It’s Saturday morning. The day is beautiful and you decide to go for a jog. You plug the headphones into your phone and hit the open road. Halfway into the run, you get thirsty and decide to stop at a nearby coffee shop to grab something to drink. You reach into your pocket to grab your wallet, but of course you left it at home…
If it was 1998 – or even a couple of years ago – you might’ve had a problem. Today, however, with mobile point-of-sale (POS), you can pay with your phone. A recent report by Berg Insight revealed that smartphone users in the US bought US$500-million worth of goods and services using mobile wallet apps in 2012. Of these, the majority of in-store mobile wallet transactions occurred in Starbucks using the company’s own smartphone card app. I guess people really love their coffee.
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In Africa, the mobile payments market is even bigger than the US. It is only second to Asia/Pacific in terms of mobile payment transactions. To give you an overall indication of the impact: Africans spent over US$57.8-billion in mobile payments in 2012 alone. It isn’t difficult to understand why it would be popular: it’s cashless, convenient and helps you beat the long queues.
South Africa hasn’t lagged behind, either, and currently there are four major players that dominate the local mobile payments landscape:
- PocketPOS: a device that is able to accept chip and pin debit and credit cards in a secure manner.
- SnapScan: an app that allows the user to scan a QR code in-store and make a payment.
- FlickPay: an app that generates a unique QR code on a phone for every transaction.
- Payment Pebble: a device that can turn a smartphone or tablet into a mobile card machine to receive
credit or debit card payments on the go.
As the technology progresses, so too will it evolve and merge with other services. The implementation of location-based services with mobile payments, for example, has added another important component: understanding your consumer beyond the till. Beacon technology, such as Apple’s iBeacon, lets retailers implement geo-fencing based on micro-location triggers of products in-store. This will allow shoppers with a mobile app to be digitally rewarded with specials, be navigated to products of interest, get more information by scanning product barcodes and ultimately be converted to a purchase via mobile payments.
Despite the excitement around mobile payments, it’s still early days. According to the MasterCard Mobile Payments Readiness Index (MPRI) conducted in 2012, no market has progressed to what is defined the ‘inflection point’ score of 60 out of 100 on the mobile readiness scale. While I’m sure there’s been growth since then, scepticism will remain until the levels of consumer adoption – be it mobile wallets or near field communication (NFC) – surpasses 50%. Other factors that will influence growth are technology infrastructures, mobile commerce clusters, regulations and policies, consumer financial services, and cooperation among industry players.
Progress in the mobile payments industry has been slow and fragmented, primarily due to challenges related to infrastructure and adoption. Even so, experts are optimistic about the future, with signs showing that a significant take-off is imminent.
The increased adoption of smartphones could result in US$1-trillion of mobile payments worldwide by 2015. It is expected that mobile payment subscribers will increase from 206 million worldwide users (measured at the end of 2010) to 1050 million users by the end of 2015.
We’re on the brink of a mobile revolution, and it appears as if Africa will be one of the primary drivers for adoption. As consumers search for more convenience, they will inevitably find it in their pockets.
