Mobile Payment in Emerging Countries


Using your mobile phone for payments is a convenient and attractive idea, whether you are using it like a credit card, purchasing items over the Internet, or paying for mobile goods like ringtones and applications.

The term “mobile payment” is actually very broad, and refers to a different payment method that involves using your mobile phone. In emerging countries, services such as transferring money using a phone that operates on a standard mobile network are taking off. In more developed areas like South Korea, NFC (Near Field Communication) mobile payments are gaining popularity.

In any case, mobile payment is happening worldwide. UK-based analyst firm Juniper Research said the availability of secure, easy-to-use payment applications and the growing number of users who are aware that they can make e-commerce purchases using their cell phones will drive the value of payments for physical and digital goods from under $100 billion this year to $200 billion in two years (by 2012), and up to $300 billion by 2013.



Mobile Payment Gaining Popularity in Emerging Countries

In emerging countries, mobile payment has seen widespread deployment. Often, people in these regions, especially in rural areas are much closer to a mobile phone than a bank branch. For this reason, these areas are sometimes called “unbanked” or “underbanked” markets.

Some banks and operators offer a service known as ATM SIM, an innovation that allows mobile phones to act like virtual cash machines. Users can also securely add credit card accounts to their SIM, check balances and payment deadlines, send money to their families, transfer money, make payments, and more – all without having to enter a bank branch. These transactions are safe, as all account details are kept on the SIM (which is the same technology as a chip banking card) and all information sent to and from the bank is encrypted. The money is therefore transferred safely on the network and also removes the need for users or retailers to carry around large sums of cash which is often a security risk in developing countries.

Users in underbanked areas are also making the most of the mobile connection to make remote payments. This includes bill payments, prepaid mobile and utility account top-up, microfinance lending as well as loyalty schemes and customer care services. These types of payments are based on a standard SIM card and use secure SMS, meaning they will work with any mobile phone on any network.

Where are these services available?

One example is MTN Middle-East and North Africa (MTN MENA), which is now now launching mobile financial services in five countries. MTN MENA is part of the MTN Group, which serves over 100 million subscribers in Africa and the Middle East, including 30 million in the latter region.

Subscribers can access a wide variety of financial services including money transfer, mobile payment and balance checking, mobile purchases, as well as the ability to buy airtime in real-time.

MTN MobileMoney’s interface includes simple menus and multiple language options, including English and a number of local languages.



In Summary

– Mobile networks are not only taking communication services to developing countries but also financial services to the under-banked.
– Mobile payment is secure as it is based on the same smart card technology used in chip banking cards.

For more information about M-Payment solutions in emerging countries, you can also watch this movie.