- robotravel (telepresence with machines),
- augmented cities (location plus augmented reality),
- evolved intention (R&D using genetic algorithms),
- 3D printing, brain-machine mergers (I can’t wait for my exo-cortex),
- text mining (using twitter instead of market research)
- and digital wallets.
My old colleague (he’s not old – I meant it as in several years ago) from the Guardian Technology section, Bobbie Johnson, says the mobile phone-based NFC-enhanced electronic wallets will be disruptive, and I’m sure he’s right, but I think he missed the key reason why: the mobile wallet is a means of getting paid as well as a means of paying. This makes the mobile phone a means to replace person-to-person payment instruments (cash and cheques, primarily) and usher in a new era, which is is one of the reasons why I think the apparently hypetastic estimates for the mobile payments market may well be too conservative. I just looked in my notebook to see some of the estimates I’ve heard at recent events and jotted down:
- Yankee Group put global transactions at $241 billion this year.
- Cap Gemini’s “Global e-Payments Report” for 2011 says that there will be $140 billion in mobile payments—which I assume must not include all mobile transactions—around the world next year.
- Aite Group estimates $214 billion in 2015.
- AD Little put BRIC-only m-payments at $52 billion in 2015.
- Juniper Research put mobile payments at $670 billion in 2015.
- IDC reckon that Western Europe will be about a fifth of this market, with $125 billion in mobile payments in 2015.
Why do I think these may still be under-estimates? I started writing this on a Sunday morning after I just finished my usual household chore of going through bills, checking the credit card statements and making the week’s payments. This chore included the complete hassle of having to write out three cheques, write out the envelopes to go with them and then go and find some stamps for them. I would much rather have used my iPhone to select (in this case) my wife’s knee consultant, my dentist and my son’s school and paid them there and then. The knee consultant doesn’t need a POS, he can take payments online. My dentist has a POS, but it only works if I’m there with my MasterCard in person, they don’t take web payments. My son’s school hasn’t got a POS – everything has to be cash or cheques, much as it was when the school was founded in Victorian times. With the mobile as payment acceptance device, a great many more cash and cheque transactions will migrate to the new channel. Or at least that’s what will be in happening in other counties.
In our new Britain of the 21st century, a dynamic society forged in the white heat of invention and hammered on the anvil of creativity, where the Payments Council has decided to abandon the end of cheque clearing in 2018, thus accurately reflecting the technological trajectory of a nation that once commanded the scientific heights and reaped the immeasurable benefits of industrial revolution…
Three in five Yorkshire customers said they wanted to manage their savings in branch, while over half wanted to use an old-fashioned passbook to keep track of their savings.[From Savers roll back the years and demand passbooks – Telegraph]
Do these people have any idea how much it’s costing them to maintain these pre-industrial traditions?
As a result, the society has launched a new Triple Access saver, with a passbook, paying 2.25pc. The account allows up to three withdrawals a year and can be opened with a minimum of £100.[From Savers roll back the years and demand passbooks – Telegraph]
As of today, the ING Direct Savings account is paying 3% with unlimited withdrawals. So a Harrogate matron with £85,000 to put on deposit (the maximum that anyone should deposit in any single UK financial institution) is paying 0.75% (or more than £600 per annum) for the privilege of messing about with the kind of passbook that the Yorkshire had when it began in 1864. The higher costs imposed on the Yorkshire, unless they are fully accounted for by the .75% differential, also reduce the rate paid to all other savers as well.
Meanwhile, in an advanced nation, savers use their mobile phones to both deposit and withdraw electronic money. If you took the Yorkshire £100 minimum balance that you need to open a passbook account and put in into an M-KESHO account in Kenya, you’d get 3% on your money (and there’s no minimum balance).
Kenyan customers of Vodafone are now able to use their mobiles to link to an interest-bearing savings account, as well as buy insurance, with Vodafone’s new money transfer technology, M-PESA.[From Developing Telecoms | M-PESA grants Kenya mobile access to savings accounts and insurance | Mobile Money]
The phenomenal growth of M-PESA continues to astound. The service now accounts for 12% of Safaricom’s total revenues and is handling HALF A BILLION DOLLARS PER MONTH in transfer.
Ovum believes that this is primarily due to a lack of interoperability in other operators’ offerings, with Safaricom’s 75–80% market share in Kenya rendering interoperability irrelevant for M-Pesa.[From Ovum StraightTalk | Other operators find M-Pesa’s success hard to replicate]
I’m sure this is a factor, but when M-PESA launched, Safaricom had a much smaller market share. When Susie Lonie from Vodafone introduced M-PESA to digital money denizens back at the 2006 Digital Money Forum, she said that the need for fast, safe money transfers was obvious and predicted growth but I’m sure even she would admit to being surprised by just how astonishing the growth has been. (Having a listen to me talking to her back in 2007.) The latest figures show that about 29% of Kenyan GDP is going through M-PESA and the fraction is still rising!
We are now getting on six years since Consult Hyperion started work on the M-PESA project, and I still can’t use my mobile phone to pay my son’s school, my dentist or anyone else here (although with a lot of mucking about, I can transfer money between my own accounts.) And now we’ve set our national payment goal of keeping cheques for the foreseeable future, I can’t see this changing.
These are personal opinions and should not be misunderstood as representing the opinions of
Consult Hyperion or any of its clients or suppliers