MIH SWAT

How many times have you left home and forgotten your wallet? That thick, lumpy receptacle with some notes, slips, credit card, garage card, loyalty cards and God-knows-what-else squeezed into it until it looks like Tito Mboweni in a Speedo LZR swimsuit. Without it, you’re basically a bum: sheepishly asking a colleague for some cash to buy a Woolies sandwich for lunch or promising your friend that next time, you’ll pay for drinks. I’m quite a scatter-brained guy at the best of times, so these scenarios are definitely not foreign to me. But forgetting my cell phone at home? The few times that this has happened – and I can count these on one hand – have been exercises in abject terror. Think of Calvin without Hobbes, or Riaan Cruywagen without his toupee: it’s just wrong! Symptoms first appear when the realisation hits that you are cut off from the mobile world: your heart rate jumps, hands tremble and droplets of sweat form on your brow. I’ve been told by smokers that this is the same process they go through when their pack of smokes are left behind. The only difference is cigarettes can be bought everywhere and at any time. And if you’re really desperate, the smoker’s code of honour guarantees that a cigarette can be ‘borrowed’ from a complete stranger. Not the same for cell phones. No other gadget is so personal to us, so tailored to our personality. Without a cell phone, you feel naked, incomplete, vulnerable, with trips to the toilet now rendered excruciatingly boring as you are forced to stare at imaginary spots on the door in front of you.

What is it I’m getting at here, you ask? The fact of the matter is that cell phones have overtaken wallets as the one item people simply can’t do without. And the research backs it up: according to an IDC report earlier this year, 38% of workers would choose their cell phone over their wallet, keys, laptop or digital music player if they had to leave the house for 24 hours and could take only one item with them (only 30% chose their wallets). Cell phones are our communication devices, cameras, watches, music players, browsers, notepads, alarm clocks and gaming devices. Apple saw this coming and knew they had to get in the game, with the iPhone the grand result. So, doesn’t it make sense to use your cell phone for making payments as well?

This idea has occurred to several entrepreneurs and companies all over the world (Obopay in the US and M-PESA in Kenya being notable examples). In South Africa, Wizzit has been on the scene for a while, although their target market has been the ‘unbanked’ demographic, which is why you probably haven’t heard of it. Most of the big banks have WAP sites you can point your cell phone browser to, WIG applications that can be installed directly on your cell phone menu, or on-deck options for accessing your bank accounts via one of the cell phone operator gateways. In addition, collaborative agreements between operators and banks, like MTN and Standard Bank with its MTN Banking product, are also available. But these are all clunky, unintuitive affairs with lots of information needing to be entered before anything can be done.

Enter new players similar to wiWallet, promising ease of use and convenience – mobile payment nirvana. wiWallet offers a Java application that enables your cell phone to become a ‘mobile wallet’. You can link credit cards and bank accounts on the service – information which is encrypted and not stored on the cell phone. To make and receive payments, a PIN is entered, ensuring that cell phone thieves are limited to using your cell phone for overseas calls. The service promises to work on any operator and with any of the major banks. wiWallet primarily targets customer-retailer transactions.  A service such as wiWallet differs from bank and operator offerings in that it aims to simplify the process of making and receiving payments.

But will these mobile payment services work? Is this a sign of disruptive technology ready to break banks’ stranglehold over consumers’ money (and on bad service!), or just placeholder services waiting for the banks and operators to wake up and smell the mobile money? As Roberto reported earlier on the SWAT Blog, USSD is another great potential enabling technology for mobile banking and payments, especially when it comes to the unbanked. The text-based simplicity makes it relatively easy to use and understand, especially in the emerging markets where the majority of phones are unsophisticated and people are accustomed to SMS. But an iPhone user is unlikely to embrace this ‘sooo 90’s’ UI, as is most tech-savvy teenagers and early adopters. A mobile payment system therefore needs to adapt to its specific target demographic, and not the other way around. The potential for mobile payments, especially in emerging markets where many people are unbanked and few other payment options exist, is obvious. In developed countries, on the other hand, these types of services will likely appeal more as a matter of convenience and extension of the other payment options available, rather than as a replacement bank.

According to Gartner research director Sandy Shen, SMS text messages will continue to be the dominant channel for mobile payments, although take-up of WAP, USSD and near field communications (NFC) contactless services will also grow. NFC technology, as well as the rival FeliCa technology developed by Sony and DoCoMo, is proving popular as a means of making small payments (usually less than $10) and accessing transport networks by simply waving the chip-enabled cell phone within a few centimetres of a reader. The obvious limitation is that this is not a software implementation and therefore hardware, in the form of a NFC/FeliCa-capable cell phone, is needed.

A recent study by Unisys reveals that the different mobile payment system providers will have their work cut out to convert consumers and convince them that the cell phone is a safe and secure payment channel. The findings reveal that:
• 71% of all consumers surveyed in 14 countries will not consider using a mobile device to bank or shop online
• 59% do not trust their mobile devices to provide a secure transaction
• Only 9% currently use these devices to conduct transactions involving credit-card payments, money transfers and deposits
• Most consumers generally perceive banks as having the best security for mobile transactions when compared to operators and online retailers

Which technology will win out? The one that makes it the easiest, cheapest and most secure to make and receive payments on your cell phone? Probably. You will decide, in the end. Rest assured, though: forgetting your cell phone at home will only lead to worse heart palpitations in future…

Related posts:

1. Taking a new look at USSD for mobile banking
2. Why Android will beat the iPhone in the long run…
3. Our Web has no future in Africa
4. My Journey to planet Android
5. Flash goes mobile!