Western Union is teaming with GSMA - an international trade group of mobile phone operators - to develop the commercial and technical specifications for connecting mobile operators to its money transfer network.

Once connected to the service, phone operators will be able to use their own mobile wallet software to enable person-to-person mobile money transfers over Western Union's cross-border remittance network.

The new service will enable person-to-person fund transfers to and from a mobile phone. Customers will also be able to use the service to transfer funds from a phone to a Western Union location and vice versa, for mobile-to-cash and cash-to-mobile transactions.

The first commercial services that make use of the framework are expected to be rolled out in the second quarter of 2008.

Rob Conway, CEO, GSMA, says mobile networks cover more than 80% of the world's population and over three billion people have mobile phones, providing a huge opportunity in the money transfer market.

"Mobile money transfers are a key driver in the development of a potentially vast market for financial services delivered via the mobile phone," says Conway.

Around 35 mobile phone operators with 800 million customers in more than 100 countries have signed up to participate in the programme, which will be headed by Sunil Mittal, chairman and managing director of Bharti Airtel.

"Remittances are playing a vital role in the social and economic development of India and many other developing countries," says Mittal. "This initiative will bring down the cost of lower-value and high-frequency mobile remittances considerably and also enable smaller amounts to be transferred in a fast and secure fashion, thereby benefiting millions of people in the developing world."

Commenting on the initiative, Christina Gold, Western Union president and CEO, says: "Our focus on the mobile money transfer space is an important step in expanding the range of Western Union's global services to a new category of consumers.

"Our brand, extensive network, and compliance capabilities, combined with the GSMA members' market reach, uniquely positions Western Union in the mobile money transfer marketplace."

Gold told Reuters reporters that she expects mobile transfers to make a material contribution to company revenue in around three to five years.