Payment Methods – We are living in an era of digital life. Almost everyone has a mobile device in their hand but “how do we” and “for what we” use it, may differ. Some devices are equipped with more innovative and life-changing features, which help us to make our daily life easy. AI bundled techniques have started coming into fintech already to excite it further, Every opportunity should be taken to increase its potential value to the nation.

The Emergence of – Payment Methods and Providers

In the previous article, I wrote about the emergence of the word Pay, this time I am going to deep dive into the topic of mobile payments as an alternative payment method. Instead of paying with cash, check, or credit cards, a consumer can use a mobile device to pay for a wide range of goods and services.

Plastic cards that are easy to hack, clone/copy or are prone to fraud and cash that can be lost or stolen are still rated as a safe medium of payment. On the other hand, the key to mobile money security is to make our payments faster, easy and much more secure than plastic/virtual cards. Mobile wallets blended with hardware-level security can be the best mix for security though.

Mobile wallets will be the biggest source of bill/merchant payments in the near future with an estimation of a 2 trillion dollar economy by the year 2020. It would be fun to watch when mobile payments will meet some intelligent decisions and predictions based on the transaction history it generates. AI’s subdomain machine learning will be able to create lots of exiting use cases when we will get the right kind of algorithms meeting with lots of data on extreme faster and deep data platforms.

The recharge service is the most common type of payment system where one exchanges monetary value in return (airtime value) for the ability to make voice/SMS/data calls. In one way or another, today’s mobile money transfer service originated from Airtime top-up services. In the past one can do a P2P transfer of airtime which cant be en-cashed but used for the purposes of the communication i.e. voice / SMS / data calls on mobile.

Micro-Payments & Mobile Payments

Most of us usually make 20-30 payments in a month. The value of each payment can be categorised as either micro or macro payment.  The micropayments space has been highly lucrative hence we have seen many players venturing into this segment with the latest entrant being mobile handset manufacturers who are now jostling with older players like PayPal.

Mobile money players (e.g. FeliCa of Japan) and plastic card companies (Visa and Mastercard) around the globe are also jumping into the micropayments space as well.

Money in Mobile

Mobile payments are being adopted all over the world in different ways. At the end of 2011, the combined global market for all types of mobile payments would reach more than $600B by 2015 which would be double the figure as per projection made in February 2011. The mobile payment market excluding contactless NFC transactions and money transfers is expected to exceed $300B globally by 2013.

Nigeria To Attain 80% Financial Inclusion By 2020 as per ventures Africa report. We can imagine how much that would drive on Mobile. In Kenya, it’s now possible to pay taxes via mobile money. According to a recent report in Mobile Money Africa, mobile operator Airtel has partnered with the Kenya Revenue Authority (KRA) to introduce the new service.

In developing countries, mobile payment solutions have been deployed as a means of extending financial services to the “unbanked” or “underbanked” segment of the population which according to the financial access 2009 report “Half the World is Unbanked” is estimated to be as much as 50% of the adult population. Due to the financial standing of the people involved, these payment solutions are often used for micropayments.

The use of mobile payments in developing countries has attracted public and private funding by organizations such as the Bill and Melinda Gates Foundation, USAID and MercyCorps. Consumers expect that new technology will continue to facilitate the convenience of carrying out daily and repetitive payment related tasks, for example, an area that is still generating a great deal of attention is the use of hard cash in conducting commercial and personal daily payments. It is now widely expected that some new pervasive technology-based solutions should be introduced to minimise this problem.

The Speed of Payments – All That Matter

Consumers demand that whatever the ultimate nature of new technologies, processes or products, they should not add any significant shortcomings to the existing solutions but are supposed to bring improvement. Furthermore, although there are already some service offerings capable of substituting cash, so far no technology or service has achieved the necessary acceptance to become a true alternative primarily because new burdens that consumers were not ready to accept were added.

Since mobile devices have achieved full market penetration and rich service levels, they are an ideal channel for payment instruments. The usage of the mobile device is hereby primarily considered for payment initiation whereas the underlying payments are based on existing payment instruments.

While the “Year of Mobile” remains elusive for advertisers, To do so will require financial institutions and Mobile Network Operators (MNOs) to work together with regulators on a country-by-country basis. Smartphones, tablets, and, in the near future, watches, eyewear, and other wearables, will emerge as new points of sale. Online retailers with a well planned, flawlessly executed, and tightly integrated mobile presence stand to gain the most. More impulse buys come from mobile, with clothes, books, and music noted as leading impulse buys.

Transformation Payment Methods

In 2014, mobile commerce was expected to rise to $57 billion (Google as a source). By 2017, mobile is poised to represent nearly a third of all digital sales at $115 billion (Google as a source). In 2013, physical and digital retailer, Target raked in 43% of its digital sales from mobile-only users (Read more)

it appears to have already arrived for e-commerce. Smartphone and tablet users are more likely to visit a retail website or app than desktop computer users, and more than a third of visits to the top 50 e-commerce sites come exclusively from mobile devices, according to a new study from analytics firm ComScore.

In June, 91% of tablet users and 90% of smartphone users accessed mobile e-commerce web properties. That’s compared with the 78% of desktop web users that accessed e-commerce sites. The importance of e-commerce on mobile devices is further reinforced the study’s finding that 35% of visitors to the most popular e-commerce sites only access those websites from mobile devices.

The most used technologies in mobile payments are plain SMS, encrypted SMS, USSD, GPRS under GSM, CDMA and 3G umbrella but currently, the majority of interbank mobile fund transfer transactions are channeled through the NEFT system. “Retailers who do not (at a minimum) optimize their mobile browsing experience or introduce mobile apps are effectively turning away a one-third of their potential customers,” comScore said in a blog post about the study.

Under NEFT, transactions are processed and settled in batches hence are not real-time. Also, the transactions can only be done during the working hours of the RTGS system except in a few markets like Kenya where funds transfer from mobile wallets to bank accounts are almost conducted in real-time, for example, if Mr. X (who also has a Mobile Wallet) needs to pay 500USD from his bank ABC account in real-time to Mrs. Y in her bank ZYX account; Mr. X will pull funds from his bank ABC account to his Mobile Wallet in real-time then he will push funds directly to Mrs. Y in her Bank ZYX bank account in a near real-time fashion.

POS Payments and Remote Payments

In the past few years, there has been a significant effort from FinTech and mobile payment companies to develop a new system that enables real-time processing. With the continuous advancement of the digital economy, customers have a growing expectation for businesses to embrace modern payment methods. Therefore, it is crucial for the nation to implement essential steps to deal with outdated modes of payment.


Partnerships within the industry will culminate in the development of a secure and user-friendly payment system that enables individuals to perform transactions in real time. The Interbank Mobile Payment Service (IMPS) was established by the National Payments Corporation of India (NPCI) on November 22nd, 2010, following a trial with select banks in response to identified limitations. The Instant Payment Service (IMPS) facilitates expeditious, ceaseless interbank electronic fund transfers through mobile devices.

The IMPS facilitates customers to use mobile instruments as a channel for accessing their bank accounts and push high interbank fund transfers in a secure manner with immediate confirmation features. This facility is provided by NPCI through its existing NFS switch. Mobile payments may broadly be classified as “contactless” (also known as “proximity”) or “remote” payments. For mobile “contactless payments,” the payer and payee (and equipment) are in the same location and communicate directly using contactless radio technologies such as near field communications (NFC), QR Codes, Bluetooth or infrared.

For mobile “remote payments” the transaction is conducted over a telecommunication network such as GSM or the internet and can be made independent of the payee’s location and/or his/her equipment thus creating ease, convenience, and trust for end-customers (payers/consumers and beneficiaries/merchants). This concept is hereby regarded as critical for further development of mobile payments.

Point of Sale terminals (POS), Mobile-POS, NFC-POS, VCN-POS, ATMs and subscriber handsets are different payment instruments which we will discuss in much greater detail in the next article.

Points to Note:

All credits if any remains on the original contributor only. We have covered all basics around FinTech Payments, its working models and the importance of quality financial services to the masses. 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 Telecom, FinTech or their new enablers i.e AI, Machine Learning, Data Science or Big Data Analytics? Leave a question in a comment section or ask via email. I will try best to answer it.


Conclusion – Today’s consumer expects a seamless mobile payment experience, failing to meet those expectations can be devastating to a brand, idea, innovation and eventually the payments industry. Experts agree that mobile-driven loyalty will be critical in garnering consumer adoption of mobile payments through apps, USSD, SMS, NFC, GPRS or QR codes.

Fortunately, the rest of the payment industry players who were not part of the initial painful experiments have the unique opportunity to learn from the growing pains and avoid making the same costly mistakes as one mistake could make them miss the opportunity to convert an occasional customer into a regular loyal customer. This post was originally published on 17-February-2011, then 26-October-2014 on a Linkedin (Click here to read on) and in Jan 2018 again in FinTech magazine in Africa.

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Posted by V Sharma

A Technology Specialist boasting 22+ years of exposure to Fintech, Insuretech, and Investtech with proficiency in Data Science, Advanced Analytics, AI (Machine Learning, Neural Networks, Deep Learning), and Blockchain (Trust Assessment, Tokenization, Digital Assets). Demonstrated effectiveness in Mobile Financial Services (Cross Border Remittances, Mobile Money, Mobile Banking, Payments), IT Service Management, Software Engineering, and Mobile Telecom (Mobile Data, Billing, Prepaid Charging Services). Proven success in launching start-ups and new business units - domestically and internationally - with hands-on exposure to engineering and business strategy. "A fervent Physics enthusiast with a self-proclaimed avocation for photography" in my spare time.

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