Research has found more people in SA are cellphone literate than computer literate and this is driving opportunities for cellphone payment solutions, says Arthur Goldstuck, World Wide Worx CEO.
“SA is seeing a huge uptake in mobile banking. In particular, banks such as FNB and Absa have taken on cellphone banking and the industry has seen a phenomenal growth in the technology,” he notes.
Absa, First National Bank and Standard Bank have all rolled out mobile banking solutions that give account-holders the facility to use their cellphone as a credit card. These solutions provide mobile banking to those who have no Internet access.
Into Africa
Richard Hurst, programme manager of communications from IDC Africa, points out that mobile phones used as a banking platform is growing because of SA's large cellular subscriber base.
“Mobile banking is reaching portions of the population who don't have access to banks. It's not new technology but it is new in the way the infrastructure is being used to create these services.
“We are seeing trends in other parts of Africa, such as Tanzania and Namibia, which are also experiencing benefits in adopting the technology,” he adds.
Two local companies, Swap and Inter-active Technologies, are bringing their own mobile payment solutions, which are not reliant on banks, to the table. The companies say these solutions could be particularly useful to consumers who do not have access to any sort of banking.
Entry barriers
A weakness in the market, Goldstuck notes, is an interoperability issue. Local companies have not yet adopted a standardised approach versus international companies. “There are currently a lot of proposals on the table to change this, because different payment mechanisms and infrastructure prohibit the growth of the cellphone banking market.”
According to Wikipedia, attempts to overcome interoperability issues with different phone devices are localised, and this lack of standards requires banking applications to support a widely acceptable set of protocols for data exchange.
Hurst says cellphone payment is one of the more secure banking platforms. “Nothing is ever 100% secure, but mobile banking is one of the most secure platforms out there. This is because of the security encryption built into the SIM card as well as the security coming from the network itself. There's also the convenience advantage; people don't need to travel to a bank and stand in a queue.”
Research conducted by the GSM Association found the global wireless market, with 2.5 billion mobile subscribers, is one of the fastest growing markets in the world and is still growing at a rapid pace.
US financial consultancy Celent predicts 35% of households using online banking will convert to mobile banking by 2010. It adds that while one billion people in the world have a bank account, three billion people have a mobile phone.