Payments Rush Hour: Mobile Payments rush hours, i.e., every day a new entrant in the mobile payments business jumps in with or without any experience or expertise. Mobile payment businesses like ApplePay, SamsungPay, Microsoft, Google, Facebook, and many more are a few examples of this. All of them jumped into the business with no prior knowledge or experience. All these players came out of the industry and made everyone in it run.

The New Entrants – Without Any Prior Experience

Where are we and where do we want to be for payments? The advantages of using mobile payment also put emphasis on the security risks it brings. The most important key point of today’s mobile payments revolution is the security of data. The virtual currencies on the backbone of blockchain without any reasonable financial modeling or due diligence are putting the entire private equity of funders at risk.

The aim to combine the advantages of direct cash transactions with the power of digital technology is still very gray. “Speed to market is the king,” for whom? Consumers or service providers? Are we heading towards a cashless payment society or simply a less cash society after all these massive arrangements?

Apple Pay’s launch provided some additional context about the state of mobile payments in general, which includes much more than just Apple Pay. Now, after six months, if we see where it is, the answer is still in a very small balloon. The hectic pace of change in payment systems All of this is because the physical and digital worlds are converging. Online, mobile, virtual wallets, and smartwatches, among others, mean that all businesses need to remain alert to the latest trends and developments.

They and their customers will almost certainly start paying for goods and services in new ways in the future. A month after Apple Pay launched, MasterCard was quick to remind analysts in the company’s third-quarter earnings call that Apple Pay wasn’t the only player innovating in the mobile payments space. All these new ways will continue to change and proliferate as time goes on. Some providers of payment solutions for the financial industry, retailers, hospitality, and e-commerce

A well-functioning infrastructure for domestic payments plays a crucial role in minimizing the expenses associated with remittance services, particularly in nations that receive them. Access to financial services for individuals includes remittances. An effective remittance offering can enhance the immediate benefits and lead to better access to financial services in the future. It can also stir up rivalry among providers and shift transactions towards official channels. As a result, it is essential to preserve the confidentiality of the data being gathered to comply with regulatory standards and maintain security protocols.

Apple Pay – The New Mobile Payment Service

Apple is a well-known and trusted brand, and so the whole world was talking about Apple Pay for a while, but now the dust has settled, or we can say the noise has calmed down, so now we are getting voices for Samsung’s, Google’s, Facebook’s, and Microsoft’s Pay services. These are from big players, but there are thousands of regionally trusted small brands and MFS providers who are also coming into play to claim their share of the hot cake pie, and all the banks are launching their own version.

Apple Pay adoption is progressing, but it still has a long way to go, as recently released data from the InfoScout and PYMNTS surveys of iPhone 6 users indicated. 85% of iPhone 6 users haven’t even tried to use Apple Pay.

Only 9% had even tried it, and just 6% revealed they were users of the service. The biggest reason is that those who tried Apple Pay in the past but didn’t convert to users likely just forgot to use it again. In fact, 32% of respondents said they simply forgot to use Apple Pay again. In today’s time, subscribers and customers want value, convenience, and ease in their lives, and if you have those ingredients, people will taste it, and if they like it, they will continue and will be ready to pay a small extra fee.

Now the question is, if not cash, then which route, as mentioned in the last article Payments: “Cash, Internet, Cards, Mobile, and Paper”. Mobile payments cover many types of transactions, which fall into two categories: transactions with a remote merchant or proximity payments at the merchant site. There is no standard definition of the terms mobile money transfer, mobile payment,” or “mobile banking. There are some proposed definitions from industry associations (e.g., GSMA and Mobey Forum) and the European Union, but there is no agreement on a common definition.

The pace of technological advancement is swift, and service providers have a tendency to swiftly introduce novel solutions to customers. Conversely, customers tend to embrace and integrate technology more gradually and at a slower rate than service providers desire. Generating a change in one’s mindset requires substantial effort and resources. Due to the fact that trust takes time to establish, it is possible that consumers are not prepared to exclusively adopt a single payment method option right away. It took Apple many years to establish the level of confidence they currently enjoy in this particular scenario.

Mobile Payments – Accepting Mobile as a Payment Instrument

Switching exclusively to mobile payments would require significant time, effort, resources, and sweat from service providers. It is assumed that security concerns would not be an issue, but this is highly unlikely given that even a newborn baby can dance and run on their first day.

Although Apple Pay has achieved impressive mobile payment growth and captured market attention, it still constitutes only a fraction of overall transaction volumes. Furthermore, competitors like Facebook and Microsoft have now entered the arena, presenting a formidable challenge. MasterCard has expressed its intention to offer additional support in the realm of mobile payments with its digital wallet solution, known as MasterPass. This service will serve as another companion to aid in facilitating mobile transactions.

The FinTech company based in London, Currency Cloud, reports that the mobile banking market is growing at a much faster pace in Africa and China than in any other region. Despite their economic and cultural differences, these two regions offer an ideal opportunity to trial mobile payments as a means of filling the financial services gap for the significant number of individuals who do not have access to traditional banking options.

There are numerous publications, news titles, and online content circulating about the growing mobile payments market. By 2019, it is speculated to reach a potential market value of 64–84 billion USD, as companies like Apple, Microsoft, and Facebook are making their way into the payment industry. And not only are there numerous big players, but there are also millions of small businesses seeking to gain a piece of the pie. Perhaps this could be referred to as the World Payments Battle, in which all parties strive to gain the largest share of the market and emerge as the top contender. The outcome remains uncertain, causing both excitement and anxiety in regards to the future of mobile payments.

The data, which was released six months after the initial release, presents some promising findings for Apple. MPD CEO Karen Webster notes that usage is on the rise and consumers are so enamored with the product that they consider whether merchants accept it when making purchasing decisions. This observation was made in reference to the InfoScout report. However, Apple seems to be facing difficulties expanding its customer base beyond a limited number of tech-savvy individuals.

Some useful Data from Research

The research firm reckons the Middle East and Africa region is the biggest market for mobile money services. In Africa, in particular, there are large numbers of people who have no access to traditional banking services, and the mobile payments market is growing fast along with mobile phone adoption. But the report said it expects increased traction for mobile money services in the APAC and North American regions within the next five years.

Now, after all these studies, my questions to me, for which I am still looking for responses,

  • All MPSPs are just focusing on disrupting the market. or any action to create such a market
  • What all initiatives are going on by mobile payment service providers (MPSP) to create such needs that consumers feel for mobile payment systems and services?
  • Whom we are acquiring consumers or merchants
  • Do we have that much mobile phone handset penetration (as other devices may not be used for payments in-store or on the road) to handle such a huge volume of 80 billion USD (I am assuming averages of all those figures that are flying all over the internet)?
  • And there are many, many more questions that are jumping around, looking for some responses to share later on.
  • As said by my friend, “I think your questions have merit.” Someone called the mobile payment industry “a solution looking for a problem.” ‘. So if that is true, I hope we find our problem soon with the solution we have created beforehand.
  • Are they creating a need now after having a solution at hand?

Financial inclusion and the concept of the unbanked have become buzzwords when it comes to mobile payment innovations. Who are the unbanked, who are the mobile money companies reaching, and where are there still gaps? And why? To some Apple critics’ points, getting consumers to change means giving them a reason to stop what they are doing today and to start something new. More than one-third of the people surveyed said that they didn’t try Apple Pay because they didn’t have a reason to change from their current payment method, and one-fifth said that they preferred an alternative method of payment.

Points to Note:

All credits, if any, remain with the original contributor only. We have covered all the basics around the myth of mobile payments, its models, and the importance of quality services. In the next upcoming post, we will talk about implementation, usage, and practice experience for markets.

Books + Other readings Referred

  • Research through the open internet, news portals, white papers, notes made at knowledge sharing sessions, and live conferences and 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 and charging, data science, or big data analytics? Leave a question in the comment section or ask via email. I will try my best to answer it.

Machine Learning (ML) - Everything You Need To KnowConclusion–I guess my analysis is reasonable, but a conclusion at this time might be a bit premature. The clearinghouses get real-time payment data to apply their expertise and also have a vision beyond their current rails and the pockets to support it. Further, more data sources are added all the time.Start and grow businesses and prevent fraud by putting security before innovation. Transactions and data generated out of them will then be safe, quick, and easy.

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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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