Mobile money could make Africa the new boss
Samsung Pay has officially launched in the UK, continuing the evolution of the digital economy, but does this technology have the potential to disrupt the global pecking order?
Telecoms.com, Banking Technology‘s sister publication, reports.
In the last couple of weeks there have been numerous announcements which is slowly moving cash into the redundancy line. Whether it is chip and pin become more universally accepted or using a selfie to authorise payments, the concept of paying something with physical objects is slowly becoming a thing of the past. The cheque has been almost eradicated from the UK, how long until the £5 note succumbs to the same fate?
“Following the launch of the Galaxy S8 and S8+ earlier this year, we are thrilled to be introducing another innovative service to our latest flagship devices, reinforcing our commitment to making people’s lives easier,” says Conor Pierce, VP of the IT and mobile division at Samsung Electronics, UK and Ireland.
“We hope the UK launch of Samsung Pay will transform the way our customers pay for day-to-day items, giving consumers a safer, smarter mobile wallet.”
The current ecosystem includes many of the expected names including Mastercard and Visa, as well as cards issued by MBNA, Nationwide and Santander, with more in the pipeline. Users will be able to pay as you go on London buses, the underground, trams, TfL Rail, the Emirates Air Line (if anyone actually uses it), the River Bus and most National Rail services in London. They will also be able to upload their loyalty cards at selected merchants across the UK, to accumulate and redeem points.
Samsung might be late to the party in the UK, but it is at least arriving before the idea moves into the mainstream. Mobile payments are still in their infancy, but the trend is catching on fast. That said, the fact that it is still in its early days has the potential to disrupt the global hierarchy in the technology world. Perhaps we are reaching an inflection point in certain parts of the sector, as the Western world is playing catch up in terms of deployment with the developing nations.
It’s a simple matter of necessity or convenience. Mobile money may be seen as a perk in the UK, playing to the impatient desires of the consumer, but for certain countries in Africa, mobile money is a necessity due to the lack of availability of traditional banking institutions. Across the continent, roughly 25% have bank accounts, which drops to as low as 14% when looking specifically as West Africa. Mobile money isn’t a convenience here, it is a necessity.
Mobile payments have been very successful across the continent, in particular in Kenya, where the M-Pesa money transfer and payment system developed by Safaricom in 2007 now serves over 17 million people. It’s estimate that as much as 22% of the population in East Africa uses mobile payments (statistics are from late 2015), compared to 3% in OECD countries. Admittedly these numbers are slightly dated, however Africa is still miles ahead of the Western nations 18 months later.
So the Western world has a lot of catching up to do, but are we mature enough to learn from the African nations? The export of services and experience has primarily gone one direction in recent years when it comes to developing telco infrastructure or implementing digital solutions. The Western societies have been teaching the African nations, but when it comes to mobile money, the experience should be flowing the other direction.
African engineers have the experience of developing the systems to facilitate the mobile money evolution, as well as the business models to support them. The UK is just about catching on, and in the US signing a credit card receipt is still a thing! There is no question that the student has now become the master, but will the Western nations be able to accept this disruption to the status quo? Will a perceived arrogance and superiority lead to ignorance? Are Western business mature enough to accept they are no longer the best and brightest?
When the tables are turned like this, it can be difficult to accept the new hierarchy, and culturally it might be a shock to the system for some. But one thing which is clear is that the African nations are the bosses of the mobile money world. If the Western nations cannot accept this, there is a risk of severe complications when there really doesn’t need to be.