Use of cell phones to pay bills not big here, at least not yet

Would you use your cell phone to pay your bills, or send money to your daughter in college, or to tip your favorite waiter?

Whenever I am in Kenya on a mission trip, I am always amazed at the penetration of cell phones. Even in the most out-of-the-way villages, you'll find a little kiosk selling pre-paid cell phone cards. Of course, many people have older cell phones -- the type you might have seen in the U.S. several years ago -- and I'm sure the pricing structure is different. Some neighborhoods in Kenya simply never got land-line phone service and have leap-frogged directly to individuals having cell phones as their primary means of communication.

One offshoot of this is that a program for sending and receiving money by cell phone has taken off in Kenya. It's called M-Pesa. You sign up for an account and link your cell phone number to it. You can then go to any M-Pesa agent to have money put on your account, and once there's money in your account you can use your cell phone (and a PIN) to send it to anyone else -- a business, friend or family member -- who has a cell phone number and an M-Pesa account. They can then take their cell phone to an M-Pesa agent and withdraw the cash from their account.

There's a fee for using the service, but it's only pennies per transaction -- nothing like the fee for a Western Union money transfer. Because of this, M-Pesa can easily be used even for small transactions.

For many people in Kenya, this may be the closest thing to a bank account they've ever had. Businesses advertise that you can pay your bills by M-Pesa. One of our traveling companions in Kenya used an M-Pesa account to send the deposit for a safari she was taking at the end of her mission work.

M-Pesa is part of a Kenyan cell phone provider called Safaricom, which is partially owned and controlled by the international cell phone giant Vodaphone. (Vodaphone is also a major shareholder in Verizon Wireless.) During my Kenya trip last month, the CEO of Safaricom announced his retirement, and the news stories about him cited the success of M-Pesa as one of his greatest achievements.

There are also attempts to start cell phone payment services here in the U.S.

Venmo (venmo.com), which the Wall Street Journal recently featured in its technology blog, is a cell phone payment system that started last year. It works similarly to M-Pesa, except that it links to an existing credit or debit card account. Another difference is that you can also authorize trusted friends or businesses to withdraw from your account, such as for automatic bill payments or a child away at college. The system notifies you of any withdrawal you didn't originate, and gives you the chance to cancel it.

According to Venmo's co-founder Andrew Kortina, a restaurant using the system allows trusted customers to just get up and leave after finishing their meal, and then deducts their Venmo accounts later once the bill has been tallied. One Venmo customer tips his favorite bartender before arriving at the bar, and has his favorite drink waiting for him.

Kortina says that mobile payment systems haven't caught on quickly in this country because we already have a credit card / debit card infrastructure with which people are comfortable. But he says as smartphones like the iPhone (and Droid) become more commonplace, people may become more interested in, and comfortable with, using their phone for things like micropayments.

I still wonder if people will feel secure with a cell phone payment system, even one with safeguards like passwords or PINs.

--John I. Carney is city editor of the Times-Gazette and covers county government. He is also the author of the self-published novel "Soapstone." His personal web site is lakeneuron.com.