November 07, 2013

Mobile Payments Come of Age

By Hisham Isa, Vice President (Marketing)

More working adults use mobile payments to buy things and pay their bills than cheques, according to the latest BuzzCity global survey. Mobile payments are also rapidly gaining on debit and credit cards. (Mobile payments are actually already more common when it comes to bill payments, but not yet for commercial transactions.)

Think about this for a moment.

Cheques were likely first used in the Middle East more than 2300 years ago.

Mobile commerce and mobile payments didn't exist until 1997.

It took centuries - well, millennium actually - for cheque usage to really take off. By the time of my parent's generation, billions of cheques were being issued annually and these rectangular pieces of paper were the preferred means of payment for many people, particularly in North America, India, Oceania and parts of Europe.

Mobile payments meanwhile have come a long way over the past sixteen years, when the first two mobile-enabled Coca-Cola machines accepted payment via SMS in Finland.

Let's take a closer look now at the stats and some examples from around the world.

Mobile Payments Overtake Cheques

Over a four week period in July and August, BuzzCity surveyed 17,000 mobile users from 22 countries.

We found that 16% of working adults over the age of twenty use mobile payments to pay for daily purchases. Only 7% use cheques.


Thirteen percent of working adults use mobile payments to pay bills versus 12% for debit & credit cards and 6% for cheques.




In my article last week about the 'UnderBanked', I explained that there are several mechanisms that enable consumers to make payments with their phones, including
  • Operator Billing ('one-click billing')
  • Pre-Paid Cards
  • Premium SMS
  • Third Party Money Transfer Services
Not in Beta

Many are surprised that mobile payments are so widely used.  What we need to realise is that m-payments are no longer a tool of the future, they're becoming commonplace today.

Take the case of Indonesia, where consumers use their phones to buy groceries and other basic needs at more than 14,000 mini-marts and supermarkets around the country.

Leading retailer Alfamart has teamed up with carriers like XL and Indosat to accept m-payments.  Indosat, which has a 21 percent market share in Indonesia, provides consumers the ability to open a mobile "dompetku" ("mywallet") for shopping and other financial services.




Indonesian consumers can also use Telkomsel's t-cash to shop at more than 6000 Indomaret stores, purchase insurance from several providers and shop online for cosmetics, music and lifestyle accessories and in the tokobagus classified ads. Indomaret also provides mobile top-ups and withdrawals.

Indonesia is the first large market where carriers offer consumers the ability to instantly transfer money to someone using a different phone provider.  In most countries, mobile transfers to someone on a different network require consumers to cash out at an agent.  Indosat, Telkomsel and XL announced their interoperable solution in May.  The fee for consumers is just 2000 rupiah (less than 20 US cents).

Sometimes companies rely on third party specialists like Onebip, which works with over 250 carriers in 70+ countries, to provide m-payment solutions.  In Turkey, for example, Onebip has partnered with Turkcell to offer an m-ticketing service for international football matches.  Here's a look at how one of their services works:


Meanwhile in Ireland, motorists can automatically have tolls billed to their monthly mobile bill or pre-paid card.  After you subscribe to the service, you don't event have to have your phone in the car with you - just a tag that you place on the windshield. 


As I mentioned at the top of this article, mobile payments have already overtaken cheques.  How long do you think it will be before they surpass credit cards?