Global mobile cellular connections are expected to hit eight billion by 2016, whereas of the world’s seven billion people only two billion have bank accounts. Consequently, m-payments occupy a unique place in current technology, being seen as a ‘next step’ and with Asia’s growing mobile user base it’s not surprising that we are constantly reading about new m-payment apps.
Take Singapore for example: in June this year, SingTel and Standard Chartered Bank launched Dash, an app which allows consumers to load money onto the app and pay friends and businesses without needing to access an ATM. Standard Chartered benefits as users are required to open an account with it (done online with a simple e-application) and it can then cross sell its other banking services while Singtel increases customer loyalty adding an additional barrier to exit (would you want to swap mobile provider if it meant losing your m-payment account?)
OCBC launched Pay Anyone which allows you to transfer money via Facebook, email or SMS within Singapore without even knowing the other party’s bank account details. We’ve also seen MasterCard’s MasterPass which stores your payment details in the cloud so that you can easily purchase goods with a single click, and DBS’s PayLah, a mobile wallet which allows you to pay friends via mobile numbers.
PayPal’s partnership with Samsung also deserves a mention as it allows all of Singapore’s Galaxy 5G owners to just swipe their finger across the fingerprint sensor in order to purchase goods via PayPal doing away with having to key in details.
Just recently, Olswang’s Singapore and German offices also acted for the Philippine Long Distance Telephone (PLDT) Company on the establishment of a strategic cooperation with Rocket Internet AG to develop online and mobile payment solutions. This collaboration is no surprise given that Smart Communications, PLDT’s wireless subsidiary, is a global pioneer in mobile banking and has introduced several world first m-payment innovations in both domestic and global markets.
It is clear that m-payment is set to replace plastic as our convenience of choice and whilst there remains a wider question of how to optimise monetisation and make m-payment a balance sheet winner (rather than just an add-on service) the likes of card networks, financial institutions and telcos do not seem too fazed as we continue to see an increase of deals in this sector particularly between banks — already familiar with the internal systems to address complex financial regulation requirements — and telcos who can supply a ready pool of users as well as the technology platforms on which to build the service.
So with so many m-payment services now available why are we yet to see mainstream adoption with statistics like eight billion global mobile cellular connections? What is different between the US, Europe and Singapore against the likes of Kenya where a staggering 17 million people have subscribed to M-Pesa (equivalent to more than two-thirds of Kenya’s adult population)? M-Pesa was launched by Vodafone in 2007 and allows users to deposit money into an account stored on their mobile phones (rather than an actual bank account) and to send funds using SMS technology to other users or businesses. M-Pesa’s services are by nature similar to that of Dash, Pay Anyone, MasterPass and PayLah, so why haven’t we seen the same level of adoption in Singapore?
The answer comes down to security. An M-Pesa user is likely to be using a GSM or 2G phone, not a smartphone, which is significantly less vulnerable to cyber attacks. By contrast, m-payments in Singapore and other developed countries are woven into a wide network of technology, personal data and therefore risk. If your smart phone is hacked, a thief may have instant access to a complete data package: your address, emails, social media accounts, amazon account and calendar — a worrying enough premise. Consumers are therefore reasonably reluctant to add their bank account details to that list.
Notwithstanding, if m-payment providers adequately deal with cyber security, data protection and the added layer of financial services regulation (which must be carefully navigated) the world may yet be m-payment’s oyster.
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SingTel is a telecommunications company that provides ISP, IPTV, mobile phone, and fixed line telephony services.
PLDT provides telecommunication products and services in the Philippines. As of December 31, 2009, PLDT served 41 million subscribers.
Smart Communications, Inc. (Smart) is the Philippines' leading wireless services provider with 54 million subscribers on its GSM network as of end-March 2015.