Haitian Relief Text Donations a Glimpse of Micropayment World

Last Updated Jan 19, 2010 10:13 AM EST

Consumers' overwhelming use of mobile devices to text millions in monetary donations for Haitian earthquake relief is as telling about the future of micro payments as it is about the compassionate American spirit.

Given a convenient, secure payment method available on universal devices and the right cause, consumers are using text-to-pay in unprecedented numbers.

With encouragement from telecom carriers and First Lady Michelle Obama's public service message, more than $11 million in relief funds had been raised by Friday night from consumers texting their support at an average 10,000 texts per second. (Update: On Jan. 19, the Red Cross reports that about $22 million of the total $103 million in pledges it has received for Haitian relief efforts have come by way of text message donations.)

Texting to Haiti 90999 authorized a $10 donation be added on to individual mobile bills and directed to Red Cross and other earthquake relief efforts. Organizers of the unprecedented mobile donation drive -- including The American Red Cross, the State Department and a company called mGive -- are providing continuous Twitter updates.

Notably, the grassroots use of connected mobile devices and social networks to raise contributions for Haiti required little organized prodding. Millions of dollars had been committed by text days before the movement garnered national attention.

By Friday evening, US companies had pledged nearly $50 million to emergency relief in Haiti, and a United Nations launched an appeal for $562 million to sustain the Haitian people for six months.

The success of the initial word-of-mouth text donation campaign is attributable to all the right elements: relevance, engagement, convenience. This is despite the wariness about relief fund-raising scams that in the aftermath of Hurricane Katrina.

The viral momentum for Haiti text donations provides a glimpse of the potential market for mobile giving and text-to-pay as long as secure payment and credible propositions are assured despite logistical and other obstacles.

"Carriers will increasingly be involved in payments: very sophisticated payments like credit card payments, utility transactions, and sort of just day to day debit card type transactions," UBS telecom analyst John Hodulik to CNBC.

"A whole new ecosystem needs to develop. The credit card companies will be involved, the banks will be involved, the carriers will play a role and they will definitely be able to monetize the growth in that area," Hodulik said.

As with all disasters, new and innovative applications utilizing digital interactivity will rise to the surface.

--FarmVille and other Zynga video games have generated more than $1.2 million for the Haitian children's meals-on-wheels from the sale of virtual goods such as farm animals or tractors using Zynga coins, which are backed up by real money.

--In a move reminiscent of the desperate post-9/11 search for victims, the Red Cross and The New York Times are posting the names and photos of missing Haitians by family and friends searching for loved ones.

--Entertainers such as House's Olivia Wilde and Artists for Peace and Justice is one of the many organizations have raised hundreds of thousands of dollars through Twitter to support its medical care, shelter and education for Haitian children.

--Dozens of celebrities used their popular Twitter pages to encourage fans to do all they can to fund and assist Haitian relief. They included Twilight co-stars Ashley Greene and Justin Chon.

-- Twitter users are widely publicizing that Haitian-born musician Wyclef Jean is urging $5 donations o his existing charity by texting "YELE" to 501501.

Not surprisingly, Gartner predicts that text money transfers will be the leading mobile application by 2012. Mobile phones morphing into transactional mobile Internet devices will be a new commerce catalyst that will drive mobile manufacturers, content and service providers, and carriers to create new revenue-generating models for the mobile Internet.

Other industry experts predict mobile phones equipped with field communication (NFC) technology will start replacing cash as early as next year, as well as credit cards, loyalty cards, bus and train tickets, library cards and door keys. It will involve holding a specially programmed handset up to an item or surface that contains chip that would validate a response. Such mobile devices could provide innovative advancements in retail, banking and health care.

As mobile wireless services continue to be restored on Haiti, it will not be surprising to find relief workers relying on embedded bar code readers in their smart phones to track supply inventories. They will have the capacity to swap mobile minutes for something of equivalent value, such as medical supplies or food.

The weeks to come will render more stunning evidence of how universal mobile devices can link the desperate and needy with life-saving services and supplies in an otherwise imploded, cashless environment.

  • Diane Mermigas

    Diane Mermigas has been a contributing editor and columnist at Mediapost, The Hollywood Reporter and Crain Communications as well as writing for such sites as Seeking Alpha, TrueSlant and BNET. In addition to speaking and television appearances, Diane consults with companies in digital transition, and is completing a book on the future of media.