Affordable mobile phones act as financial liberator in emerging economies

Global mobile payments solutions provider Omlis believe that the rapid rate of mobile phone adoption in emerging economies such as Latin America, Africa and Asia, could see the world’s poorest continents become global leaders in internet and mobile payments use within the next five years.

A recent Ericsson mobility report released in June 2014 on Sub-Saharan Africa estimates the growth of mobile data traffic in Africa to increase 20 times between 2013 and 2019. This is 10 times more the estimated mobile voice traffic growth estimated in the same period. GSMA forecasts Latin America to experience a 67 per cent growth by 2017, and Asia Pacific to produce 47 per cent of all global mobile data traffic within this same period.

These reports cite the lack of basic fixed landline infrastructures and the perceived high costs of existing fixed line services as key drivers for the mass consumer adoption of mobile centric internet use. Many consumers in emerging markets now rely on their mobile phones to perform activities that would otherwise be completed using desktop computers. The increase in competition between smartphone manufacturers in these regions have also contributed to the increase in mobile data traffic. Consumers are now experiencing cheaper handset costs, cheaper data charges and faster data speeds, facilitating popular activities such as social media and mobile payments. Even though Ericsson’s report found that 47 per cent of Sub-Saharan mobile users still believed that mobile data charges were too expensive, they still found it cheaper than any fixed line internet alternative.

“Africa, Latin America and the Asia Pacific present immense opportunity for the mobile payments ecosystem to engage a rapidly growing consumer base who, out of necessity, have fully embraced new opportunities presented by their adoption of 3G and 4G technology,” said Markus Milsted, CEO of global payments solution provider Omlis Ltd. “Sub-Saharan African countries like Nigeria, Kenya, and South Africa have experienced an explosion of mobile payment adoption in the past year and current predictions regarding data usage still expect over 100 percent year on year between 2014 and 2019, which is simply astonishing.”

Sub-Saharan Africa, Latin America and Asia markets’ large consumption of video content, social media and apps is a key driver for mobile data consumption. The increased availability of affordable smartphones make such data-rich services more accessible to a large number of consumers and businesses alike. The ability for consumers to access such services through smartphones priced at £70 and below has been a catalyst for mass adoption of a mobile-focused lifestyle.

The countries with the highest smartphone users in Sub-Saharan Africa are Nigeria, South Africa, Kenya, Democratic republic of Congo and Tanzania. The increase of smartphone usage in these emerging economies provides a means for users to browse the web without depending on unreliable, and in some cases non-existent, electricity or internet connection. With a large number of Africans and Latin Americans ‘unbanked,’ the mobile revolution now provides a cost-effective means to integrate otherwise excluded members of society into a structured financial system. In 2013, there were 163 different mobile paymentsproducts operating in developing economies, 90 of which were in Africa, followed by 40 in Asia-Pacific, and 17 in the Americas. With affordable smartphones and mobile payment options, consumers in these regions now have the ability to save, transfer and transact without having to visit a bank, providing financial power and flexibility.

“Although smartphone penetration is on a steep upward curve in Africa and now at saturation in Latin America and Asia especially for 3 and 4G users, it is worth bearing in mind that many in these regions, 75 per cent in Sub-Saharan Africa, reside in rural areas and rely on feature devices that operate predominantly on 2G. Where we excel at Omlis is our ability to provide everyone using any mobile phone operating on 2, 3 and 4G the ability to access digital services via their phones with absolute freedom and confidence,”Matt Banham, Chief Technology Officer at Omlis added, “Such technology must be priority for emerging economies which in this context is focused at the African, Latin American and Asia Pacific economies. This will add significant value to the social and financial inclusion efforts of their respective payments ecosystem and governments.”

Mobile banking has been a key driver for the increased adoption of the mobile phone as an option for lower to middle class consumers in emerging markets, with a large majority operating in rural areas. Such customer segments experience increased social and technological challenges like unemployment, lack of transport, or access to cost-effective financial services and education.

“Such strong cash-based economies place great value on cost and reliability. The forecasted increase of mobile data and payment adoption in these markets can only be achieved through provision of flexible, easily accessible and secure mobile services.” Markus Milsted also added, “The growth of mobile payment services will certainly increase opportunities for potential fraud and all players in the mobile payments eco-system must play their part in ensuring consumers are enabled to use their mobile phones safely. At Omlis, our high integrity mobile security architecture is developed specifically for the mobile phone. Other available options have simply been adapted as best as they can and their lack of specific focus exposes the users of these options to an increased risk of fraudulent attacks.”

The ability for the previously unbanked to transact and transfer funds without having to deal with cash is a key factor in the mobile liberation experienced in Africa, Latin America and Asia Pacific. The social integration possibilities provided by the mobile phone are proof these emerging economies will continue to be receptive to mobile-focused innovation as long as products and services are accessible, affordable, and secure.

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