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Global Issue 15

Global Insight Making Money Move and mobile payment to tackle fraud, robbery and counterfeiting, as non-cash transactions create an electronic paper trail that can be traced at a later date. Using Lagos state as a testing ground, it imposed a huge NGN100 charge on every NGN1,000 withdrawn or deposited in the form of cash above NGN150,000 (US$960). The move, welcomed by the federal government and business organisations, is being rolled out in six more Nigerian states this year. It will take time to assess its effectiveness, but there has been some resistance to changing Nigeria’s cash culture. The head of mobile payments at eTranzact International, Uwa Uzebu, said: “It has not been simple. The Nigerian market is unique in its own way. The mobile banking/money project has not gained as much traction as everyone had hoped. Even though mobile money is still in its infancy, it represents a key element of our journey towards developing a payment system that is nationally utilised and intentionally recognised.” One problem in Nigeria – and many other parts of the world – is that digital wallets are largely restricted to a single mobile network. The more players in any given market, the more difficult it is to promote the use of mobile money. M-Pesa was launched by telecoms operators Safaricom and Vodafone, which control the lion’s share of the Kenyan mobile market. Will the Kenyan experience be replicated in Asia? The signs are promising, in South Asia at least. Only 35 per cent of Indians have bank accounts, partly because only about 30,000 out of India’s 600,000 villages have bank branches. A small, start-up firm, BEA, has gained 15 million customers in India in just two years, while, in neighbouring Bangladesh, bKash has 2.5 million users. Though much bigger companies have launched their own mobile wallets in the region, these two smaller companies, which have a wide range of investors including NGOs, have gained traction because they operate on any network. Mobile banking and the use of airtime as currency has revolutionised money movement in countries with limited banking infrastructure and poor security. In Afghanistan, for instance, money has long been transported by truck drivers, each of whom takes a small cut of the total. Now, mobile banking is becoming the preferred method of moving money. It is safer, quicker and usually cheaper. The investment opportunities of seeking to provide mobile banking services to the previously unbanked are huge. Mobile money transfers are equally useful in carrying international remittances. Money sent home by migrant workers to their families is one of the biggest sources of income in many developing countries. It is believed to be the main source of revenue in unstable states, such as Afghanistan and Somalia, and is even one of the most important components of GDP in more substantial economies, including Egypt (see Harnessing the diaspora dollar, pages 19-21). In the industrialised world, most new mobile technologies have focused on customer convenience. Near field communication (NFC) is already included in many smartphones, enabling handsets to communicate with other computers with which they come into close proximity. It relies on a simple form of wi-fi and employs more basic technology than Bluetooth but can be used to pay for goods or tickets in shops and on transport systems. Customers merely run their phone over the reading device in question, in much the same way as goods are passed over barcode readers in supermarkets. However, it remains to be seen whether tying payment services to a single device can compete with the digital wallet, which offers Cloud services that can be accessed from any enabled device. NFC payment is already up and running on a small scale in the UK, with new retailers joining on a regular basis, while the digital wallet has In figures: the mobile economy  46% of the world’s population use mobile communications Subscribers are growing four times faster than the global population There were seven billion mobile connections in 2012 50% of new connections between 2013 and 2017 will be in Asia Pacific – the region accounts for just under half of all connections and subscribers 20% of new connections between now and 2017 will be from Latin America and Africa Total subscribers and Sim-enabled connections internationally – actual and projected Total subscribers (billions) Total Sim-enabled connections (billions) 2008 2.335 4.05 2009 2.556 4.705 2010 2.789 5.474 2011 3.014 6.176 2012 3.212 6.766 2013 3.402 7.424 2014 3.564 8.053 2015 3.705 8.643 2016 3.829 9.204 2017 3.94 9.741 Mobile money ■■The total value of global mobile payments by 2017 is projected to be US$13 trillion ■■Two and a half billion, or 48% of the world’s adult population, do not have access to a formal bank account ■■Total African mobile transfers are expected to exceed $200bn in 2015, accounting for approximately 18% of the continent’s GDP ■■16% of adults in sub-Saharan Africa have used a mobile phone to pay bills or send/receive money in the last 12 months Security ■■ In October 2012, bank phishing accounted for 34% of all SMS Spam – more than any other type of spam ■■McAfee internet security recorded 21,400 mobile malware samples in its database in 2012, up from just 100 in 2004 Sources: GSMA, ATKearney: The Mobile Economy 2013 (www.gsmamobileeconomy.com), The Economist 16 l www.global -br ief ing.org thi rd quar ter 2013 global


Global Issue 15
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