Article at a glance:

Developing a new rural payments system in China

• A reliance on cash in rural China makes it hard for consumers to spend and for retailers to sell. But additional ATMs do not appear to be the answer.
• McKinsey research shows that the mainland’s existing mobile Short Message Service network could quickly and cheaply provide an SMS-based payment system in rural areas.
• Because the most expensive parts of the infrastructure—the mobile network and millions of mobile phones—are already in place, the cost of this solution would range from less than $40 million to $60 million. By teaming up, banks, mobile-phone network operators, merchants, and regulators could go a long way to unlock spending by Chinese consumers.