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Mobile money services to penetrate 60-70 percent by 2014
By siliconindia
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Wednesday, 05 August 2009, 16:51 IST
Bangalore: A report from global consulting and advisory firm Ovum titled "Mobile money in emerging markets" defines that activity in mobile payment services, broadly mobile money services, is accelerating in many emerging markets. The report predicts the market to reach a service penetration between 30 - 40 percent of the emerging market's mobile users in 2014. As the industry can resolve the market barriers more quickly than expected, the mobile money services can penetrate between 60 - 70 percent because of the strong demand of the mobile users in the emerging market by 2014.
The report defines that the market is still infant, but it has the potential to become a mass-market service, penetrating one-third of all mobile users in emerging markets in five years time. However, it will depend on how well the industry addresses various market barriers, and its ability to nurture user demand with clear, simple and attractive propositions.
"The success of Vodafone's Kenya subsidiary Safaricom with its mobile money service M-Pesa has underlined the potential for mobile money services," said Angel Dobardziev, Emerging Markets Practice Leader and Co-author of the report. In spite of launching more than 100 mobile money services by both service providers and banks globally, the market remains in a fragile state with few well-established services.
Low penetration of access to financial services as compared to the penetration of mobile services is influencing the market uptake, as the former is growing fast.
The unbanked and connected customers are the key demand driver of today's market, as the service provider and banks must target them, says the report. "Recruitment, training, incentivizing and support of networks of mobile money agents will be significant to service providers' mobile money strategies, particularly when it comes to targeting unbanked customers. Without access to an extensive distribution network for the users to deposit and withdraw cash as they make use of the service, users will be prevented from making the most of the service," said Dobardziev.
For ensuring that the early user disappointments do not extinguish the market, services providers must get the basics of the service right. "They must not lose sight of the fact that telecoms and banking have very different volume, size, margin and tolerate error on their core transactions. As the two worlds draw closer with mobile banking, this will mean a different mindset and approach to service provision, reliability and security," added Dobardziev.
