BLOOMBERG A vendor holds cellphones and airtime scratch cards at a mobile money stall operated by MTN Group on a street in Kigali, Rwanda, in this file photo. Many African countries are already way ahead of South Africa in the cellphone banking industry. File photo: BloombergON THE LATEST “Gates Notes” annual letter, Microsoft founder and philanthropist Bill Gates wrote on the impact smartphones and mobile banking would have in the next 15 years. He observed that “digital banking will give the poor more control over their assets and help them transform their lives and by 2030, 2 billion people who don’t have a bank account today will be storing money and making payment with their phones”.
I have to say he’s spot on and, in all my years as a mobile technology professional, I can say without a doubt that the future of mobile money is inevitable and this has some of the major financial institutions running scared.
Here at home, we saw Nedbank investing a lot in PocketPOS, First National Bank (FNB) developed Cell Pay Point, Absa has Payment Peddle and Standard Bank partnered with SnapScan. Not only did the banks invest in mobile payments, but they invested in e-wallet services as well, confirming that the threat of mobile money or cashless transacting is real.
The fact is South Africa has a huge unbanked population, with some researchers estimating it as high as 67 percent, who get turned off by the banking system due to its exorbitant banking fees, Financial Intelligence Centre Act (Fica) requirements and a general lack of trust in banks.
At the same time, South Africa has one of the highest mobile penetrations in the world with 87 percent individual cellphone ownership, of which 36 percent are smartphone owners, according to Mobile in South Africa 2014 AMPS (All Media and Products Survey) Report.
I do believe that in the next couple years South Africa will see a massive switch in people’s mindsets regarding mobile money, which will turn into another South African success story.
Johan Meyer SUPPLIEDThe advantages of mobile banking are endless; mobile money can give people a means of having money on them without the constant fear of losing it or being robbed. It can give them the ability to be part of a society where they can make use of a non-traditional banking system without being exploited. People can make use of their cellphones to pay for taxi fares, to buy groceries at a local corner shop, to send money to relatives, and so on.
Countries like Kenya, Tanzania, Botswana and Zimbabwe are already ahead of us. The time has arrived for every supermarket, retailer, spaza shop, coffee shop and taxi business to embrace mobile money as another form of payment. It’s also encouraging to see more local major companies, and those in the rest of the world, working on including mobile money into their business models.
From automated payments for parking, to allowing your fridge to order milk or even an automated reward system, mobile money is not just a solution for the under-banked, but the future for all. And with big tech firms like Apple, Google and Samsung getting involved in mobile banking, the industry is growing at a very rapid rate.
Regulators will be forced to adapt, which will make it possible for smaller businesses to adapt to mobile money and allow companies to launch their mobile money products. This, in turn, will contribute to the country’s economic growth.
In South Africa, the biggest factors behind the slow growth of mobile money are the limitations put in place by the regulating bodies.
Another factor is the strong hold the top five banks have over the payment industry. It’s almost impossible for any company to get a banking licence in South Africa. Without a banking licence or a banking partner, it is illegal for a company to start a proper mobile banking company in the country, which means the industry’s growth is limited.
The country cannot delay any more and needs to jump on the bandwagon because on a larger scale, we are really talking about the critical subject of financial inclusion. People are already using alternative digital mediums as currency.
In other African countries, we find people using airtime as currency. Bitcoin is also becoming more and more popular.
I do believe that these currencies will become another form of mobile money. As banks and regulators limit the growth of mobile money, people will find different forms and means of making payments.
In the near future we will find more people accepting Bitcoin or airtime as a form of payment.
Johan Meyer is the founder and chief executive of Wallettec, a software company that assists retailers in accepting any type of mobile transaction or currency type at their point of sale.