Power of Mobile Financial Services – The introduction of mobile financial services has dramatically changed the daily routine of ordinary people in Africa and has also revamped business operations within the area. The everyday routine and methods used for various financial transactions A new prospect is presenting itself for vendors and service providers in terms of using a mobile phone as a convenient method of payment.
Mobile Financial Services – Outlook
The increase in the number of mobile phones holds great potential for boosting financial activities in underdeveloped countries. The proliferation of mobile phone usage in areas like Africa and specific parts of Asia has exceeded the number of people owning conventional bank accounts, presenting an unparalleled chance for financial growth.
With the flourishing popularity of mobile content services, including games, ringtones, and apps, it’s clear that consumers are steadily moving towards utilizing their mobile phones for making payments.
Remote Payments/Contact-full Payments: Remote payment covers payments that take place either via a mobile web browser or a resident smartphone application, in which the mobile phone is used as a device to authenticate personal information stored remotely.
SMS, STK, USSD, MPOS & POS, ATM, and URL Email are also under these umbrellas. Remote payment solutions can also be used for transactions such as face-to-face and vending machine transactions.
Mobile Payment Ecosystem
The mobile payment ecosystem involves the following types of stakeholders:
- Consumers
- Financial service providers
- Payment service providers
- In-service providers (merchants), including content providers
- Network service providers or Mobile Financial Service Provider
- Device manufacturers (Mobile, MPOS, POS & Other Infrastructure)
- Regulators (Telecom regulator and central banks)
- Standardization and industry bodies
- Trusted service managers
- Small medium enterprises
- Agent Networks
- Application developers
Advantages (Consumers) of Mobile Payments vs Plastic Cards.
Convenience: Mobile payment methods are more convenient than traditional payment methods in terms of portability.
It eliminates the inconvenience of carrying multiple plastic cards in a physical wallet by enabling consumers to link m-Wallet to those accounts. These accounts could include credit, debit, and prepaid cards from banks as well as merchant cards that entitle the user to rewards or discounts. Finally, mobile wallets can be used for small-dollar transactions; they will eliminate the inconvenience to consumers of carrying coins and currency.
Flexibility: M-Wallet can carry other payment methods and pay directly from a bank account through ACH. On the m-Wallet, consumers can choose a payment instrument that best fits their type of payment. Many consumers may want to fund their M-Wallet from a debit card account, directly from a bank account for every-day small-dollar purchases, or from a credit card account for occasional large-dollar purchases. To maximize their rewards, some consumers may also want the option of paying with a merchant card. M-Wallet can make it easier for consumers to choose among these options at the point of sale.
Security: The utilization of mobile payments holds the promise of considerably decreasing the chances of deceptive transactions at the point of sale or through mobile point of sale systems. One approach involves enabling real-time verification of the transaction during the purchase process. In the United States, card transactions have conventionally used unchanging information like the card number, expiry date, PIN, or signature for authentication.
The possibility of fraudulent transactions is minimized when using M-Wallet payments because of the security measures in place, such as password protection for the mobile phone and payment application. The utilization of password protection adds an additional level of security that is absent when individuals opt for plastic cards as a payment method. Facial recognition will become a viable option for authentication thanks to the advancements in mobile technology.
Self-Profiling: M-Wallet has several advantages over traditional payment methods in managing finances and controlling spending. Mobile Wallet enables consumers to check their account balances prior to making payments. Because many different payment instruments can be loaded on the m-wallet, consumers can choose the payment instrument with the most favorable financial impact, for example, the instrument with the lowest fee, highest reward, or, in the case of credit cards, the most favorable terms for repayment.
M-wallet helps consumers by enabling them to set thresholds for different categories of spending. A consumer would be alerted when a threshold was reached, regardless of which payment instrument was being used.
(Image source from google and modified with Mobile Financial Services Column)
Advantages for the merchants
Customer behavior or credit trending: A common struggle for small businesses is tracking inventory and customer behavior. But with mobile payment services, you can automate these processes and better serve your customers. ” Small businesses using mobile payments can now track what products and services they are selling to understand customer demands.
Not only can they now capture payment information, but they can also learn about their customers and use that information to improve service. For example, a business can use the purchasing data to learn that they sell a lot between the 25th and the 5th, i.e., the salary period, and make sure that they have enough stock in store. The business also knows the methods and types of instruments used for this shopping.
Fees: Mobile payments charge less per transaction than plastic cards, which equates to direct savings and easy reconciliations for merchants.
Paper Payments
The oldest and easiest way in good old times, even in current times, is still widely used. Security bond or guarantee, checks, bank drafts, and vouchers. The four main items on a check are
- Drawer, the person or entity who makes the cheque
- Payee, the recipient of the money
- Drawee, bank or other financial institution where the cheque can be presented for payment
- Amount, the currency amount
It is advisable to proactively welcome the forthcoming transformations before they completely consume one’s essence. In order to maintain their status as banking partners, financial institutions must implement improvements in their business practices. Failure to adhere to the specified rules will lead to the withdrawal of their banking rights in the near future.
Points to Note:
AI is increasingly being utilized as a means of categorizing banks as either good or the best. Banks aspiring to reach the top tier are rapidly embracing artificial intelligence, bots, and machine learning approaches. Banks must be able to effectively harness and comprehend their data before this can be achieved. Information aimed at assisting and comprehending clients and other related matters. The entire credit for any contribution is solely attributed to the original contributor.
Books + Other readings Referred
- Research through Open Internet – NewsPortals, Economic development report papers and conferences.
- AILabPage (group of self-taught engineers) members hands-on lab work.
Feedback & Further Question
Do you need any clarifications on FinTech, Digital Banking Technology, Machine Learning, Data Science, or Data Analytics? Feel free to drop a comment or send an email containing your question, and I will do my utmost best to provide an insightful response.
Conclusion – Contemporary technological advancements, specifically the utilization of artificial intelligence, have engendered diverse prospects for financial institutions to initiate modernization and overhaul their provisions. The incorporation of artificial intelligence technology within the banking industry has the potential to transform the traditional banking system into a more efficient, customer-oriented, and cost-effective model.
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