Serving the needs of the unbanked consumers will create a greater demand for the adoption of mobile payments in developing markets, compared to developed markets where mpayments provides convenience. 

In developing countries mobile payments could be the answer for people who are unbanked, after witnessing the success of schemes such as M-PESA in countries like Kenya. Mobile penetration in the developing world reached 79% at the end of 2011, with Africa in fact being the lowest region worldwide with 53%, according to The International Telecommunication Union. This overall high penetration rate brings the mobile opportunity into unbanked citizens’ hands.

“Based on a large population of unbanked people, there is a clear amount of money to be made, so the cooperation and the discussions between operators is simpler because there is a bigger piece of pie,” said Malin Holmberg, group director of products, Tele2, during a panel discussion at the Telecoms IQ NFC and mPayments event in London. “The pie in Western countries is not so big, because the banks are already here and the need is one of convenience, so it’s not so clear how much money there is.”

As Saadi Hussain, head of commercial propositions at BT, said, in developing markets there are many unbanked customers and lots of rural people who have never seen a bank in their lives and the first technology they’ve come across is a mobile phone. “It is not just banking, but other services such as healthcare. Mobile is one of the key components for transferring technology in those countries,” he said.

But can the lessons from the developed world extend to emerging markets? In developed markets the technology has a different need – one of convenience. mPayments and NFC allows consumers in Western countries to step out of the house without their wallets, to buy low value goods and virtual tickets.

Austria conducted successful trials into an mPayment scheme for buying train tickets. Christian Kantner, head of IT and services, Paybox Bank described how people appreciated the convenience of not having to log-on at home, or stand in a queue.

“In Austria it's definitely all about the mobile context, where people are in the street wanting to make transactions and it is convenient,” said Kantner. “But at the point of sale it is trickier as we have no problem to pay in Western Europe - you have your cards, you have cash, you have everything.” 

Saadi Hussain, head of commercial propositions, BT, agreed that mPayments are generally about transacting in a convenient way in the developed markets, but added that there are also benefits such as collecting loyalty points on a device instead of having to use numerous different cards.

“This will drive take up in the UK and other European countries,” said Hussain. “Convenience and the fact that I’m not carrying four different loyalty cards so I have to shop in four different areas. So convenience is the most important thing, but how much you can charge someone for that I don't know yet?” 

Holmberg pointed out that Swedish people do not trust websites with their card details as readily as other countries, mPayments therefore provides another channel for payment of goods as well as convenience.  “People are unwilling to leave credit card details on web in Sweden, not at all the same as in the UK - it’s a very different culture,” said Holmberg. “So there is a space for an operator to bring in an option there to have a safe and easy payment.”

“If micropayments are going to be the key for NFC development you have to remember that the word ‘micro’ means small amount,” explained Hussain. “If I’m using NFC to buy a chocolate bar from a vending machine and it charges me 10p to use NFC, I’m not going to do that. So if the developed markets are looking at micropayments as the biggest growth for NFC then we may have a problem rolling NFC out.”

Hussain also pointed out that age will be a key factor in the development of mPayments. “The younger generation are much more used to new technology,” he said. “It will take one generation before people become a lot more comfortable transacting on mobile.”

 caroline@mobilesquared.co.uk