NextBillion - An Initiative of the William Davidson Institute at the University of Michigan

Monday, June 8, 2015

When Stellah Vardling was getting ready recently for her birthday party, she did what many 22-year-olds would have done. She asked her family for money to help pay for the party.

Yet Vardling, who lives in Kampala, Uganda, did not turn to her local relatives for help. Instead, she texted her sister in Sweden, who quickly sent money directly to her smartphone.

“All it takes is a few minutes,” said Vardling, who receives a couple of remittances each month on her mobile phone from her extended family in Sweden to pay for food, clothes and other basic necessities. “By the time I ask for the money, there’s always something urgent that needs to be bought.”

Vardling’s experiences are part of a growing shift in how people send money to each other around the world. While the likes of Western Union have offered international money transfers for decades, new tech startups and traditional telecom operators are taking advantage of the rapid rise of smartphones in many emerging economies to reduce the barriers – and costs – of sending cash overseas.