Mobile Payment Magazine

REPORT: Global Mobile Payment Market 2015-2019

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Mobile payment is a form of payment where an end-user can initiate a transaction using amobile device for goods and services through communication networks or technologies.Mobile payment allows consumers to use a mobile device to pay for goods and services instead of using cash, check, and credit/debit cards. It is also referred to as mobile money,mobile money transfer, and mobile wallet.

The report forecasts the global mobile payment market to grow at a CAGR of 36.26%, in terms of transaction volume, over the period 2014-2019. In terms of number of end-users, the market is expected to grow at a CAGR of 18.10% during the forecast period. [Read more…]

Google Wallet and the New Payment Ecosystem

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When the Google Wallet launched on September 20, 2011, the first test of a remarkable new financial ecosystem began. But despite the apparent success of traditional mobile payments products like M-PESA in Kenya and South Africa, Google and rival Isis have decided to rewrite the business model – and for good reason. Actually, four good reasons:

  1. Significant revenue is available from the advertising, retention and rewards programs, leaving the usual payments fees to the payments companies.
  2. The payments ecosystem cannot afford new categories. The-existing players are companies with considerable resources and the willingness to use their resources thwarting a new category of entrants.
  3. Regulatory changes are already pressuring known revenue streams, increasing the motivation for existing players in the payments ecosystem to protect position.
  4. Cash is resilient to other tender types in developed worlds, not so in developing countries.

As a result, both Isis and the Google Wallet products are creating a strategy which lets the payment ecosystem continue to charge and earn as much as possible from the payments business. The new revenue these companies seek to earn comes from two vulnerable industries: advertising and loyalty. Google, with its extreme interest in data collection and distribution, will likely seek new revenue from that channel also.

The strategies of these two companies, which are likely to be eventually joined by Apple and Amazon in their approach, has substantially slowed mobile commerce development in the rest of the developed world.

Even Japan, which has used an NFC-like technology for most of the last decade, is highly interested in understanding the results of the American experiments before committing to a long-term strategy. And they are not in a hurry. The only short-range communication standard with approval from the International Standards Organization is ISO/IEC 14443, known simply as Near- Field Communications or NFC.

To use either the Google Wallet or Isis product as they are currently understood, the customer will either need a phone with an NFC chip built in (which is in exactly one model out of hundreds of models of mobile phones in the United States—The Samsung Nexus S), and merchants will need to invest in NFC readers at their cash registers (also known as POS terminals).

Whether the US experiments succeed or fail, one thing is certain—the unenhanced peer-to-peer payments systems like M-PESA have no chance to reach the mainstream of the US or any developed country. The environment is simply too hostile from entrenched payments incumbents, and from feature-rich new services. A different breed of service that includes advertising and rewards programs as well as data services will vastly overshadow stand-alone mobile payments products. These new services are called “mobile commerce.”

The overriding conclusion is that the winning mobile commerce business model, inclusive of the mobile commerce players that will prevail in the long term, may be decided months or years before mobile commerce begins to penetrate the general transaction volume in developed markets.

More information: Google Wallet and the New Payment Ecosystem White Paper.

Source: Luciano Group

Western Union Provides Mobile Money to M-PESA Subscribers in Kenya

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Western Union now provides services for consumers to send money directly to the mobile “wallets” of Safaricom M-PESA subscribers in Kenya from 45 countries and territories. According to the company, it’s the first service of its kind in the world.

The expansion of the service to more than 80,000 Western Union Agent locations worldwide follows the successful debut of the offering from Western Union Agent locations and the Western Union website in the U.K.

The service rides on Western Union’s worldwide network and trusted global “hub” for processing cross-border remittances. It also builds on the unprecedented success of M-PESA, a domestic mobile money transfer service in Kenya offered by Safaricom that has attracted more than 13.5 million customers since its launch in 2007.

“We are pleased to extend our service with Safaricom, and we look forward to adding additional functionality for M-PESA users in the near future,” said David Yates, Executive Vice President and President, Business Development and Innovation, Western Union.

The service will allow people to visit one of more than 80,000 Western Union Agent locations in 45 countries and territories across the globe, including the U.S., Canada, Italy and the U.K., and send funds directly to the mobile “wallets” of M-PESA’s 13.5 million subscribers. Funds are delivered generally in minutes.

The service will likely benefit thousands of Kenyans working abroad. According to the Central Bank of Kenya, Kenyans living outside their home country sent US$642 million home in 2010—up from the US$609 million sent home in 2009.

Safaricom CEO Bob Collymore said, “Our customers are very proud of the revolutionary M-PESA service, and this partnership sees us pushing new boundaries to continue to keep Kenya at the forefront of the mobile world. Through this partnership, our customers and their friends and families will benefit from affordable, faster and more convenient international remittances, and the money is available to use straightaway for any M-PESA transaction, or can be withdrawn as cash at any of our 24,000 Safaricom agents.”

Western Union offers the Mobile Money Transfer Service in the Philippines with Smart Communications and Globe Telecom; in Malaysia with Maxis; and in Canada with EnStream. Western Union also has agreements with other mobile operators and banks to introduce the service in the future.

Source: Business Wire

In Rural Kenya, M-Pesa Used as Savings Account Too

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In Kenya, with banks often few and far between, 65% of population uses M-PESA. 81 percent of M-PESA users said they used M-PESA for saving.

As the developed world begins its recovery from the global economic meltdown, the financial architecture in parts of the developing world is being rapidly transformed by a mobile payment system that enables people to deposit, send, and withdraw money with a push of a few buttons.

Established in 2007, the sms-based service, known as M-PESA, has enabled Kenyans to both save money and better withstand serious blows to their personal finances, according to new research by Tavneet Suri, a professor at MIT’s Sloan School of Management.

Suri and her colleague William Jack, a professor at Georgetown University, conducted two surveys of 3,000 households in Kenya: the first was in 2008, the second in 2009. They found that nearly 60 percent of Kenyan households now use M-PESA for person-to-person transfers, as well as to pay for everything from school fees to mobile phone credit to electricity bills.

“Kenyans find using M-PESA faster, more reliable, and more convenient than a traditional bank,” says Suri. “There are nearly 25,000 M-PESA agents in the country compared with 850 bank branches. In Kenya, if you want to transfer money from your bank, you need to travel long distances, stand in line with a fistful of cash, and fill out a bunch of paperwork. M-PESA agents, on the other hand, are often found at gas stations and grocery stores, and some are open 24-hours a day.
Although M-PESA balances do not earn interest, the service has some of the functions of a bank account but is much easier to access, and much easier to manage.”

According to their survey, the vast majority of Kenyans – over 80 percent – stash some of their money “under the mattress,” but M-PESA is fast becoming an important savings tool.

In 2008, about 75 percent of users said they used M-PESA for saving, and by 2009 this increased to 81 percent. By that year, half of all households said M-PESA was one of their two most important savings instruments.

“People are able to amass savings on their M-PESA accounts over time,” says Suri. “By providing a safe storage mechanism, the service could increase net household savings over the entire population.”

Most important, the expanded ability to make interpersonal transfers deepens the person-to-person credit market, which helps Kenyans withstand shocks to their household finances through risk-sharing networks.

In the developing world, a poor harvest or an illness can quickly portend financial ruin. Because mechanisms like unemployment insurance and health insurance are limited, people in Kenya have created informal risk-sharing systems whereby wide networks of friends and extended family give money to those in need with the implicit understanding that when they one day find themselves in grim circumstances, the favor will be returned.

This arrangement in the past has been fraught with risk. Poor roads, an inadequate transport system, and expensive money transfer services, like Western Union, mean that people wait a long time for their money, and often, conditions worsen.

“In the US, if you lose your job you may well be eligible to receive unemployment insurance, in which case you would continue to be able to eat three meals a day,” says Suri. “But in developing countries, when you lose your job, there are often no formal safety nets. People don’t have a lot of savings or other ways to smooth these shocks so their food consumption drops.”

But this is not as true for users of M-PESA. According to Jack and Suri’s research, the consumption of M-PESA users falls about 6 percent less during a crisis because they are able to receive money from a network of family and friends.

“It appears that M‐PESA facilitates efficient risk sharing and enables support networks to keep negative shocks manageable,” says Suri. “For example, a household head with access to M‐PESA who suffers a mild health shock might quickly receive a small amount of money via M‐PESA that allows him to keep his children in school. If this money was delayed, the children might have quit school, the effects of which are hard to reverse.

“The way M-PESA improves the ability of households to manage risk is dramatic and has important implications for the welfare of virtually all Kenyans,” she adds. “M-PESA has helped households overcome some of the most impenetrable barriers to financial services, and has provided real value to Kenyans, especially during a time of need.”

*The Risk Sharing Benefits of Mobile Money By Tavneet Suri, MIT Sloan School of Management and William Jack, Georgetown University; January 2011

Source: PR Web

Mobile Banking Aids Healthcare in Developing World

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In countries where access to traditional banking services is limited, more and more people are utilizing mobile phones to send money with services such as M-Pesa, which now boasts more than 13 million subscribers. The technology may be a boon to the health field as well, as the same systems can be used by organizations such as the World Food Program, which uses mobile devices for some of its food aid voucher programs.

The application allows a food vender to enter a person’s voucher code into a mobile phone, and the system automatically reimburses the vendor via mobile payment. The convenience encourages retailers to participate in the food program, and cuts paperwork. The same technology could easily be applied to conditional cash transfer programs, which are health promotion initiatives that offer cash incentives to poor families for getting children vaccinated, or sending them to school.

Read more, via PBS NewsHour.

Mobile Financial Services Provide Banking Solutions to Rural Kenya

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Nuru International, a U.S.-based social venture that equips the poor living in remote areas to end extreme poverty in their communities, is using innovative new technologies for mobile banking to increase access to basic financial services for rural households in Kenya. The organization is working with Mifos cloud-based MIS and M-PESA mobile money transfer services to create a viable solution to some of the issues that persist in providing financial services in these difficult service areas.

“One of the biggest problems we face when it comes to finance and banking for the extreme rural poor is how to disburse loans and payments to our farmers, we don’t want to give large amounts of cash to them because they have to cover long distances on foot, have no secure place to keep the cash, and robbery and theft are real concerns.” — Vivian Lu, Community Economic Development Program Manager.

Nuru’s microfinance program has helped extend the reach of mobile money in rural Kenya. The combined technologies of Mifos and M-PESA have helped to create a branchless banking structure, allowing Nuru savings members in remote areas of Kenya access to some of the basic financial services that traditional banks offer. M-PESA is a mobile phone based money transfer service offered through Safaricom, allowing users to transfer money to other users, pay bills, and purchase air time. The service has great potential to be leveraged in mobile banking, allowing people to complete basic financial transactions without needing to visit a physical bank. Mifos is developing integration with M-PESA and allows Nuru an affordable way to scale. Because it’s a cloud-based application, Nuru can access it from mobile phones and netbooks, improving their reach in rural areas.

Nuru recognizes the importance of savings as a critical and often overlooked component to economic growth in rural areas. The Community Economic Development model is a savings-led program that offers financial training. Nuru members are trained in the fundamentals of financial planning, budgeting, saving, and responsible loan management, before they are eligible to apply for individual loans.

Source: PR Web

Unwary Customers Hit by M-PESA Money Transfer Scam Attempts

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Not surprisingly, common scams have hit the mobile money transfer services, such as M-PESA. The usual scam involves the receipt of money, confirmed by a fake SMS purportedly from M-PESA. The scammer then says the transfer was a mistake, and asks for the money to be returned, or forwarded to the intended recipient.

Andrew Muchira, who was taking a rest at home received a text message — nothing out of the ordinary, he would have thought. But then it was a message supposedly from M-PESA telling him that he had received Sh8,000 from a certain Mr Waititu. Besides the fact that he did not know anyone by that name, what peeked his interest, was his ‘new’ balance. It was Sh8,000, yet he recalled transacting with his M-Pesa account the previous day and leaving a balance of Sh2,000.

It should read Sh10,000, he thought, then became suspicious — he was being conned, he concluded and decided to play along with the con-man.

via allAfrica.

M-PESA Wins “Mobile Money for the Unbanked” Award

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Safaricom’s M-PESA has won the Mobile Money for the Unbanked Award at this year’s Global Mobile Awards 2011 which is being held in Barcelona, Spain between February 14th and 17th.

The M-PESA service was launched in March 2007. As of the end of 2010, the service had over 13.5 million customers countrywide. More than 400 organizations acceppt Bill Payment via M-PESA. The service does not require users to have a bank account; an important aspect in Kenya, where millions of people do not have a bank account. With M-PESA, account holders can buy electronic funds at an M-PESA agent and send the electronic value to any other mobile phone user in the country, who can then redeem it for conventional cash at any M-PESA agent. The awards are part of the annual Mobile World Congress which brings together players in the global telecoms market and is organized by the GSMA (Global System for Mobile Communications Association).

The “Mobile Money for the Unbanked” award category recognizes innovative, sustainable, pioneering mobile money services around the world that bring low-cost financial services, through mobile, within the reach of low income groups. The award recognizes the mobile money service that has had the most significant impact on unbanked customers in developing markets over the last year.

The win extends a five times winning streak by Safaricom M-PESA at the GSMA conference in over a three year period, and is a fitting recognition of its leadership in Mobile Money services.

Safaricom CEO Bob Collymore exalted in the win and said it was a validation of ongoing work to expand the M-PESA service in line with meeting the needs of the Kenyan customer.

“I am delighted and congratulate the M-PESA team. This shows that we are leading the evolution of mobile money from simple transfer to a total mobile commerce solution,” he said.

The judges said in their citation: “The success story continues. This solution is enhanced further with the addition of new features and territories. It is winning ground in a way seldom seen in the mobile industry and is a true and sustained success story.”

This years entry, put together jointly with Vodafone, covered M-PESA in Kenya, Tanzania, South Africa, M-Paisa in Afghanistan, India and Fiji, and Vodafone Money Transfer in Qatar, bringing together the strengths and benefits of the service to the firm’s customers across the group.,

The GSMA, which organizes the awards, represents the interests of the worldwide mobile communications industry. Spanning 219 countries, the GSMA unites nearly 800 of the world’s mobile operators, as well as more than 200 companies in the broader mobile ecosystem, including handset makers, software companies, equipment providers, Internet companies, and media and entertainment organizations.

Since the launch of M-PESA in just over 3 years, M-PESA has bagged a total of 12 international awards in its contribution to offering financial inclusion to the un-banked in Kenya.

Source: Safaricom