Mobile Payments: Customer interfaces like NFC, USSD, Mobile apps, and SMS for payments via mobile have been in existence for a long time. In spite of this reality, some banks and retailers are still not willing to participate fully. They have legacy reasons like fear of a low adoption rate, data sharing, etc. All these excuses (yes, excuses) are now the story of the past. Originally, this post was titled “Stunned Mythical Facts of Mobile Payments”, This was changed upon request.
Basics of Mobile Payments
In today’s time, the race for data collection is on a rising path that does not leave any business with too many options to stay out. Payment companies, especially new entrants, are creating data lakes and data science factories to find and mine new business cases.
The payment technologies covered herein are neither new nor revolutionary innovations. Almost all of them have been here on this planet for decades. Interestingly, not all of us are aware of them, or maybe the way I have experienced them is far different from everyone else’s.
MasterCard, Visa, EuroPay, ApplePay, and AndroidPay are the leaders of the growing trend of mobile payment. All of them have been pushing to create a standard for the modern method of commerce so that mobile payments can be easily adaptable and accessible on a global level.
There are many contributors who have reduced the time for payments for the services and goods by refining the process and technologies.
- Using NFC technology to enable “touch & go”.
- Artificial intelligence (Deep Learning methods) which has enabled “smile & go”.
The lack of participation may vanish banks quickly in case they don’t join this era of FinTech intelligence secured with blockchain and crafted on the foundation pillars as data science, artificial learning and machine learning.
The so-called innovators and many players are constantly anxious about protecting their hard-earned franchises, thereby confirming the emergence of the ‘new normal’. I believe embedding these core elements in the proposition, operating, and delivery models will enable players to ‘play to win’ in these turbulent times.
Some Widely Used Customer Interfaces
MasterCard is now claiming that convenience and security for their plastic card will be at their best. Under the banner of technology, which will transform payments and the financial system, we will create a dream world. It will be a world of complete cashless economies in which no one would think to withdraw money from an ATM or stand in line to buy a train ticket.
Near-field communication (NFC): In NFC, two devices exchange data at a few centimeters distance from each other. With this exchange of data, payment takes place, where one device pays the other device.
Unstructured Supplementary Service Data (USSD) is a GSM communication technology that is used to send text between a mobile phone and an application program in the network. This is the cheapest and most widely available method on almost all handsets today.
Mobile payments, or payments through a mobile device, are not new, but they are a financial technology that has not been talked about. Now that artificial intelligence, cognitive computing, and machine learning are getting popular, the payments
Mobile Application (Mobile App): A small application installed on Android, Windows, or iOS devices that uses GSM data in the background. This is communicated over the internet.
Some Thoughts on Disruption
If we had a Ministry of Innovation for regulation and control on a global level, they would have made today’s innovation work impossible or may have stopped it long ago. Apple was able to sell 10 Million handsets in the first 3 days of launch.
They launched Apple Pay, an innovative (As per them) solution. From a technology perspective, this was neither a new offering nor a game changer, but it is now followed by almost every big player in the industry. Without a doubt, that launch was to set a trend for NBFTC (non-banking financial and technology companies). That showcased how to enter payments. The disruption job was done well enough to eat the bank’s lunch.
Rapid advancements in mobile technology are changing the way we live, from the way we connect with others to the way we manage our finances. It’s time to rethink mobile payments by putting some of their common myths to rest. One can help grow their business while offering their customers an alternative way of paying their bills while still maintaining a high level of security.
The other key driver for this is the inaccessibility of banking services to the general populace, mainly due to poor infrastructure and a lack of trust in local banks among countrymen and companies. Payments have a share to move beyond transaction capture to enable a sale (trigger, originate) by aligning to the new ‘consumption context’ of payment services. Partnerships are an effective way to enable this. e.g., Apple Pay is a ‘device franchise’. Utilize collaborative models where available.
The Customer Experience
Yesterday I was standing at a KFC counter for my Sunday evening meal. After I made my mind up, I was given a 9-dollar bill to settle in advance before I collected my stuff (This must be a usual method, I guess, around the globe). I started searching for cash in my pocket and realized I didn’t have my wallet. I was about to excuse myself when all of a sudden a sweet voice brought me back to reality, asking how I wished to pay, and I was given the following options:
- Card Payment (Debit, or Credit)
- Cash Payment
- Mobile Payment (either using my Mobile Wallet via NFC, Mobile App or USSD)
- My Mobile Banking account.
Mobile Payments are an easy and simple concept, but sometimes they get oversimplified, along with the same reasons for payments under the mobile or simplified version as mobile payments, about which every single company on this earth is talking these days, and it is true that every single company is.
The assumption made here is that the reader is well versed in mobile payments through the mobile wallet, or mobile money, which is a solution that lets people conduct banking transactions with ease, directly from their mobile device, in a secure and convenient manner. With a full understanding of the business case and technologies, we can now get ideas on how to merge these to gain some cost reduction, speed, and effectiveness.
To make me crazy enough, I was told that whichever method I want, I can use it on the separate counter, even via a free phone call to my family or friend (their location can be around the globe) to ask them to pay for my meal. Finally, I paid via my mobile money account using my mobile app on my Apple phone. This whole episode told me very clearly that there is no dull day in the payments business these days, provided the buyer is willing to pay. The unglamorous world of clearing and settlement is a recipient of generous attention due to continuous launches of visible overlay propositions, often by non-banks. Important questions being:
- How to position a Mobile Payments Portfolio to my consumers?
- What my consumer wants?
- How my consumer wants it?
- How much and when my consumer needs?
Technological innovations have made certain aspects of our daily lives that much easier. The advent of mobile money has given those who were previously unable to conduct monetary transactions an easy and affordable alternative to traditional bank accounts. Mobile Payment services may or may not link to your mobile wallet or directly to your bank account.
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: What are the implications of Mobile-based Payments and Solutions? Is it going to change the world, be a significant “win”, be a nice hack? Proximity-based, Mobile App, SMS or USSD, Cloud or hosted mobile payments can support globally and will give financial institutions and partners greater choice in offering consumers secure ways to pay with smartphones.
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