Absa was an event sponsor at the First Tuesday - Vodacom Mobile Connect event, held at the Sandton Convention Centre on 1 August 2006. Absa`s presentation at the event focused on mobile banking with specific focus on `where to from here?`
Mobile banking is a service that is characterised by evolving technologies and industry structures and incorporates mobile payments, access to bank accounts as well as value-add services. The success of mobile banking is dependent on addressing factors such as accessibility, ease of use and customer behaviour.
Mobile banking has seen an enormous growth since its introduction to South Africa, with the customer base growing from an estimated 10 000 users in 2001 to over 700 000 users in 2006. Added to this, transaction values for mobile banking are expected to reach a figure of close to R4 billion for 2006.
During 2005 and 2006, mobile banking gained a higher market profile, with South Africans showing a growing interest in the service. As a result of the growth in the customer base, developments to date have largely been driven by retail customers making remote payments. However, the recent launch of WAP banking (banking via the Internet on a cellphone) and future developments may widen the impact of mobile payments to include online retailers as well as proximity payments in the retail environment.
In this vein, mobile payments are distinguished by value and proximity. The value of payments can be split between micro payments, these being low value payments, which tend to be for virtual content and low value services, and macro payments which are payments over the perceived micro payment amount. The value of a macro payment is country dependant, but they are usually payments for physical products and services. Proximity payments can be split between remote payments, which are not restricted by location, and local payments which require handset interaction with other devices, eg toll booths and point of sale devices.
Two key technology drivers for the future include Near Field Communication (NFC) which is a standards-based, short-range wireless connectivity technology that enables simple and safe two-way interactions between electronic devices, and Wireless Application Protocol (WAP). WAP allows for the delivery of Internet content and services via handset. Secure WAP not only makes the Internet mobile but will also generate increasing demand for remote payments as consumers perform more online commerce activity via their handsets.
NFC will be a key technology to expanding the reach of mobile banking into the local payments space within the retail environment. It can be described as an evolution of credit card-based payments whereby the card information is stored on a chip in a handset. In order to pay for goods, a customer merely swipes his cellphone over the point of sale device. Benefits include faster checkout times, and less cash-based sales which lead to cost savings.
WAP-based payments will become more prevalent as online merchants start making their Internet commerce sites available to cellphone users via WAP. WAP gives banks the ability to provide mobile banking users with Internet-based banking functionality with the added advantage of anytime, anywhere access. To date, three of South Africa`s major banks have launched secure WAP banking services.
Online merchants can also facilitate credit card payments at their own WAP portals. MasterCard SecureCode as well as Visa`s Verified-by-Visa are encouraging the use of these services for mobile payments. Successful mobile commerce sites will to a large degree mimic successful Internet commerce sites in the following areas: online ticketing, share trading and online auctions.
South Korea is an excellent example of what is possible in the mobile payments space. In September 2003, Kookmin Bank together with LG Telecom and SK Telecom launched a mobile banking service, whereby a custom manufactured handset allows a customer to insert a smart chip card into a separate card slot in the handset. This smart chip card together with NFC allows users to perform proximity payments at enabled merchants. Over five million South Koreans make use of the NFC enabled mobile payments solution to pay for goods and services at NFC enabled merchants. Added to this is the convenience factor that allows for the payment of public transport services - no more hassling with cash and payment cards when you are in a hurry to board your train.
Factors that led to the success of mobile payments in South Korea include co-operation between banks, networks and handset manufacturers as well as the market demographics of South Korea. South Korea is characterised by trend sensitive and tech-savvy consumers who are keen to take up new technologies and services.
In an ever-changing and technologically advancing industry, the mobile payments landscape will continue to evolve and change over time, thereby adding convenience and time saving efficiencies to the lives of many customers all over the world.
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