Five things you need to know about mobile money

More and more companies are embracing the potential of mobile banking, which is rapidly expanding into a global technology.

  1. What is mobile money?
    The term refers to the ability to perform financial transactions on your cellphone. This includes accessing bank accounts, remitting money and taking payments of any amount without using a conventional bank. So, for instance, you can now pay for your latte with a swipe of your contactless-technology-enabled phone.
  2. What’s the fuss all about?
    The growing use of smartphones and the near ubiquity of cellphones in general means the world is ready to adopt mobile financial transactions. In fact, parts of it already have. Africa’s well-established M-Pesa service, for example, enables users to send and receive micropayments instantly via their cellphones. This replaces the need for retail banking infrastructure, offering the country’s “unbanked” the chance to use life-enhancing financial services via SMS. The developed world is now catching up fast.
  3. Who are the players?
    The mobile networks obviously want to profit, as do the big banks and card payment companies such as Visa. Vodafone and Telefónica-owned O2 are early pioneers in the developing world, joined more recently by hardware maker Ericsson. Google and Apple are just two technology giants that are hoping to capture market share. Innovative companies such as Monitise Group in the UK and Square in the US also have designs on this rapidly growing market.
  4. What’s the potential?
    Mobile banking promises to be a disruptive technology. The number of users will rise to 400 million globally by 2013, according to Juniper Research. Google’s Eric Schmidt identified mobile payments as one of the search giant’s top three priorities. Al Lukies, CEO of Monitise, points out that the advantage of cellphones lies in the fact that they can be used offline, while on the move and in conjunction with virtual, location-based vouchers. Despite claims that the rise of mobile money will eliminate the role played by big banks, Lukies believes that “it will be hard to displace their central infrastructures.”
  5. What do the doubters say?
    Skeptics say that, while mobile money is a boon in the developing world, consumers in the developed world are already well served with bank branches, efficient online banking and the convenience of plain, old-fashioned cash. Concerns about digital security may also discourage the more conservatively minded from adopting mobile financial services. To which the industry responds with one statistic: 5.5 billion cellphones and counting.

The article was written by:

  • Andrew Stone

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