mobile money” services attracted wide media and philanthropic attention with Safaricom’s M-Pesa. This service allowed people using basic mobile phones to send money to each other via text messages. In the space of seven years since its launch in 2007, M-Pesa attracted over 17 million customers, in a country of 43 million people—40% of all Kenyans are active subscribers. By 2010, more Kenyans subscribed to M-Pesa than had a bank account. Hence, development practitioners’ hope that services like M-Pesa can become a route to financial inclusion for people without access or the means to afford bank accounts.

This project studied regulators and industry participants in the mobile money revolution. It also contributed to the regulatory discussion of such systems. Its focus on the regulation of mobile money spotlighted several key issues:

1) consumer protection;

2) the nature of payments infrastructures as a public good (on which, a World Bank report cites work completed under this grant);

3) the conceptual difficulty of distinguishing money's store of value function from its means of exchange function in prepaid services like most mobile payment products. When mobile money services allow people to store money, they start to look like banks. This poses safety and soundness issues, as well as the potential for money laundering, since mobile operators have not faced the same kind of regulatory scrutiny as banks.

The research to date indicates that mobile money services do have the potential to incorporate more people into formal financial arrangements—thus mitigating risk of theft, crime, bribery, loss, and so forth that often accompany cash transactions –yet that the social element is crucial to the success to such services.  Part of the social element includes regulators’ understandings of how these services work, legal definitions of money, and regulators' own “folk” understanding of what money is and how it functions, which impacts their professional judgment.

The project contributes to sociolegal studies and the anthropology of law on the motivating factors for regulatory change in rapidly evolving technological contexts, as well as the social study of science. The rapid rise of mobile phone-enabled financial and money transfer services is fundamentally changing access to financial services, and reopening questions over the meaning and nature of money itself. The project contributes to the anthropology of money, and is h...

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