The McKinsey Quarterly writes:
The good news is that mainland China can tackle the problem by using existing technology, without a hefty price tag. McKinsey research shows that the mainlands existing mobile Short Message Service network could be quickly and cheaply deployed to provide an SMS-based payment system in rural areas.
Because the most expensive parts of the infrastructurethe mobile network and millions of mobile phonesare already in place, we estimate that the cost of this solution would range from less than $40 million to $60 million. A payment-settlement system among merchants, banks, and mobile-phone network providers would account for the bulk of this expenditure. The initial investment would quickly be recouped through transaction commission fees and mobile-phone usage charges.
An SMS-based payment system, aside from its lower cost, is versatile and ubiquitous. Users simply send an SMS message specifying the mobile-phone number of the payee and the amount to transfer, along with a personal identification number. Within seconds, the payee receives both a confirmation message by SMS and the money in the designated account. The payer receives a confirmation message.