The move follows the success of a similar programme in Kenya, called M-Pesa, which launched by Vodafone and local mobile operator Safaricom in March 2007 and aimed at the unbanked market.

Vodafone says the M-Pesa service now has over 1.6 million subscribers and around 200,000 customers are still signing up for the service every month.

Once Safaricom subscribers have registered for M-Pesa they can load accounts with funds by depositing cash at a local registered agent. Subscribers then send an SMS message to a recipent who receives the amount stated in the text by visiting a local agent.

Vodafone says that small businesses such as taxi drivers and grocers are now accepting M-Pesa as an alternative payment method. The firm anticipates that the service will be expanded to pension payments, contract phones, water and electricity bills.

Following strong take-up in Kenya, Vodafone is now launching the service in Afghanistan and has plans to introduce the system in India and some African countries.

Nick Hughes, head, international payments, Vodafone, says: "During the course of this year we plan to continue to extend of the uses of the service in Kenya and seek new markets where the benefits of mobile money transfer can be used to assist people in sending funds safely and securely."

The Vodafone system only works within national borders meaning that it cannot be used for the lucrative remittance market.

Western Union and MasterCard are both attempting to utilise mobile phones for remittances by working with GSMA - an international trade group of mobile phone operators - to develop the commercial and technical specifications for services.