When it comes to using mobile phones as electronic wallets, the emerging markets are clearly way ahead of the more developed ones. In Kenya, the Philippines and elsewhere, millions of people are using their phones to pay for things, transfer money, secure micro-loans and do their banking. Not so in the United States. Will the US follow the path of the emerging markets? Probably not.
This message came through during a media panel sponsored by IBM in New York recently. The event, “Driving Mobile Payments Adoption in Developed Markets,” featured as panelists Tomasz Smilowicz, global head of mobile banking, Citibank; Kate Kingberger, of the CTIA wireless trade association; and two IBM executives, Alberto Jimenez and David Mangini. “There will be two distinct markets,” said Jimenez, the mobile payments leader for IBM. “One market will be the developed economies and wealthy people in emerging markets. The other will be majority of people in the emerging markets.”
In the United States, it seems likely that mobile money will primarily be a means of conveniently paying for things and interacting with retailers. In emerging markets, its could become the main doorway to banking services for masses of poor people.
Citibank is betting on that outcome, and plans on being the most aggressive mobile money advocate in the world. “Citi was the bank that made ATM’s successful. Now we hope to make mobile banking successful–even moreso,” Smilowicz said.
In spite of the fact that mobile money will develop differently in developed markets from emerging markets, Smilowicz believes that businesses in the West can learn from the experiments elsewhere. One of the deterrents to adoption of mobile money in the US is the fact that a new generation of point-of-sale devices would be required–or seemingly so. He pointed out that Kenya’s Safaricom, the mobile money leader in Kenya, is exploring the idea of putting near-field communications chips in handsets and installing wireless point-of-sale terminals. The cost: an affordable $10 for the phone and $30 for the terminal. “In Africa, they don’t have wired point-point-of-sale terminals, so they have to think outside the box. We can learn from them,” he said.
The panelists were optimistic about the potential of mobile money. Smilowicz stuck his neck out and predicted that in just three years the phenomenon will be mainstream.
Many factors have to come together for mobile money to take off in the US, but the main thing is large numbers of people will have to see a benefit in it. That hasn’t happened yet. Maybe Google Wallet will provide a tipping point. What’s needed is the proverbial killer app.
Here are links related to this topic: