The mobile phone represents the next frontier for payment, after cash and the credit card
It’s a sign of the times. The latest brainchild of Twitter co-creator Jack Dorsey is a mobile phone based micropayment system. Called Square[i], it will allow merchants and others to receive secure payments using mobile smart phones, with the addition of a tiny electronic dongle that attaches to any device with an audio input jack. With no contracts, monthly fees or hidden costs, payments can be transacted in under 60 seconds.
While using mobile phones as tools for financial transactions may seem unusual, this is not an unexpected development. Over the past decade, the mobile phone has gone from a technological curiosity owned only by a select few to a device that virtually everyone carries all the time. Particularly in Asia, the penetration rate of mobile phones is unmatched by any other device.
The Mobile Marketing Association (MMA) recently released a paper titled Asia Mobile Telecommunications Innovations[ii], which traces recent trends in the deployment of mobile phones across Asia, and uses that as the basis to forecast future development. Using data gathered by Solidiance, it is clear that there is extreme growth in the mobile communication industry in Asia, with countries like Singapore, Hong Kong and Korea now seen as forerunners in the world.
With the proliferation of mobile phones across Asia, functionality will be the next driver for growth. Mobile phone innovation is the next step, as developers and mobile phone providers work together to lift the average users mobile phone experience. No longer will the mobile phone be seen solely as a communication platform, but as a necessary adjunct to everyday life.
MMA has identified mobile payments as a likely area of new innovation. While the industry is still in its infancy, there is a potential USD$200 billion in global remittances moving through Asia. This represents a growth opportunity, not only for banks wishing to capitalize on the ubiquity of the mobile phone, but also for operators who can offer their customers added functionality for their devices. Smart phones such as the iPhone and Research in Motion’s range of Blackberry phones have the computing power to handle more sophisticated electronic transactions
Rapid growth in the industry will be driven by demand for convenient, secure micro transactions, as well as by the needs of Asians working both in Asia and abroad who need to repatriate money back home. Asia also has the advantage of high mobile phone penetration, plus any development will be supported by early adopters in technologically-advanced markets like Singapore and Hong Kong.
With mobile payment being one of the likely new developments in Asia, it seems less surprising now that innovators in other parts of the world will be working on creating easy-to-use payment solutions that will bridge the gap between the mobile phone and the use of cards or cash.
