Mobile Payments: Macro Hype & Micro Trends
by Paul Ruppert
There’s currently a lot of noise in the mobile payments segment.
Companies such as Firethorn, mFoundry, even Google recently have garnered considerable attention and coverage. Admittedly I’ve looked at the segment at my personal blog, www.mobilepointview.com, recently with “Google Sends SMS Mobile Payments: GPay†as well as “Mobile Payments: The Tipping Point.â€
I think we need to differentiate and identify what can be labeled as macro forces where much of the hype resides, and micro forces where much of the real trends are developing.
Raising $100 million in funds (Obopay), announcing carrier trials (Verizon with Obopay, Sprint with mFoundry) or financial institutions announcing studies (Wells Fargo, Citibank, Visa) are certainly getting a lot of ink to drive the hype curve. They serve as big, macro attention-getters. Given the time frame which mobile payments have been lingering, some argue that we are currently in the “trough of disillusionment†regarding mobile payments.
I think the phase has shifted back to just moving up the slope of “inflated expectations.†The problem is that the financial industry and the mobile payment enabling companies are too focused on the big and the big, meaning what carriers and financial institutions are doing in the space. Can you suggest any two more risk averse players than a mobile operator and a bank?
I think the micro trends are being overlooked. Consider–most of the traction in the space will be with those consumers that find mobile transactions more convenient than direct banking via ATMs or bricks and mortar branches. Since most of the attention in the space is emerging from western developed economies such as the US and UK, how much more convenient can banking be? Banking industry numbers indicate that both countries have 20 ATMs or branches for every 100,000 in population.
The overlooked link here is between mobile pre-pay customers and the unbanked. These are going to be the real trend lines as mobile payments move to the “plateau of productivity.†Look at the emerging markets such as India, Brazil, rural China and even Africa, where many countries have less than 2 branches per 100,000 in population.
These areas of the world where the great unbanked exist, yet have high penetration of mobile phones plus a proclivity to pre-paid mobile use, is where the real trends are going to emerge. These are countries where consumers are already accustomed to SMS messaging top offs, micro payments and sachets, trusting mobile operators with daily increments and decrements as small as 6 US cents. These countries are where new customers are going to emerge, not just adding a feature to current banking services as mobile banking is being positioned in the developed economies. Consider that in some parts of Africa over 80% of the population do not have bank accounts. Yet 60% of the population have mobile phones.
These “Bottom of the Pyramid†plays are going to be the real trend setters in mobile payments.
yet.
