Mobile Financial Services – Emerging Markets
The consumer initiates the process by converting physical cash to electronic money that is stored on the consumer’s phone. The agent in turn lodges the money at a partner bank (less his commission), which will either be a trust account for the mobile money operation or an individual account per customer depending on the model permitted by the central bank.
Now the consumers can begin to transfer money to other recipients (Person to Person – P2P). As new users are recruited to the service the number of transfers will begin to rise exponentially. Building this critical mass at the base of the pyramid attracts businesses to the service, both in the form of accepting payments (e.g. bill or merchant payments – P2B) or initiating payments (e.g. salary disbursements). At the same time this critical mass brings governments and bilateral agencies to the table to distribute social welfare and relief payments (G2P).
With the network effect now firmly in place banks and other financial service providers are attracted to the service as a vehicle to offer their products to consumers, giving them access to huge numbers of previously unbanked people. The lower cost of delivery ensures that the products are far more competitive than those currently being offered making them attractive to the customer and deepening financial inclusion.
Corporate Mobile Payments
Within a developed mobile payments ecosystem Corporate Mobile Payments are a part of b2b payments. As the payment flow for mobile receivables above demonstrates, corporate mobile payments touch every part of the ecosystem. The consumer, transacts and pays a merchant via mobile (p2m) who in turn pays his own supplier via mobile (b2b) who in turn may pay his supplier or corporation by mobile (also b2b).
Today many markets are beginning to reach beyond p2p as their payments ecosystems evolve. As we shall see corporate mobile payments have the potential to speed up this evolution, change conventional thinking on ecosystem development and revolutionise the mobile payments sector.
To participate in this next wave of mobile money banks and technical vendors need to begin to strategically position themselves now.