By Patti Murphy
Mobile technologies are coming into their own. And I may be stepping out on a limb, but it appears they are leveling the banking and payments playing field, at least from an end-user perspective. Consider these recent data points, developments and corporate strategies:
We may not be witnessing wholesale abandonment of cash for mobile e-payments, at least not in the United States. But mobile technologies are being deployed in ways that make traditional payment preferences (like cards and checks) better, faster and safer. Mobile capture, for example, is now being leverage by charities like the American Cancer Society for faster, more efficient and effective fundraising.
The 13th largest charity in the United States, the Cancer Society deployed a mobile app that fundraisers now use to set goals, leverage social media, and accept card and check payments. It leverages Mitek's MiSnap technology, which utilizes the video streaming capability in smartphones to capture optimal images of checks and credit cards tendered for payment.
"We clearly have seen a shift in consumers' behaviors with regards to how they interact with our brand, primarily through more and more digital channels," said Ben Kaplan, Senior Director for Mobile Strategy/Product at the American Cancer Society. The new mobile app, which works with Android and Apple devices, "takes advantage of those shifts while still respecting the donor's choice with regards to how and which payment method they want to donate through," Kaplan added.
Michael Diamond, General Manager for Payments Solutions at Mitek, characterizes this as just the latest advance in payment acceptance prompted by mobile capture technologies. "Perhaps [one of] the biggest changes coming in the area of mobile capture is the ability to deposit multiple checks within a single video session," he said.
There's more. Mobile opens wide the doors to financial services. "The costs of money rises dramatically if you can't afford to keep it in a bank," PayPal CEO Dan Schulman wrote in a 2015 op-ed piece published by CNBC. "Not only is this manifestly unfair, but it is economically counterproductive….A growing body of research indicates that financial inclusion has a positive impact on economic growth and helps reduce income inequality."
Schulman again addressed this in January 2017 during the World Economic Forum in Switzerland. With mobile phone penetration far exceeding that of bank accounts, in the United States and elsewhere, he said mobile is not only a good way to bring marginalized populations into the financial mainstream, it's also cost effective. "The digital world can be 80 percent to 90 percent less expensive to service a customer than traditional bank branches," he told world leaders at the Forum.
Montgomery offered a similar assessment. With decades of experience working with ISOs and payment companies in the United States, Montgomery is focused on bringing into the financial mainstream an estimated 1.3 billion unbanked consumers in India. As of late 2016, MoneyOnMobile had serviced over 170 million unique customers making payments at over 306,000 retail locations across India. "Mobile money provides a democratic gateway to banking which doesn't care where you live or the amount of money you have," Montgomery said.
Apparently, the Indian government agrees. The government there has been on a campaign to wipe out large-denomination currencies, forcing consumers to seek alternatives, such as mobile payments. It is even running a lottery, offering monetary prizes to new mobile payment users.
In India today, about a dozen mobile money schemes co-exist, including one recently launched by the government in support of its "demonetization" program. Operators of those programs all reported huge growth spurts. The mobile payment company Paytm, for example, reported signing up hundreds of thousands of new customers daily. "I think demonetization has brought … the necessary push towards digital currencies," Paytm founder and CEO Vijay Shekhar Sharma told CNN in a recent interview.
Are we likely to see the United States make similar changes in payment acceptance? Probably not. But the push toward faster payments, ongoing proliferation of mobile apps and networks, pressure for greater economic inclusion, and the maturation of the millennial generation will continue to prompt more and better mobile solutions that open the gates to wider financial inclusion. I see this as democratization of banking and payments.
Patti Murphy is Senior Editor of The Green Sheet and President of ProScribes Inc. She is also the founder of InsideMicrofinance.com. Email her at firstname.lastname@example.org.
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