ONE-CLICK TWEETBy Srinivas Nidugondi,
SVP of Mobile Financial Solutions,
Mahindra Comviva.
Mobile payment technologies and mobile payment services will continue to evolve rapidly in 2015. They are and will be a priority for every stakeholder in the mobile financial services space. Mobile money has moved beyond hype and is establishing itself as a lasting trend.
#1: THE MOBILE, AS A PAYMENT TECHNOLOGY, WILL REGISTER SIGNIFICANT GROWTH OVER THE NEXT 5 YEARS
Sample this; according to a recent report published by The Society for Worldwide Interbank Financial Telecommunication, consumers are using their mobile phones to make payments in over 130 deployments with a 100 more planned and several new initiatives are being announced each week. If that doesn’t indicate growth, nothing does! Moreover, this is a growing market. The mobile, as a payment technology, will register significant growth over the next five years. As per industry estimates, the growth rate for mobile payments is expected to vary between 350 and 900 million users, generating anywhere between $430 billion and 1 trillion in transaction value by 2015. The retail segment, in particular, is expected to take up this cause enthusiastically. How? By adopting a “mobile-first” strategy-i.e. ensuring that a customer’s experience on any mobile device (tablets, handsets, phablets, you name it!) is nothing short of perfect!
#2: THE MOBILE PAYMENT ECOSYSTEM WILL CONTINUE TO EXPAND
Now let’s talk about the services themselves. Mobile payments have risen far above and beyond P2P transfers. This is just the tip of the iceberg; numerous non-financial players have entered the mobile payments market, often with innovative solutions. In fact, mobile network operators like Vodafone, MTN, Orange and airtel have deployed mobile payments services in several countries or have set up joint ventures between them. If that wasn’t enough, money transfer operators like Western Union and MoneyGram, as well as card companies like Visa, MasterCard and Amex all have multiple mobile payments initiatives. To add to the mix (or shall I say confusion?) payment service providers like PayPal are throwing their hat into the ring too and putting their entire might into the mobile.
#3: NEAR FIELD COMMUNICATIONS TO SEE MORE LAUNCHES
The big bucks matter, of course. So does the technology used for such payments, by the way. For example, Near Field Communications is (and will continue) creating a lot of buzz in the mobile payments space. It is being used in Japan on close to 65 million handsets by 15 million customers initiating 30-50 million transactions per month with 750,000 merchants. If that wasn’t enough, several projects have been launched in some 35 countries in Europe, the US and China, but many have a long way to go before reaching critical mass (in terms of market penetration). Google Wallet is one example.
Srinivas Nidugondi,
SVP of Mobile Financial Solutions,
Mahindra Comviva
#4: HOST CARD EMULATION IS HERE TO STAY AND WILL BECOME MORE PROMINENT
Now, let’s add another element to this mix; namely: Host Card Emulation. It is here to stay. Very simply put-traditional NFC using SE for contactless proximity payments had too many challenges which HCE has resolved. The tokenization service offered by card schemes would enable financial institutions to launch NFC Wallets by simply working with a mobile wallet platform provider. In fact, I believe that the movement of NFC-based payments towards HCE, which started in 2014, will become more prominent in 2015.
Moreover, user experience, context awareness and universality will be the benchmarks by which every mobile money deployment will be judged. The user experience has to be compelling, convenient and cost-effective and the context awareness, intelligent and customized. Too much of wishful thinking? Well, let’s put it this way; the solution that addresses these best within the time, cost and quality constraints shall succeed.
#5: MORE COLLABORATIVE INITIATIVES TO TAKE PLACE IN THE MOBILE PAYMENTS SPACE
But, as the saying goes, “there is no such thing as a free lunch”. So, while mobile money offers significant business opportunities, it also comes with very specific challenges. It’s quite straightforward, really. The metaphorical elephant in the mobile payments room is interoperability. All the mobile money faithful agree that it can boost volumes to dizzying heights. But, naturally, one’s own company’s business goals become priority and so no player wants to give another even the slightest bit of elbow room, whilst expanding market share. Things are expected to, well, improve somewhat in 2015. Stakeholders are expected to relax their competitive stance and adopt a collaborative approach. And, it’s already happening (in small doses, of course). Citing the Tanzania example mentioned before, in November 2014, Airtel Money and Tigo Pesa joined hands to enable the very first domestic interoperable mobile financial service in Tanzania. Powered by our very own mobiquity® Money (still not tooting my company’s horn), the service allows customers to send and receive money directly between the mobile money accounts of these two service providers. The service simplifies off-net money transfers and enables recipients to transact through the convenience of their own mobile phone without cashing out. Small steps, no doubt, but at least it’s a start. A word of caution, though; before the full potential of interoperability can be leveraged, the various faces of this concept need to be clearly understood, prioritized and then introduced. Tanzania is just the tip of the iceberg, though. In 2015, we are likely to see a number of markets jumping onto the interoperability bandwagon!
To sum up, 2014 witnessed several changes and innovations in the mobile payment space. Honestly, we can continue to gaze into a crystal ball with regard to what’s going to happen in 2015. We may or may not be right. Nevertheless, it’ll be worthwhile seeing how the next year shapes up for this space.
About The Author:
Srinivas has over 17 years of experience in various industries including financial services, payments and commerce in a variety of business and product related roles and most recently with a specific focus on enabling banking, payments and related services through digital channels.
At Mahindra Comviva he heads the mobile financial Solutions business unit, which currently has over 120 deployments globally, providing services for more than 750 million consumers and processing over 35 billion USD in payment flows. He has not only enhanced the leadership position of Mahindra Comviva in the mobile money space, but expanded the offerings to cover other segments, and thereby have a full suite of products and solutions – across the banking, retail and telecom industries – to meet the requirements of consumers and businesses.
Prior to joining Mahindra Comviva, he established and led the business for online banking and mobile payments at ICICI Bank and also headed product management and business development functions in start-ups and IT product companies. Srinivas has many distinctions including heading India’s first digital only banking offering; defining the World’s first mobile payments interoperability standard; South Asia’s first mobile banking offering; being part of the first nationwide financial infrastructure for MFIs among others.
