There is a mobile revolution going on in Africa and the rest of the world needs to sit up and take notice, says Shane Leahy, CEO, at Oxygen8 Group.
Revolutions happen when the basic needs of people are not being met. In Africa, there is a basic need for financial inclusion in society, to be able to pay for goods and services without using credit cards or cash.
A confluence of circumstance and technology is driving the use of mobile payment solutions that is way beyond the growth rates being experienced in the UK, North America and Northern Europe.
First, the circumstance. In many African states there is virtually no banking infrastructure to speak of. There are practically no cash points, no credit cards and only 30% of the population have bank accounts.
This has created the ideal breeding ground for a mobile technology solution. Why mobile? Because even if the populations of Kenya, Ghana, Rwanda and Egypt have no bank account, they do possess mobile phones.
Mobile money services like MPesa are experiencing extraordinary growth, with Africa now leading the world in using mobile platforms for financial services transactions.
How does it work? Services like Tola enable mobile subscribers to pay for goods and services by providing their mobile number at the Pay by Mobile checkout and, in return, receive a one-time only PIN which is required to validate each and every transaction. Entering the pin completes the secure check-out process and funds are debited from the customer and credited to the merchant.
Every transaction is confirmed with an SMS receipt and the cost of the transaction is then added to the customer’s mobile phone bill. If the customer is pre-pay the cost is taken from the credit on their account and, if the customer has a post-pay account, he or she settles the bill at the end of the month. Limits can be placed on both pre-pay and post-pay accounts to help consumers manage their spending.
Where ATMs do exist it is even possible to withdraw money without a bank card. The consumer merely sends a message, they receive their one-time PIN which can then be used at the cashpoint.
The potential for marketers is also enormous. Up until now there has been no means of tracking sales or gaining market or consumer data to target specific products or offers at consumers. With mobile payment, suddenly a whole world of information opens up about consumer’s demographics, spending habits and interests.
Mobile payment technology even opens up the possibility of alternative credit scoring. With no banking infrastructure there is no way of credit scoring anybody, but a mobile phone account, with a record of transactions, offers the potential to give individuals credit, based upon their history and ability to pay.
It is my belief that we will begin to see this type of payment begin to take off in the UK, initially with micro payments, under £30, and then maybe larger.
Where is the potential? Whilst the UK has a banking infrastructure already in place, there is potential for payment by mobile with parking and toll roads, vending machines, payments for school clubs and other activities, sports betting and dining out.
For once, the North American and European markets are behind the curve. We are only now beginning to grasp the opportunities offered by Apple Pay, but mobile payment, once it is fully understood and trusted by consumers, opens up a whole new era of possibilities.