Mobile payment providers have criticised banking regulations and called for more work to be done in lowering the barriers to entry for mobile payment solutions.
They point to inhibitive banking regulations as the key barrier to enabling the unbanked in Africa to engage in transactions using their mobile phone. This was during a panel discussion at the Tech4Africa conference last week.
According to mobile payment company Wizzit, statistics from the World Bank show only 4% of the African population is banked, while 700 million people living in Africa are either unbanked or under-served by banks.
Yet, Fica requirements and similar regulations are still bringing difficulties for the unbanked living in remote areas, who have little or no access to formal banking services.
In some regions, people can spend half a day travelling to banks and airtime facilities, to pay for school fees, airtime and bus tickets, according to the panellists.
This is despite the fact that Africa has more mobile phone users than fixed-line subscribers. In addition, Africa has become the world's fastest growing mobile phone market.
Risky business
“The biggest worry for banking regulators is money laundering. However, there's no money laundering risk when people are allowed to participate in electronic payment at low payment thresholds,” said David Reynders, MD of Pocit.
Reynders explained that in order to open up the market, banking regulators should allow mobile payment providers to enable limitations on how much money can be deposited into an account. This would help calm regulators' fears about money laundering.
Reynders believes the answer lies in making mobile banking simple for the public to use and for regulations such as the Banks Act and Electronic Communications Act to promote the mobile banking services.
“We have conservative regulations and what we need to see is a lowering of barriers to market entry and to make it easier for people to participate in making payments electronically.”
He noted it's very difficult for foreigners living in SA to use mobile banking because they need to get Fica accreditation and require a certain amount of documentation to prove their identity before they can use a mobile payment service.
Boom times ahead
Tayo Oviosu, founder and CEO of Pegatech, a mobile payment service in Nigeria, said regulatory issues around mobile payment solutions have resulted in higher costs for the unbanked. “It is difficult for a Nigerian bank to bank the unbanked, not only because of lack of infrastructure, but also around regulatory concerns.
“What has progressed in Nigeria is the fact that mobile payment providers allow for people to participate with just a name and a phone number. They do not need to provide an address. A model like this would work well for SA.”
World Wide Worx found the number of mobile broadband Internet subscribers has gown by 88% in the past year. The firm found there are currently 930 000 wireless broadband subscribers versus 630 000 ADSL users.
In the World Wide Worx Mobility 2009 study, it emerged that while 16% of banking customers in SA use the Internet for banking, 28% use their cellphones. A total of 34% of banking customers use one or both of these channels.
According to Gartner, the number of mobile payment users worldwide will exceed 108.6 million in 2010, a 54.5% increase from 2009, when there were 70.2 million users.
The global research firm says in Europe, the Middle East and Africa, mobile payment users will total 27.1 million and represent 2.1% of all mobile users in the region.
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