23 September 2014

Payments and Architecture

Anand Sundaresan - Wipro Consulting Services

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War of the Plastic cards with Mobile wallets

21 July 2014  |  1504 views  |  2

In Africa, the use of simple phone based payments such as m-pesa are on the rise. The infrastructures are neither complex nor expensive. The unbanked markets are seeing huge growth in mobile payments and the face of payments are changing fast even as the west grapples with more regulatory complexities such as the Dodd-Frank, FSA and PCI DSS requirements on recording mobile communications.

The Dodd-Frank and FSA rules are contrary to the PCI DSS requirement not to store any sensitive authentication data, including card validation codes and values, after authorization even if encrypted.

Mastercard and Visa are venturing into emerging markets to boost payments. There are many tie-ups with countries in Africa and APAC. The Mobile wallet wars are increasing. Are we seeing the long history of the plastic card coming to an end soon, time only will tell!

TagsMobile & onlinePayments

Comments: (4)

Andrei Charniauski - IDC - London | 22 July, 2014, 13:27

Anand, I don't think you see the whole picture here. First of all, Africa is one major exception to the rest of world - and even in Africa the number of payment cards is going up.

Secondly, no matter how complex or contradictory regulations are, payments cards will remain the most robust and scalable solution for payments for decades - and African countries will eventually shift to it and move away from mPESA and others.

Finally, the vast majority of mobile wallets use payment cards as the actual payment method. So if anything, there is perfect working relationship between cards and wallets - but certainly not a war.

Anand Sundaresan - Wipro Consulting Services - London | 22 July, 2014, 14:24

Thanks Andrei. No doubt about the cards being robust and scalable they are a proven method and the PCI-DSS seems a stable standard. Recently I read a report which mentions that 80% of Africa are unbanked customers. If payment cards are going to be issued there, then many banks would have setup shop there I guess. I have never been to Africa with the exception Joburg so I cannot comment:-) Cheers

Andrei Charniauski - IDC - London | 22 July, 2014, 14:46


Banks will come there - but only when there will be something to come for. Just to give you an idea, the average amount of individual bank deposits per person in Kenya is around 450 USD - now compare this to, say, Lithuania with its average of 4,000 USD. And Kenya is by far not the poorest country in Africa.

So for the current level of disposable income, mPesa and other mobile-based systems offer enough (basic) functionality in relation to income they generate. But this is temporary... just a matter of time and growth in disposable income - and then there will be demand for better financial services.

Anand Sundaresan - Wipro Consulting Services - London | 22 July, 2014, 16:12

Makes sense. surely as economies prosper, the demand for financial services will grow.

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Anand Sundaresan

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Wipro Consulting Services

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