Upwardly Mobile

An Analysis of the Global Mobile Payments Opportunity

In the good old days, your office couldn’t reach you 24×7, Apples and Blackberries were found at fruit stands and you only came across an Android when you relaxed with a science fiction novel. Also, in the good old days, people drove in circles looking for an address or a payphone, they stood in line at the bank for every financial transaction and they ran from store to store searching for the best price. Today in most developed markets, you can not only place a call but with a couple of clicks on a mobile phone you can pay a bill, send money to a friend, search for the best bargain, donate money to charity and pay for practically anything. In emerging markets, consumers are finally being included in the formal financial system. Workers who are employed anywhere in the world can now text their wages back to family members at home and no longer have to travel hours at a time to pay utility bills.

The meteoric rise in mobile phone subscriptions – now almost 6 billion worldwide – has transformed communication. It’s not only about voice. Today’s mobile phones can serve as a mobile payments platform or shopping mall. Mobile Payments touches a large number of industries. This is increasingly true in low-GDP countries and for lower-income consumers with basic phones.

In emerging markets, mobile phone penetration now outpaces the availability of banking and other financial services, giving rise to the mobile phone as a portal for the provision of these services. Once consumers are comfortable with the concept of electronically stored monetary value, more advanced mobile banking functionality can be introduced. There are more than 125 Mobile Payments pilots in progress today. Successful deployments like M-PESA in Kenya have forged a path for others to follow, based on massive adoption of the platform, gaining 60% penetration of the country’s adult population in just four years since being launched.

In developed markets where access to financial services is more commonplace, the Mobile Payments opportunity is based more on providing feature-rich products that enhance the consumers’ banking or shopping experience. Mobile commerce is already transforming the way consumers shop, blending of the online and off-line into a single homogenous view. Adoption will depend on using mobility to enhance the consumer’s buying experience and leveraging mobile information to create additional consumer value.

It’s not just telecom providers and financial institutions, but an ecosystem that also involves consumers, private corporations, governments, retailers, technology companies and processors.

In the report that follows, we look at what the Mobile Payments opportunity could be and examine the factors that contribute to a successful Mobile Payments ecosystem. We look closely at Japan and Kenya – two countries with leading Mobile Payment offerings – to help to provide a blueprint for how future offerings should be structured. We then take a global tour to examine the key mobile payments offerings around the world.