[Dave Birch] In a very good piece about the location of risks in retail payment systems, discussing Obopay’s decision to end instant bank transfers, Jim Salters from our good friends at Glenbrook reinforces a key point:

it is important to understand that mobile banking and mobile payments are wholly different animals.

[From Glenbrook Partners: Mobile P2P Payments Continue to Evolve in the US]

He’s absolutely right, of course, and it appears that as time goes by the two animals are evolving into different species. A great many of the people who want mobile banking are in the developed world, have PayPal accounts and don’t need another P2P service (mobile or otherwise). What’s more, in the US the services that they are using are not even really “mobile” services at all (in that they don’t use any of the services or functions of the mobile network, SIM or handset), just web services jammed on to a smaller screen. Conversely, a great many of the billions of people around the world who want and need mobile payments do not need a bank account or anything like it. What they want is a simple, cheap, transaction system.

Banks have all sorts of things that most consumers, in most of the world, most of the time, do not need. Expensive headquarters buildings, an investment banking division full of rogue traders, a well-padded board, a CEO that earns 200 times the salary of the average employee, private jets and a dodgy loan portfolio. No wonder it’s difficult for them to provide a basic, inexpensive, payment service.

These opinions are my own (I think) and presented solely in my capacity as an interested member of the general public [posted with ecto]


  1. I am not so sure that you or Jim Salters has this one right. Mobile Banking and Mobile Payments are closely related; they are not “different animals” as you suggest. Mobile Banking is in its infancy in the US Market. While the predominant channel is by WAP, SMS and down-loadable applications are gaining momentum and I would predict will overtake WAP. And yes the initial phases of WAP do seem to be OLB on a smaller screen. I would suggest, however, that this approach was used for expediency and as a means of gaining knowledge and experience in this space. The next round of Mobile Banking releases will focus more on providing the platform for future inovations that lead to integrated Mobile Payments, Mobile Marketing and other truly mobile services.
    What is different, as you point out, are the markets that the purveyors of Mobile Banking target in the US, vice the rest of the world. The US is primarily focused on the wealthy while the developing world is seeking to provide services to the BoP population. These are two completely different animals that require compeltely different go-to-market strategies.
    It is curious that Obopay was the genesis of this discussion. It was founded upon observation of mobile P2P payments in Africa. This model is now being applied to the payments markets in the US. The dominant logic of the former, I would suggest, will not play well over the long term.

  2. Mobile Banking and Mobile Payments is quite different I think, the one that makes it different is the widget we use while we use the service has different function itself =).

  3. “Mobile Banking and Mobile Payments are closely related; they are not “different animals” as you suggest.”
    Obviously we disagree about this, but I’m pretty sure that as time moves on, more and more non-bank players will enter the mobile payments space.

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