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For a good analysis of M-Pesa's success in Kenya
Thanks Matt. You're right - that "Innovations" article on M-PESA is excellent - by far the most comprehensive analysis I've seen. It tends to reinforce my suspicion that the success of M-PESA is driven mostly by factors specific to Kenya itself - not just
the lack of a robust banking infrastructure, but also patterns of urban-rural migration, the dominance of Safaricom in Kenya, and very clever marketing and management by Safricom. Interesting that similar schemes seem to have been relatively unsuccessful
not just in Tanzania but also South Africa.
Good effort, but we don't get many 'lively debates' on Finextra. A couple of replies is a good effort ;)
NFC will continue it creeping rollout (because the card issuers are pushing it), but it has very little to do with 'mobile payments'. The only difference seems to be that instead of wafting you NFC card from your wallet, you waft your mobile phone infrom
of the NFC enabled reader instead. Its not your mobile account that gets billed, its your NFC linked bank account.
Mobile Payments is about being able to pay for stuff 'with your mobile and applied to your mobile pre or post paid bill'. In effect, this is defined by the Payforit scheme in the UK and offered via Payment Intermediaries (like OpenMarket). There are rules
for stopping recurring charge bill shock subscriptions, and 'double opt-in' flows to be really sure the consumer knows what they are buying. Consequently there is a big disadvantage compared to the 'tap and go' vision of NFC.
How about - make the phone itself the POS terminal. Have the merchant bluetooth/NFC the bill to the phone, the phone relays the charge to their mobile operator, the merchant gets a confirmation and the success of the payment and (optionally) hands you a
receipt. You get a SMS receipt too.
Sending a SMS payment like PayPal mobile or m-pesa is also cheap and nasty and works, but not great when standing at the bar.
Thanks John. Yes, the lack of a "lively debate" is disappointing - I'd expected a deluge of angry replies - but undeterred, here's a few more comments.
I agree with you that billing directly to the mobile account does indeed represent a genuinely new form of "mobile payment", and I can see that it has real potential for digital downloads to mobile phones, but could it be extended to the physical POS? Also,
from what I can see the amount the merchant pays is an order of magnitude higher than with card payments. Do you have any stats on PayForIt volumes?
I also agree with you that using the mobile as a terminal may have potential, irrespective of whether the back end processing is via the card payments networks or the telecom operators. I know there is interest in this as a possible replacement for cheque
payments to plumbers etc. However, I suspect the real alternative in this sort of situation will continue to be cash payments, simply for anonymity and tax reasons.
Getting back to contactless/mobile/NFC, I think it might have a chance of taking off if the whole card payments business model was reengineered to drive down costs by simplifying and stripping out things like receipts, chargebacks and itemised statements.
I believe this was the original intention, but it never seems to have happened. Probably too difficult, which is another reason I think that if this sort of thing does take off it will be in 10 years rather than 2.
On the 'lively debate', I'm afraid you can lead a horse to water but you can't make it drink. That said, we're always open to new ideas so if you've any suggestions on how we can encourage participation, let me know.
I wouldn't call M-Pesa revolutionary, at least not anymore. It was a few years ago when it was launched but if you look at other cases in Africa (look at where Rabo is present, e.g. Rwanda) and Asian countries (for example Obopay in India), I'd say it's
pretty much bread and butter for telecom companies these days. As I pointed out in a blog last year, it's time the the verb "to empesa" gets an entry in the Oxford dictionary.
I agree with the comments on NFC, indeed it's waiting for someone to go big on deploying NFC terminals in shops. I suspect Google or Apple could play a role here. Anyway there's certainly no lack of ideas in this space.
Faster payments and similar schemes are to be seen as an enabler for mobile payments. Indeed, no point being able to do a payment anytime, anywhere, when you need to wait 3 days for it to be cleared. Might as well do it at a desk then.
I do agree there's a lot of hype, and the hype can be likened to what we saw in 2000, albeit a bit more prudent in its implementation. But something useful will come out of it. Whether it's being able to pay in a shop using your phone remains to be seen.
Yes, the King does not have clothes on and someone is brave enough to say it.
Collin Consulting Ltd
03 Oct 2002