MWC points to mobile payments’ future

March 11, 2022

Visitors to the MWC (Mobile World Congress 2022) moving around the site.
Jonathan Bennett, Chief Commercial Officer

Jonathan Bennett

Chief Commercial Officer

A panel session at last week’s Mobile World Congress event in Barcelona brought together leading lights in the telecommunications and financial services industry to discuss the rapidly evolving digital payments landscape.

This year marks the 15th anniversary of the introduction of M-Pesa by Safaricom in Kenya. This mobile payment platform has since provided access to financial services for over 50m people in a secure, affordable, and convenient way. What started as a simple person-to-person (P2P) money transfer tool to help consumers pay their utility bills gradually expanded to payroll enablement for small businesses and provided to other financial services such as micro-loans.

Mariam Cassim, chief executive officer for financial services at Safaricom’s owner Vodacom Group, highlighted how the service had enabled Africans without bank accounts who dealt almost exclusively in cash to enter the digital world.

“M-Pesa leapfrogged bricks and mortar completely, so you literally had users taking money from under their mattresses and moving directly to mobile banking,” she said. “Fifteen years later, that platform has provided a great foundation for mobile payments to evolve further.”

STC Pay is another electronic wallet (eWallet) that has expanded its remit from digital payment enablement to embrace a broader range of smartphone app-based financial services. Launched by Saudi Telecom in 2017, it initially offered P2P transfers for the country’s consumers before adding support for payments, invoices, and other financial transactions. It now has 8m users (almost a quarter of the population), processes around 3m transactions a day, and plans to launch a digital bank.

“People trusted us as a telco name, and we added [financial backing] from Western Union to inspire consumer confidence and deliver an eWallet that has all the functions a user needs,” explained STC Pay CEO Ahmed Alenazi. “We were helped by a government mandate that to push towards a cashless society, extremely high smartphone adoption and the fact that 70% of the population is below the age of 45.”

The success of STC Pay to date also has the company thinking about offering services in other countries of the Gulf Cooperation Council (GCC) soon.

5G, IoT, and Super Apps to drive mobile payments revolution

Sulabh Agarwal leads the global payments practice at systems integrator Accenture. He points to the changes caused by fifth generation (5G) cellular networks and IoT devices as catalysts for mobile payments as previously separate financial transactions converge.

“If a consumer visited an ATM, that was one event, and if they went into a shop and brought something, that was another,” he said. “Now those events are coming together to change that experience.”

Keith Grose, Head of International at fintech data transfer platform Plaid, believes further impetus will come from the increased volume of people becoming comfortable with the idea that a banking app on their phone is a payment method.

“Open banking will drive a sea change in the way that people make digital payments because more of them have smartphones in their pockets and banking apps on those phones,” he said. “It is evident that this is going to be the payment method of the future, and the coronavirus pandemic accelerated that trend.”

Open banking has also created an environment that makes so-called “Super Apps” much easier to develop and launch in multiple markets worldwide. According to Plaid, many digital banks, telcos, and other mobile payments stakeholders are now planning to introduce similar propositions of their own.

October last year saw Vodacom Financial partner AliPay launch digital financial services “Super App” in South Africa, for example[i]. The VodaPay app allows consumers to load money into an eWallet, send P2P payments, and enable purchases of anything from airtime, electricity, and water to fintech products like insurance. “Customers do not want to enter data on ten different platforms of applications to do their shopping, and that leads nicely to the world of the Super App,” said Cassim.

The good news is that mobile payments infrastructure to support the new world of connected devices and Super Apps enabled by 5G is now in place, added Carol Grunberg, managing director and global head of partnerships and innovation at Citigroup’s trade solutions (TTS) division.

“Whether it’s a fridge ordering groceries for itself or buying goods in the Metaverse, the end of line infrastructure already exists,” she said. “We’ve already proved it out with digital wallets and other payment mechanisms, and just as a decade ago we needed to get everyone connected from an Internet perspective, now that is happening from a transaction perspective.”

[i] Vodacom’s superapp Vodapay launches in South Africa, The Paypers, 19th October 2021

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