Here in Washington D.C., it is easy to avoid owning a car (personally I haven’t owned a vehicle since 1995). We have a car-sharing service called Zipcar, where you pay by the hour to use the vehicle. The price includes the use of the car, fuel, and insurance. The city provides designated parking spaces, because officials have an interest in reducing traffic congestion and pollution. Call this a car “utility.” Like my electricity service or my water bill, I only pay for what I use. I don’t own the infrastructure (the car, the power plant, etc.). Tom Friedman at the New York Times wrote last week about a much more ambitious version of “car as utility” or what he calls car 2.0:

Under the Better Place model, consumers can either buy or lease an electric car …and then buy miles on their electric car batteries from Better Place the way you now buy an Apple cellphone and the minutes from AT&T. That way Better Place, or any car company that partners with it, benefits from each mile you drive. G.M. sells cars. Better Place is selling mobility miles.

Reading this column got me thinking about a recent paper that Ignacio Mas wrote here at CGAP. The title is a bit misleading in my own opinion - “Realizing the Potential of Branchless Banking: Challenges Ahead.” One key idea that undergirds the paper is that a payments system/network itself could be considered a utility - just like a car sharing service - where people pay for what they use. And obviously, the cheaper and more available appropriate financial services are, the more people can use them:

But for the payments network to be useful, people need to be able to transfer value through the payment network in a way that is convenient, reliable and secure, widely available, affordable, and useful. We need to understand what drives customers, make the economics work for banking agents, provide transactional accounts for all, and identify shared industry models.

What makes visioning a payments utility possible is the technology available today, which can be used to bridge distances, close information gaps, contain settlement risks, and generally reduce transaction costs. Now the challenge is to develop attractive services that engage customers and workable business models that enable decentralized, largely private, institutions to build this payments utility.

You can download the paper here.