Payment Service Providers -Traditional payment service providers, such as banks and established giants like Mastercard and VISA, must recognize the need for innovation and adapt to the changing landscape. Otherwise, they risk losing their market share to Mobile Network Operators (MNOs) who are poised to disrupt the industry. Additionally, the emergence of social media in the payment sphere adds another intriguing dimension to this shift.
Payment Services Providers – Outlook
One intriguing aspect of the mobile financial industry is the frequency of transactions. While individuals typically receive funds once or twice a month, such as salaries or fees, they engage in spending activities at least three times a day, and sometimes even more frequently—up to five times.
The act of frequent, low-value spending is commonly referred to as “micropayment” or “microspending.” In terms of monetary value, this activity can potentially reach billions of dollars. To illustrate, let us consider an example: if we were to impose a nominal transaction commission of 1 cent for each micropayment made through Near Field Communication (NFC), utilizing stored value card technology, for various purchases such as food, beverages, snacks, fuel, tolls, souvenirs, and similar items, assuming a conservative daily expenditure of $5 per individual (estimated at 40% of the global population).
The cumulative commission earnings would amount to approximately $4.3 billion per month. This particular market segment remains relatively untapped, presenting an opportunity to address potential leaks within the mobile money market.
The main drivers behind the success of mobile money are the explosive growth in the number of mobile devices and the fall in the cost of computing power, which has lowered the barriers to new entrants in this field. Mobile money (m-money) is quite versatile and can support a variety of services, in particular, person to person (P2P) money transfers, which are of significant value for emerging economies. When big mobile handset with keen interest in mobile payments decided to jump on board, the game changed because all of a sudden they get a guaranteed massive user base for this type of technology and service.
The Changing Landscape – Payments
In contrast to numerous Mobile Network Operators (MNOs) that primarily concentrate on expanding their mobile networks to reach previously isolated regions, the widespread accessibility of mobile phones has facilitated the emergence of mobile payments as a viable alternative to conventional payment methods, including paper-based transactions, plastic cards, online transfers, and even bank account payments.
The integration of mobile payments with service provisioning empowers the delivery of differentiated and cost-effective services in real-time. This dynamic integration capability responds to the presence, activity, and transactions of users, thereby fulfilling their immediate needs. By enabling real-time, interoperable messaging, mobile payments establish a bridge towards future advancements while concurrently facilitating an “insulated incremental transformation” within the backend infrastructure.
In today’s business landscape, the concept of ownership has undergone a fundamental shift within the framework of the “sharing economy.” The mere possession of assets no longer provides a significant differentiating advantage. As a result, organizations are compelled to rethink their traditional approach of choosing between building capabilities in-house or acquiring them externally.
The conventional “Build vs Buy” dichotomy must now evolve into a more strategic agenda that revolves around the concept of “Do vs Source.” This strategic shift emphasizes the importance of identifying core competencies and focusing on activities that truly differentiate the business, while effectively sourcing non-core activities from external partners or service providers.
Within this context, the sourcing of fulfillment activities based on a variable pricing model becomes not just an option, but a compelling necessity. Adopting this approach allows businesses to tap into specialized expertise, gain access to scalable resources, and optimize cost structures. Leveraging a variable pricing model enables organizations to align their expenditure with actual demand and achieve greater flexibility in adapting to changing market dynamics.
By embracing this strategic agenda of “Do vs Source” and adopting a variable pricing model for fulfillment activities, businesses can enhance operational efficiency, drive innovation, and redirect resources towards their core competencies. This approach empowers companies to stay competitive, agile, and responsive in an ever-evolving business environment, ultimately leading to sustainable growth and success.
Key Advantages – To All
A myth is frequently explicated as a conventional or legendary chronicle, typically centering upon an illustrious persona (e.g., a deity, hero, or pivotal event) and exhibiting a propensity to lack ascertainable substantiation or a scientific elucidation. In a parallel vein, Mobile Payments can be analogously compared to a mythological construct. It constitutes a conceptual assemblage encompassing mobile handsets, financial doctrines, legal frameworks, cutting-edge technology, and the intricate orchestration of payment transactions.
Within this realm, Mobile Payments encapsulate an array of customary practices, ceremonial observances, or even enigmatic natural phenomena, which may not invariably rest upon a tangible underpinning or manifest an unequivocal rationale, yet proffer a conspicuous cultural or pragmatic import.
- Expand financial sector reach by leveraging on a Mobile medium.
- Ease of use for financial services via various interfaces like IVR, USSD, SMS and Smart Apps.
- Expand the set of services to a larger sector of society.
- Solution Providers (Service Provider)
- Acquire a large number of customers for their solution or services.
The time has now come for banks and other entities with an interest in financial service provision to step up as one team, exploit technology, and leverage existing MNO infrastructure to acquire customers, enrich use cases, lower costs, and increase revenue, especially in markets where regulators (such as reserve banks) play a dominant role. Support for ‘Regulatory Compliance’ is taken as a given.
In case you need detailed information or further deliberation on any part, please feel free to get in touch with me directly.
Points to Note:
All credits if any remains on the original contributor only. We have covered all basics around myth on mobile payments, its models and the importance of quality services. In the next upcoming post will talk about implementation, usage and practice experience for markets.
Books + Other readings Referred
- Research through open internet, news portals, white papers and imparted knowledge via live conferences & lectures.
- Lab and hands-on experience of @AILabPage (Self-taught learners group) members.
Feedback & Further Question
Do you have any questions about AI, Machine Learning, Telecom billing/charging, Data Science or Big Data Analytics? Leave a question in a comment section or ask via email. Will try best to answer it.
Conclusion: Hold onto your smartphones, Mobile-based Payments and Solutions are crashing into town, and the implications are wild! Will it revolutionize the world, score a touchdown, or just be a cheeky little hack? Proximity-based magic, Mobile Apps, SMS or USSD sorcery, and the Cloud’s secret powers join forces to give financial institutions and partners the ultimate power of choice. Get ready to pay with your trusty device and bid farewell to boring transactions. It’s a global dance of secure payments, where smartphones become the superheroes we never knew we needed. Brace yourselves for a hilarious payment revolution!
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