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Mobile money gains ground at Mobile World Congress

By – / 12:34 PM
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Mobile money was a buzz topic at last month’s Mobile World Congress (MWC). In fact, one of the sessions was so crowded that they had to split the attendees into two groups and conduct the presentation twice.

Why so much interest? The market is growing quickly.

Robert Conway, CEO of GSMA described this growth during his keynote at MWC. After a series of launches in Japan, 60% of users are equipped with near field communications (NFC) technologies in their mobile phones to make "tap-and-go" retail purchases, he said. According to Conway, more than 140,000 shops are ready to accept these payments.

The United Kingdom is experiencing similar growth. More than 40,000 stores are ready to accept payments as part of the EverythingEverywhere and BarclayCard partnership. The next wave will reach the United States when AT&T, T-Mobile and Verizon launch ISIS.

Despite these high profile alliances, the mobile money market right now is a work in progress. It consists of three layers stacked in a pyramid. Each segment looks like a collection of puzzle pieces waiting for the right combination of players to assemble them into a cohesive, or profitable, whole. From the base of the pyramid to the tip, the three emerging market segments are:

  • Mobile Banking for the Unbanked
  • Mobile Payment Services
  • Mobile Commerce

There are clearly opportunities for mobile service providers at each layer. Some are relatively easy to seize in the near term, and others will require longer-term strategies.

For example, the mobile payment services market is “the sweet spot” for growth right now. International remittances make up the biggest portion of this segment. Millions of individuals work outside their own nations and send money to families back home. “Home” is usually developing countries. According to a study by Aite Group, the value of worldwide remittances in 2007 was nearly US$340 billion. Aite researchers at the time predicted that it would exceed US$450 billion by 2010.

Service providers are already looking to expand their mobile payment services offerings. For example, at MWC, Greg Reeve, Head of Mobile Payment Solutions, described how Vodafone has expanded its “M-Pesa” mobile payment system. It now includes mobile savings accounts called “M-Kesho.” In addition, Vodafone has begun offering insurance and emergency credit services.

Arguably, mobile service providers’ success will depend not just on technology but also on marketing. Plus, because the market segments are quite different from one another, clearly there is no “one-size-fits-all” business model for mobile payments.

But as the long line of attendees at MWC showed, interest is certainly piqued in mobile payments, and growth doesn’t seem to be slowing down. It’s certainly one area to watch in 2011.

For more thoughts on how mobile service providers can succeed in mobile payments, download our white paper or read the latest Fierce Wireless eBook.
Subjects: Telecom Trends, Emerging Technology, Mobile Commerce, Mobile
Comments:
A Juniper Research also claims that mobile money users will double by 2013. It is bound to exceed 200 million in the next two years. But there are still many developing countries around the world that do not have access to these services. I wonder how long it will take for them to catch up to the mobile boom.
Ashley Forrester — May 17, 2011 6:07 AM