Defining the mobile wallet in different regions worldwide

By Shane Leahy, CEO of Tola Mobile.

Completing transactions directly through a mobile device has become an increasingly popular trend over the last three years, as consumers seek more convenient and secure ways to make payments.

This demand has paved the way for the emergence of various mobile payments technologies, from mobile wallets to the likes of Apple Pay and Android Pay, which are now used by smartphone owners globally.

As these solutions continue to garner use worldwide and amidst the growing preference amongst brands to offer alternative payment methods and communicate with customers instantly via mobile platforms, the global mobile payments market is now predicted to reach $3,388 billion by 2022.

These technologies have undoubtedly revolutionised payments for all consumers. However, it has had a particularly profound impact on the unbanked population living in countries across Africa, who can now use a mobile wallet to pay for goods and services, removing the need for physical cash or credit. Yet, due to varying stages of technological advancement, the way the mobile wallet is defined in the African market is significantly different to a mobile wallet in other regions.

Mobile Wallets in Africa and Other Regions

In Africa, the development of the mobile wallet has enabled a frictionless payment process, by allowing merchants to take payments directly from mobile operator provisioned wallets, where customers can deposit funds into their account and use to purchase goods.

However, the technology needed to utilise a mobile wallet in Africa and other regions is very different. For example, apps like Paypal and Google Wallet which allow customers to upload their credit or debit card details to their mobile and one-touch NFC payments from mobile software like Apple Pay have given consumers an alternative way to complete purchases. This can however be very limiting, with only certain merchants allowing customers to pay using NFC in-store, or Apple Pay online. It’s convenience makes it extremely appealing to the consumer, however unlike mobile wallets in Africa, the form of payments is essentially just a bank card payment from a connected bank account or credit card.

Customers wishing to pay via Apple Pay or Android Pay will have to spend a minimum of £500 to purchase a smartphone which can support the technology. In contrast, the only requirement to be able to conduct payments through a mobile wallet is owning a mobile phone with an operator. The menus used to complete these payments leverage a low-level service menu available on every phone connected to the GSM network. This means that even the most basic phone with no internet or data connection can be used to complete transactions. It is this simplicity which makes the mobile wallet so fitting for Africa’s current level of technological development, making it both secure and hugely empowering for consumers.

The rise of mobile money in Africa has been largely attributed to the significant growth of mPesa, a mobile phone based money transfer service which now has more than 30 million subscribers in countries such as including Ghana, Kenya and Mozambique. The growing integration between these operators and mobile wallet users has enabled a more seamless transfers of funds. What’s more, with physical bricks and mortar stores still present across some parts of the region, this form of mobile commerce does well to bridge the gap and provide a more stable means of conducting payments.

How Mobile Wallets Affect Merchants

In Africa, merchants are very aware they need resilience and continuity in order to both run and maintain their businesses effectively at lower costs. By skipping the “desktop generation” and going straight to mobile, Africa has supported its developing retail infrastructure by offering consumers the chance to complete transactions via carrier billing.

In regions like Europe, the acquisition of payments made through mobile devices is charged to the merchant at a much higher cost compared to those in Africa. This could therefore explain the relatively slow adoption rate of this technology across Western regions. Research from ACI Worldwide indicates this, stating that just one quarter (25%) of consumers in Spain use mobile payments, with only 17% in the US and 14% in the UK conducting payments through their mobiles.

The contrasting types of technology being applied to mobile wallets in Africa and in other regions are, in my view, clear representations of the different levels in technological development. That said, both versions present merchants and consumers with the opportunity to reap the benefits of strong customer service and a seamless payment process. In Europe and the US, specific regulations don’t allow for MNOs to operate mobile money wallets like they do in Africa, which could restrict its uptake across these areas of the world. However, with the continued acceleration of the use of mobile wallets across Africa, the region’s financial services landscape is doubtedly becoming fully inclusive and empowering for its consumers.

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