Mobile payments ideal for Africa
In emerging markets, mobile money has the power to transform lives, says Gemalto.
Africans are increasingly tech savvy with an 80% mobile penetration rate, and the growing ubiquity of cellular connectivity in Africa makes it the ideal environment for mobile payment solutions.
So says Jeremy Osborne, field marketing manager for telecommunication solutions at Gemalto Africa, who points out that with such a high mobile penetration rate, the mobile phone is at the heart of the latest innovations Africa is embracing because it is the best channel to ensure new services are delivered to the masses.
Osborne explains that mobile payment includes remote payment, using mobile money solutions to make peer-to-peer payment, international money transfer, mobile cash in and cash out, as well as contactless proximity payment using mobile near field communication (NFC) technology for payment in shops.
"We can definitely say that remote mobile payment is getting mainstream in Africa as 52% of mobile money services deployed worldwide are actually taking place in sub-Saharan Africa, according to the latest reports from the GSMA."
According to Osborne, mobile payment programmes are successful due to their simplicity - customers buy credit on their mobile phone accounts and use it to pay bills, buy products or transfer cash to other mobile phone users.
He notes that the technology removes the barriers of time and location, and where once an individual had to walk kilometres to join a queue at a specified time to pay a bill, he or she can now send a text any time, from wherever they are, to make a remote payment.
In emerging markets, he says, mobile money has the power not just to simplify lives, but to transform them, playing a social noble role as it addresses the unbanked or underserved population in Africa, offering them payment services they did not have access to before.
However, Osborne notes that as for mobile NFC payment, it is not yet mainstream in Africa as it requires a more complex infrastructure to be in place, which takes more time.
Nonetheless, as the market grows and matures with the proliferation of NFC compatible smartphones and contactless point of sale terminals, it might not take long before mobile operators and banks start launching NFC mobile wallet solutions, and offer their customers the opportunity to pay in shops in a contactless mode using their phone, he says.
Osborne points out that NFC mobile payment solutions require specific infrastructures to work, such as contactless point of sale payment terminals at merchants.
"For mobile NFC to grow, end-users have to be equipped with smartphones which are NFC compliant. South Africa is currently developing this infrastructure. Indeed, if we look at smartphone adoption, we can see that NFC compliant handsets are growing in South Africa with the penetration rate forecast to exceed 45% by 2017, according to the GSMA's latest report."
This means that in the next few years, one out of two people living in SA could potentially own an NFC phone, he explains.
As for point of sale payment terminals, Osborne adds, ABI research predicts that 85% of them will support contactless payments by the end of 2016.
"Mobile operators are already looking closely into NFC solutions and South African banks have announced some trials. As the market grows and matures with the proliferation of NFC compatible smartphones and contactless point of sale terminals, it might not take long before mobile operators and banks start launching NFC mobile wallet solutions and offer their customers the opportunity to pay in shops in a contactless mode using their phone."
To Osborne, people clearly see the convenience of using their mobile phone for payment but some might still show reluctance as they have security concerns about what happens if a phone gets lost or stolen.
He notes that NFC in itself is just a communication channel, and when NFC technology is being used for payment applications, security is of course a central element.
"As a leader in digital security, we, at Gemalto, do take this aspect very seriously by providing mobile operators and banks with highest level of secure solutions," he concludes.