Tag: apps

Will we soon live in a world without cash? More and more payments are being made electronically: whether by credit card or debit card, or by direct debit or bank transfer, or by cash loaded cards. For many people cash is now largely used only for small transactions.

But even here, things are changing. Direct transfers via mobile phone apps are increasingly being used for small transactions. Mobile phone companies, banks and others are busy developing such apps and more and more are being released onto the market.

And it’s not just in developed countries. Many developing countries are finding that mobile phones are an ideal way of transferring money for a whole range of transactions. For example, in Kenya, under 20% have a formal bank account, only 1% have a landline and yet more than 70% have a mobile phone, and this percentage is still rising. In 2007, a system known as M-Pesa (see also) was launched:

The user can create a free account and deposit money into it for free with registered agents at retail outlets. They may be gas stations, supermarkets, banks or micro-finance providers or small and medium-sized businesses. No minimum account balance is required.

The user can then transfer up to $440 from the account to someone else — including someone who doesn’t have a cellphone. The recipient provides identification and picks up the cash from another registered agent.

Users can deposit and withdraw cash, pay water and electricity bills, pay their children’s school fees, get paid by their employers or buy extra airtime for their phone.

Other developing countries are introducing similar systems. The second webcast link below gives an example from South Africa.

So how long will it be before cash disappears as a medium of exchange? Or will people continue to prefer to carry cash around with them – especially given the convenience of having cash machines readily available which do not charge for use.


Life in a cashless society BBC News Magazine, David Wolman (14/6/12)
FNB Introduces Cashless Payment App ABNDigital on YouTube (14/5/12) (see also FNB launches new geo-payment system IT News, Africa
PayPal leads mobile payments push Reuters (4/6/12)
Are We Moving Towards a Cashless Society? TheAlyonaShow on YouTube (14/3/12)

More than 70 per cent of Canadians ready to go “cashless” CNW (13/6/12)
Is a cashless society on the way? Westfair Online, Janice Kirkel (18/5/12)
Mobile money misery BBC News, Rory Cellan-Jones (16/5/12)
Cellphones transform Kenyan commerce CBC News (27/10/10)


For a PowerPoint of the above chart, click here.


  1. What are the advantages and disadvantages of using cash?
  2. To what extent can mobile phone technology replace cash? What are the advantages and disadvantages of such technology?
  3. To what extent can mobile phone technology fulfil the various functions of money?
  4. Private-sector holdings of cash have been rising as a proportion of (nominal) GDP – see above chart. Is this consistent with a decreased use of cash? Explain.
  5. Why may mobile phone transactions be particularly useful in developing countries?
  6. What proportion of your own expenditure is conducted by cash? Has this changed over the past couple of years? If so, explain why.

Is Google’s Android catching up with Apple’s iOS in the market for apps? With Android tablets and smartphones taking an ever larger proportion of the market, you would expect so. In the third quarter of 2011, 53% of smartphone shipments used Google’s Android system, compared with only 15% with iOS.

However, Apple is still ahead of Google in the share of apps downloads. To date, there have been 18 billion downloads from the iOS App Store for iPhone, iPad and iPod Touchs compared with 10 billion downloads of Android apps. But Android downloads are growing faster and are set to overtake those of iOS apps in the coming months. This should be boosted with the new Ice Cream Sandwich Android operating system.

But what about revenues earned from downloads? Here the picture is very different. Android Marketplace has earned around $330 million gross revenue for paid apps. Apple’s App Store, by contrast, has earned over 15 times as much: nearly $5000 million. The reason is that 99% of Android apps are free; the figure for App Store apps is 86%. But why is this so and how can Android earn revenues from its apps? And how can app developers earn revenues from the Android market? The following articles look at the economics of apps.

Android Vs. iPhone: The Economics Of Apps Financial Edge, Manish Sahajwani (6/1/12)
Google has an Amazon problem MSN Money, Jim J. Jubak (25/1/12)
Android and the economics of apps BBC News, Rory Cellan-Jones (7/12/11)
Apple Getting Best Of The Android Vs. iPhone Economics Forbes, Manish Sahajwani (6/1/12)
Fragmentation Is Not The End of Android cek.log, Charlie Kindel (14/1/12)


  1. Why are most Android apps free to download?
  2. What is the business model for (a) developing and (b) offering Android apps?
  3. How can money be made from free apps?
  4. What are the long-term strengths and weaknesses in Apple’s apps business model?
  5. Assess Amazon’s business model for apps for Kindle users.