Mobile Payments: Ten Years On, What Has Changed?

Discussing recent developments in m-banking
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This note examines changes that have occurred in the mobile banking (m-banking) industry since its launch about a decade ago.

In the early days of mobile payments, potential providers were mainly concerned whether there would be coverage in areas where users were located and whether handsets could support applications. Most of these concerns have now disappeared due to:

  • Development of global system for mobile communication (GSM);
  • Availability of general packet radio services (GPRS);
  • Resilience of mobile communication networks;
  • Availability of enhanced handsets that can handle over-the-air application downloads;
  • Drop in handset costs;
  • Successful migration of users to 64K SIM cards.

In the future, the mobile payments industry will be governed by issues of customer ownership and platform. The note predicts that mobile operators will continue to have the greatest market share and brands, but will no longer be able to lock customers into products and services. Cost of enhanced phones will continue to fall, and their penetration will continue to rise. Finally, MFIs will be able to re-engineer business processes to reduce costs by using the mobile payment platforms.