Treasury News Network

Learn & Share the latest News & Analysis in Corporate Treasury

Collecting Payments via Mobile

There are already some 6.8 billion mobile phone subscriptions in the world (as of February 2014) and 2.6 billion are smart phones. It's a very fast-growing market: the number of smart phones in the world is predicted to reach 6.1 billion in 2020. Smart phones have far more computing power and facilities than a payment card chip, so little wonder a wide range of payment services is being developed for the mobile phone. Add to this the explosive growth of the tablet, since Apple launched the iPad, which have even more computing power and are just as mobile, you can see why banks, suppliers, handset manufacturers and telecommunication networks are focusing on mobile. Their aim is to make the mobile phone and the tablet the electronic centre of each mobile user's work and private lives by providing a range of electronic wallets, payment and other services.

Already many mobile web-users are mobile-only, i.e. they do not use a any type of computer to access the web, some estimates suggest as many as 30%. Companies are going to have to integrate mobile phones and tablets into their established general bill collection and POS collections systems and procedures, as they offer so many important opportunities to: 1) cut costs, and 2) to give access to and create new markets, which is where mobile phone and tablet based payment services will probably have their biggest impact.

Technology
Mobile operators and banks have long dreamt of providing payment and collection services on all mobile phones and tablets worldwide. Nevertheless, there are huge problems in making applications generally available across regions and globally including: a vast range of phone handsets with varying screen sizes, button layouts, settings, how to ensure secure end-to-end communications and standardize customer registration, and how to connect and integrate the many different phone operators, banks and other companies. Monitise, for example, have developed an integrated mobile ecosystem to provide a launch pad for multi-country payment services across many different countries and parties with their Mobile Money Manager Platform. In the relatively short-term, multi-country payment services will be available worldwide.

Mobiles as a point of sale
There are some 30 million merchants around the world with point of sale devices enabling them to accept payments by card but there are considerably more, who, for various reasons, including size, location, cost, lack of communication and technology, cannot. The one million+ smart mobile phones worldwide could potentially be point of sale (POS) devices accepting card payments. There are now several apps that convert the mobile phone into a POS device that will accept cash, credit card, check, and ACH payments. Square, the North American based mobile - phones and tablets only - provider, already process over $5bn worth of spending annually.

Types of Mobile Payment Systems
There are two types of mobile based payment service that companies will have to collect payments through:

  • mobile payment initiation services, which authorise payment through an existing payment system, e.g. payment cards, bank money transfer systems
  • mobile money payments, which make payment for content and services from the phone holder's monthly telecommunication company's phone bill or prepaid account, e.g. M-Pesa system in Kenya.

Most banks provide some form of mobile payment initiation service, mostly for consumers, although there is a growing range of business-to-business mobile payment initiation and other services, which employ advanced security systems and controls.

Mobile money payment services are being launched in many countries worldwide. They are particularly successful in developing countries where most of the population does not have bank accounts. In Kenya, where mobile subscribers outnumber bank account holders by at least three to one and more than 80% of the population is un-banked, new methods of payment are essential. Kenya's M-Pesa mobile banking service has over seven million users and is mainly used is for making Person-2-Person payments, such as sending money home to remote villages. Similar schemes are being launched in many other countries.

Collecting payments from and via mobile phones and tablets is becoming essential for consumer markets, and the technology has a real potential for cutting costs and opening up new markets. For B2B collections, mobile authorised collection payments are beginning to have an impact, and in some markets are already cost-effective.

All posts in this section