For most in the developed world discussion around mobile payments is focused on the user experience, with the knowledge that the back-end security and technology still embraces the standards of the robust existing payments ecosystem.
However in emerging markets, such as those discussed by my colleague Ian Hermon in a previous blog, “Little talk of cards, lots of mobile action” using mobile technology (mPOS) has a much broader definition than that of simple ‘card for payment’ transactions. It has the potential to solve the banking ‘last mile’ problem – where access to a bank or physical ATM is challenging as they are in rare supply.
For these markets customers already have in their possession the payment cards most of us take for granted, but the POS infrastructure is lacking. It is here that mPOS is rising to meet this challenge, essentially providing all the security and capabilities of traditional POS terminals but with the power and mobility of a smartphone.
In these rural communities, banks and other payment authorities can enable every merchant with an authorized mPOS terminal to effectively become a virtual bank branch or community ATM. Distribution of payments, for example government benefit schemes, can be made through this network as well as payments from people to other parts of the network. Unlike mobile money, these mobile payment solutions can tightly integrate into the existing banking network allowing these communities to enjoy the banking convenience that mobile gives but with the protection of existing regulations as well as access to other accounts they currently have.
So while half the world continues to anticipate the great wave of change mobile payments will bring, emerging markets may well quickly jump directly to the mobility of payment solutions to meet the basic banking needs of often very rural populations.