Nigerian banks have been advised to maximize the potentials in mobile payment
The worldwide purchase of goods and services over mobile devices will exceed $1 trillion by the year 2017, IDC Financial Insights, one of the world’s leading providers of independent research and advisory services focusing on business, technology and operational issues within the financial services community, has said in a report.
The report titled “Technology Selection: Worldwide Mobile Payments 2012–2017 Forecast,” presented a worldwide forecast of consumer and business spending over mobile networks from 2012 to 2017.
According to the firm, most of this volume will be in the form of mobile commerce, which includes digital media consumed on the device as well as e-commerce through a mobile Web browser.
“Although NFC (Near field communication, a set of standards for smartphones and similar devices to establish radio communication with each other) payments are still limited to a few countries in the Asia/Pacific region, we forecast rapid growth driven by handset and point-of-sale terminal upgrades,” the firm said.
Experts have said it is getting pretty clear that mobile payments has a long way to go, as phones are gradually taking the centre stage in businesses.
Mobile payment, also sometimes referred to as mobile money, mobile money transfer, and mobile wallet, refers to payment services operated under financial regulation and performed from or via a mobile device.
According to Aaron McPherson, practice director, Worldwide Payment Strategies at IDC Financial Insights and the lead author of the report, “The growing prevalence of smartphones is enabling a variety of mobile payment methods, which combined are becoming a significant share of global commerce”.
“We expect growth rates to continue to accelerate as consumers and retailers become more comfortable with the technology,” he added.
He said the total mobile payments market will represent only a small fraction, about 2.5 per cent, of the total transaction volume that mobile payments could address, even if theoretically.
Even at that, Mr. McPherson said, mobile payments growth will continue to accelerate.
Most of the money being attributed to “mobile payments” is actually money, according to the firm, being spent through m-commerce, meaning consumers shopping from a mobile device instead of online or in a store.
Mr. McPherson said that emerging markets are actually providing a good story when it comes to the growth of mobile payments.
He said there’s a good leapfrog story to be told in emerging markets, with consumers in those markets adopting mobile payments at a higher rate since they lack other options, as the banking sector is so underdeveloped in some economies.
With that arm of the finance industry forecasted to grow in leaps and bounds, experts have urged the banks to make the best use of this budding opportunity.
Accenture, a global management consulting and technology services company said, for banks and participants, all these changes bring an urgent need for deep payment-specific skills and insights to optimise both strategy and operations.
A growing number of major global technology companies with powerful consumer brands- already including Google and PayPal and soon expected to be joined by Apple- are set to target the payments arena with online and mobile wallet-based offerings.
“Banks cannot afford to ignore this escalating competitive threat. As usage of these offerings grow, and as more payments and value move outside the traditional banking system, the impact on banks could be pervasive, affecting their customer relationships, deposits and as a result- even their ability to meet capital requirement” the company, through the Executive Head, payments and mobility practise, Henrietta Bankole-Olusina, said.
Given that their traditional payments business model is based on charging fees for transactions, the firm said banks need to take a hard look at their own payments operations, and work out how to compete more holistically along the payments value chain.
Ms. Bankole-Olusina said beyond the cashless policy, there are opportunities for mobile payments in Nigeria.
According to her, it is a challenge for the banks to come up with something inventive and attractive for the over 100 million mobile subscribers in the country.
“We need to grow the mobile business,” she said, as actions in the mobile payment industry remains very low.
“The mobile has become part of everything we do with about 5 billion mobile phones in the world as at 2011,” she added.
Most of the banks already have already climbed the platform of the mobile money services. First Bank, Stanbic IBTC, and UBA are among the banks offering mobile money services. It is expected that the nation’s banking sector would grow its activity in line with its global counterparts.