The principle estimates on the future of money indicate that, from today until the end of 2014 e-payments and m-payments will increase by 18.1% and 58.1% respectively per year: more specifically, forecasts predict total volumes that will reach about 35 billion operations for e-payments and 29 billion transactions for m-payments. There are three main driving forces behind the growth of these segments: the unstoppable diffusion of smart phones and internet, technological progress and innovative research in terms of products that can satisfy increasingly demanding end consumers. Nevertheless, regulations are still lacking in this relatively new sector and, where they do exist, vary greatly from one region to the other. This determines the different way they grow and the speed of their diffusion in different areas around the world. All of the statistics on this topic do concord on one thing: the geography of mobile payments will give emphasis to emerging and developing countries.
In fact, even if at a global level more than three quarters of electronic payments occur in the “most developed” areas of the world, growth, in comparison, will continue at a more contained rate due to demographics and a less accelerated economic progress. The largest increase for electronic and mobile payments will be in Latin America, which has settled around 14.4% growth of innovative forms of payments over the past year, and in Africa and Southeast Asia (above all India). According to analysts at Gartner, Africa will be giving up its top rank to Asian countries that have become the world’s most active area.
Between 2012 and 2013, in fact, mobile payments in Southeast Asia have increased by 38%, generating transactions worth a total of 74 billion dollars. A rate that, if it continues, will cause this area to surpass Africa within the next three years: in 2016 the Asian Pacific will be effecting mobile transactions for a total of 165 billion dollars, surpassing Africa, which is predicted to reach 160 billion.
This race in growth and spending in these two areas affirms the contribution of emerging economies in the demise of hard cash. The main reason for this can be discovered by studying the needs that mobile money is able to satisfy within the contexts of developed countries and developing countries. While in developed countries there is a need for innovation in order to respond to the growing demand for connectivity and mobility of the end consumer, in developing markets, mobile payments allow an increasing number of individuals access to financial transactions that they would otherwise be excluded from. In these areas, mobile payments are not only a technological innovation but also a social innovation. Thanks to mobiles, areas where populations do not have access to banks, there is now the opportunity to access payment services, make international transactions, and access microcredit systems: all services that are aimed at realizing the total financial inclusion of these subjects.
Therefore, it is precisely in these areas that mobile money is capable of realizing its maximum social benefit, because apart from an improvement in the quality of life of inhabitants this also contributes to the economic growth of these countries. It has been estimated that between 2008 and 2012 the forms of electronic payment (including credit cards) have contributed to a growth of the global economy of 983 billion dollars. The top beneficiaries of this growth were precisely the emerging countries whose PIL rose by 0.8%, while growth for developed countries it was on average only 0.3%.
In general, it is a win-win situation: as well as for the interested country itself, all of the actors who participate in offering mobile money services also profit. The real social need of these services makes these areas a rich terrain of opportunities for the most innovative entrepreneurs who can exploit the advantages of being the first movers. The high costs of traditional banking services (caused by building office branches, ATM machines, and account management) has forced a large part of the world population unable to participate in the banking system. This is contrary to the vast majority of inhabitants who do, instead, own a mobile phone: two-thirds of the adult population in sub-Saharan Africa (according to a McKinsey report that studied the market opportunities of the continent). This explains the success of mobile payment initiatives like M-Pesa in Kenya where the penetration of these payment systems has reached 86%. Or like Wizzit, which offers South Africans very low activation costs for accounts that are managed solely via mobile (mobile banking) and has activated a money transfer and payment service via mobile phones. Wizzit also offers small businesses the possibility of receiving loans in order to set up their businesses, again managed entirely via mobile phone.
Once again using the above-mentioned McKinsey February report, data demonstrates that 54% of inhabitants in sub-Saharan Africa conduct more than once a month long distance payments, beyond national borders, for a total of 5 billion in transactions per year. The total value of these transactions equals about 760 billion dollars. As of today, 50-60% of these transactions are done with cash. So even if a conservative estimate of 2% is given of a transfer to mobile management, this still results in a total of over 6 billion dollars. Thus, the biggest opportunities are represented by P2P services and, above all money transfers, which all represent about 71% of total transactions. “Traditional” bank operators have not been fast enough, so far, in proposing efficient and low cost services to clients for transferring money. But the challenge has just begun. And the opportunities for banks to recuperate are out there, with, for example, the inclusion of mobile banking and money transferring along with traditional banking in order to attract clients. This would be an important milestone because people who are “banked” can plan for their future, send their children to school, chose to make small investments, and insure themselves against unexpected crises. Clearly there is also the subject of education which must be considered but here the importance is primarily to highlight that the goal of bringing financial services and electronic payment to developing countries is not just a business goal: the so-called financial inclusion, in fact, does not only render life for the inhabitants of these countries simpler and safer, it is also a stimulus for economic growth, it gives opportunities for enterprise and thus employment. It is a multiplying effect that will also favor, over the long run, more developed countries due to a more fluid flow of money at a global level with less waste of resources.
