I frequently get asked about mobile commerce, mobile money, mobile payments and mobile banking and often find there is some confusion over this new development in mobile.
I first posted an entry on this blog on mobile money in January 2008, when things were beginning to take shape, at least on paper. Now, with smartphone penetration approaching 30% in mature markets, interest in mobile money is picking up.
First, let's clarify some terminology.
Mobile Commerce, also known as M-commerce, means carrying out a wide range of commercial transactions on mobile, whether it is purchasing digital goods or physical goods (like train tickets) or carrying out mobile banking.
Mobile money refers to either transfers of cash through mobile payments systems, like Mobile Money Transfer service M-PESA (a popular money transfer method in countries with limited banking infrastructure like in certain countries in Africa) or to actual Mobile Payments to purchase items. This means using the mobile device as a kind of mobile wallet.Some operators, under the umbrella of the GSMA, refer to this as Pay-Buy-Mobile.
Pay-Buy-Mobile is now being trialled by 52 mobile operators worldwide and works by effectively using the mobile device's SIM card as a 'credit card within the phone'. It combines the secure encryption of the SIM card with an embedded NFC chip in the device to act as a touchless payment system. In reality, each payment has to be authorised by inserting a PIN code (though this may change in future).
The advantage is that the mobile device can hold several credit and debit cards at the same time.
While this is all relatively new, acceptance of the technology is pretty high. Studies by the GSMA show that over 70% of interviewees would use the mobile to pay for their weekly supermarket shop. In countries like Japan, NFC-enabled mobile payments are already a standard way for travellers to purchase train tickets amongst other things.
To be continued...