Thursday, February 25, 2010
If there is anyone reading this who questions the market for mobile payments (especially micro-payments, those for amounts of $10 or less) in the United States, I invite them to revisit the successes fundraising organizations had collecting donations in the aftermath of the earthquake in Haiti last month.
I did it. I made my first mobile payment. Actually, I did it twice. At least 10 other folks I know did it too. And the real shocker is that none of these payments involved banks.
Fixated on the television images of devastation and human suffering in Haiti, I grabbed my cell phone and, following the instructions that ran along the bottom of the screen, I sent text messages to the American Red Cross and another relief group, donating $10 and $5 respectively, to be transferred by my mobile carrier and posted as charges to my monthly invoice.
As of Feb. 11, more than 3.1 million Americans had done the same thing, donating in excess of $32 million to Haitian relief efforts through the American Red Cross alone. According to the Pew Research Center, 14 percent of donations to Haitian relief efforts in the weeks following the earthquake were initiated using text messaging.
"This is a great example of rapidly employing modern technology to support a vitally important foreign policy and humanitarian priority," commented P.J. Crowley, a spokesperson for the U.S. Department of State.
I'll say. Who would have expected, just a few short months ago, that we'd be using our cell phones for "impulse" buying or giving?
Outside the United States, mobile payments are making serious headway, as illustrated by announcements from the Mobile World Congress, held Feb. 15 to 18 in Barcelona, Spain.
A leading Pakistani bank, MCB Bank Ltd., used the congress as a forum to announce it had reached a milestone in its mobile money program: $10 million US in mobile payments since July 2009.
Altogether, 70,000 customers are using the bank's mobile money service; now MCB hopes to grow the user base by marketing the service "to some 50 million, mobile savvy, unbanked consumers, offering them secure and convenient access to financial services," Qasif Shahid, Executive Vice President at MCB, said in a statement.
What makes the MCB offering unique is that it operates on a "shared platform" that is available to both banks and mobile operators. "This is a truly unique approach that stands apart from the piecemeal, proprietary implementations in other countries," Shahid boasted.
In the United States, banks pretty much have a lock on payment systems, while telecommunications carriers control the mobile networks. And neither industry seems eager to relinquish any control of their customer relationships or potential new revenue flows to the other.
On the basis of size and numbers, the telecoms appear to have the upper hand here: the three largest networks, combined, pretty much have the entire nation covered. Even the largest banks and ATM networks can't match that. Take any Web-enabled mobile device to a remote locale (say rural Southwestern or Plains states), and I'm certain you'll discover you can check your bank balance with the help of your mobile carrier faster than you will find an ATM.
According to Consultative Group to Assist the Poor, 1 billion people today do not have bank accounts but do have mobile phones. "By 2012, that number will grow to 1.7 billion, making mobile phones a direct conduit to nearly half the world's unbanked," the group reported in a brief published in December 2009. CGAP estimates as many as 364 million low-income, unbanked people, worldwide, will be using mobile money applications in 2012.
Today, one in four Americans is either unbanked or underserved by financial institutions, according to the Federal Deposit Insurance Corp. The CTIA, a trade association representing mobile and wireless companies, estimated that 89 percent of Americans had mobile phones in June 2009.
Meanwhile, a recent survey sponsored by Firethorn, the mobile banking unit of Qualcomm Inc., reveals that a majority of Americans (59 percent) are interested in using their mobile devices as though they were credit and debit cards.
Banks, especially U.S. banks, have always found it tough to make a business case for micro-payments. Not so the telecomm companies, if the experiences with Haitian relief efforts are a true indication.
Editor's Note: Editor's note: This article was originally published by Inside Microfinance (www.insidemicrofinance.com ) Feb. 22, 2010; reprinted with permission. © 2010 by Patti Murphy. All rights reserved. Murphy is Senior Editor of The Green Sheet and President of The Takoma Group. E-mail her at firstname.lastname@example.org.
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