Mobile money set for new wave of growth but great consumer security and reduced complexity needed for success
20 February 2014
Mobile payments are set for a new wave of growth but mobile operators must address customer concerns within a fragmented technology landscape to ensure that they make the most of the market’s potential, according to EY’s Mobile Money – the next wave of growth report, released today. The report comes ahead of the World Mobile Congress where mobile payments will inevitably be one of the main discussion points amongst telecom leaders.
Over one in five mobile subscribers currently use mobile money transfers or mobile payments globally. In the UK this drops to 16% for mobile location-based payments but, more positively, 23% of consumers currently not using these services would consider doing so in the future. While the range of mobile payment technologies available has never been greater, it will take some time for this to translate into regular usage.
Adrian Baschnonga, Lead Analyst, Global Telecommunications at EY, comments, “Mobile payments services in developed markets are at an early stage of growth but present unprecedented opportunities going forward. After a slow start, growth in mobile payments take-up is projected to accelerate from 2015, driven by factors including rising merchant acceptance, stronger policy support and improved customer education.”
Adrian adds, “It is essential that governments, industry regulators, consumer protection agencies and trade bodies reconcile the various drivers of their activities in order to generate a holistic roadmap for the regulation of digital payments services.”
Greater confidence in privacy and security is essential
Young, urban smartphone owners are leading the adoption of mobile money services. The proportion of smartphone owners using mobile payment services regularly or occasionally is twice that of non-smartphone users. Given the sharp contrast between different groups of consumers it is important to segment customers to target the likeliest adopters.
According to EY research, more detailed information on security and privacy measures and a better understanding of the service benefits would encourage 45% of potential UK users to take up mobile location-based payments and 52% of potential UK users to take up mobile money transfer services sooner.
Adrian concludes, “In future, service providers must reassure customers that mobile money services have robust privacy and security credentials, and can deliver new forms of convenience. Engaging more closely with a range of end users – from consumers to merchants – will help operators differentiate their mobile payment propositions in the long term, ensuring that their evolving offerings live up to industry expectations.”
Wider range of services needed but complexity must be reduced
The desire for sustainable competition in banking and payments services should be balanced with a keen understanding of changing customer needs, as well as commitment to proportionate rules for new entrants.
Horizontal (multi-operator) and vertical (multi-industry) partnerships in mobile payments are becoming more prevalent. However, as partnering models seek to drive take-up and usage of mobile money, competition between them may accelerate technology fragmentation, undermining scale and confusing customers.
Adrian comments, “Flexible business models are vital if service providers are to meet customer demands, adapt to changing market conditions and cope with shifting regulatory imperatives. New partnering frameworks, innovative pricing models and targeted acquisitions will all have a role to play.”