Mobile payment industry eyes huge opportunity in 'under-banked' markets

Sometimes disorder can be a perfect order. For the nascent mobile payment industry, the nearly non-existent banking facilities in many developing countries appear to be big time opportunity. Accordingly, the mobile banking operators are gearing up to fill the void with their latest offerings that are cheap, secure and convenient.

Companies such as Wizzit and MTN Banking have already established their mobile banking services in many African countries, but industry experts believe there remains a huge potential for both the existing and new entrants to these markets.

According to the GSM Association, which represents more than 700 mobile operators across the globe, total remittances sent to the developing countries could quadruple by the next four years (from the current 102 billion pounds) if transfers by SMS become the standard practice.

One characteristic feature of the under-banked countries of Africa or Latin America is that while banking facilities are severely lacking, mobile penetration is quite high. The mobile subscriber base in Africa is expected to increase to 400 million by 2010 from 135 million in last year. This coupled with the deployment of latest digital money transfer technology provides a perfect tool that can address the banking needs of the poor masses.

A significant endeavour to this end is the M-PESA project of Vodafone, CBA Bank and others. According to David Birch of Consult Hyperion, which is associated with the project, “M-PESA provides a valuable case study of digital money in action….As such, the project is being watched closely by mobile operators around the world as a way of target ing the mul t i -bi l l ion pound international cash transfer industry long dominated by companies such as Western Union and MoneyGram.”