How Mobile Money is transforming the payments landscape

Mobile and digital payments have become topics of greater media focus of late, as the world becomes a more locally available place.

Ever since the 19th Century, when the wire transfer was first invented, engineers and companies have looked for faster, more efficient and affordable ways to move money from one person to another – whether they live in the same postcode or across international borders.

Now, technology advancements have enabled electronic funds transfers (EFTs) to be made or managed instantly – be that an instant bank deposit, a cash remittance that’s available on the other side of the world in a remote location, or an in-store payment for groceries using a contactless card at the payment terminal.

 

Payments

NFC technology in smartphones and some cards, has enabled contactless and mobile payment technology to flourish. 

 

The rise of mobile technology  

Nowadays, there are also easy ways to pay for goods and services using a mobile phone.

If your debit or credit card is linked to a mobile app – effectively turning your phone into a contactless ‘card’ – or you use Samsung, Android or Apple Pay, by simply holding your smartphone near the payment terminal, your account is debited (or the card is charged) without the need to remove a physical wallet from your pocket or purse.

An important component of this rapid technology revolution has been Near Field Communication (NFC).

The NFC chip is one way for devices within a few centimetres of each other to exchange information and data. Along with radio-frequency identification (RFID) technology, it is also used in some contactless debit or credit cards.[1]  Today, most smartphones are being equipped with NFC capabilities, which also allow the use of various mobile money software, leading to a new consumer transaction experience.

According to the GSMA (Groupe Speciale Mobile Association), the term mobile money refers to a service in which a mobile phone is used to access financial services. Within those services, there’s a wide portfolio of operations such as mobile money transfer, mobile payments and mobile wallets.

So, what constitutes a mobile wallet exactly? The GSMA defines it as “… a software application on a mobile handset that functions as a digital container for payment cards, tickets, loyalty cards, receipts, vouchers and other items that might be found in a conventional wallet.”

 

Payments

Mobile wallets act as a ‘digital container’ for cards and other items that may be found in a conventional wallet,  allowing information to be stored in one place.

 

New mobile technology that adapts to the needs of the user is a key driver in building a more digitally-connected payments landscape and it’s also leading the way in terms of providing financial inclusion to users whose primary monetary resource might only be a mobile phone.

The number of unbanked or underserved adults has improved slightly in recent years with 62 percent of adults now having an account at a bank or another type of financial institution or with a mobile money provider.[2] However, with 2 billion adults still not using formal financial tools to save or borrow, the mobile phone is having a real impact on the lives of many people in developing countries.

Stay tuned for our mobile money series where we explore the benefits of mobile remittances.

 

[1] GSMA White Paper: The Mobile Wallet

[2] Global Findex Database 2014