In doing research for this blog, the first search that comes up when typing in “Mobile Money” is for a company that provides mobile ATM machines. Well, let me be the first to tell you that port-o-ATMs are not the entirety of what mobile money is all about.
I have long been intrigued by the prospect of using your phone to pay for services – simply swipe your phone at something that’s near (or part of) the cash register and your phone acts like a credit card. In fact, in the US, Forrester predicts that Mobile Commerce will reach $31B by 2016. There is much jockeying for positioning going on with this with regards to the mobile carriers (including joint ventures being announced and joint ventures not happening), Google, and credit card companies. Mobile payments described in this paragraph are one use case for Mobile Commerce. I have no doubt I will be paying for my Dunkin’ Donuts coffee within a few years like this (even though Starbucks is the one making the news on this front these days ).
Another use case of Mobile Commerce, which I wrote about in my first blog of 2011, is using your smartphone to become more informed about your purchase. In this case, I witnessed people in stores taking pictures of bar tags and then seeing if there were better prices elsewhere since “there is an app for that.”
Yet another use case is mobile advertising and mobile coupons, utilizing either Location- Based Services or some kind of social networking.
But using your phone as a “bank” as opposed to a credit card is another use case for mobile money. The GSMA has done some excellent work regarding this, with what they refer to as “Mobile Money for the unbanked.” I’ve been to Africa twice this year and have met with some of Dialogic’s mobile value-added service customers, some of whom offer mobile banking solutions. Through them, and through the GSMA website, I’ve learned a lot about this segment of mobile commerce.
Ultimately, the phone is used to first store and then transfer money. For a mobile money transfer, in a basic use case, a retail store of some sort is involved (it could be a mobile operator’s store for instance) where cash goes to the retail outlet and then “money” gets transferred to the phone, and then there is a wireless transfer of the “units” to another phone, where then actual cash could be exchanged for the “units” at a different retail outlet. In this way, this money transfer can be quicker and potentially cheaper than other methods such as utilizing the post office, or telex services, or something else. And variations of this mobile money are also available.
I have no doubt this will continue to grow in importance in certain regions of the world, and this is yet another example of the increase in importance in mobile value-added services.