Over the years our company has seen mobile payment technologies, business models and ideas come and go.  We see and hear many things and often get asked for views on various mobile and payment related issues.  We thought it was now time we started our own blog to share some of these discussions, ideas and issues.  We hope to cover topics not only on mobile payment but also on mobile technology and how it is being applied in different ways.  mHITs is uniquely positioned as one of the few mobile payment technology company’s covering both developed (Western) and emerging markets.  This gives us a unique perspective on developments in mobile payments from both extremes of the spectrum – from the poorest people in sub-Saharan Africa and the Pacific Islands to affluent societies in Australia and the US.

What we have observed is that mobile payments mean very different things to different people in different markets.  Not a day goes by when a new mobile payment system somewhere in the world is launched amidst much fanfare and excitement and we are told how it promises to dramatically change the world and improve peoples lives – I mean we should know – we have built some of these mobile payment services ourselves.  The promise of change may indeed be true in some cases but the experience is likely to be completely different – even disappointing – for others.  Fundamentally mobile payments will impact on people and societies in very different ways because societies have different attitudes to money and payments.

The suitability of using a mobile device for making payments is well documented.  We see blasts of news and publicity about the disruptive promise of Google Wallet, Square and other Smartphone payments in the US and Europe but these are mostly completely irrelevant to people in other countries because they operate in totally different ways in a totally different (and sometimes isolated) context.  It is premature and even irresponsible to set high and unrealistic expectations about what will be achieved globally in one broad brushstroke because in many cases it cannot.  The fact is that each market (country) has its own payment ecosystems and it takes time for these to adjust, apply and adopt new technology and new payment models.

Mobile payments often need to be highly tailored and customized for the market in which they operate – sometimes completely re-engineered.  It is not a matter of only changing the currency on which the platform operates.  Even the name and branding of the service in some cases is critical.  Simply transplanting a technological solution from one market to another usually does not guarantee that the service will work – as is evidenced by spectacular failures over the last few years.  Imagine transplanting the kidney of a whale into a baboon and being completely surprised when the baboon eventually dies of kidney failure!  We laugh at such absurdities yet this metaphorical equivalent occurs in the world of mobile payments.  To illustrate this, a recent study by the GSMA showed that of approximately 200 mobile money deployments in the world, less than five were profitable.

So what do we mean when we talk about mobile payments?  Sure it might have something to do with using a mobile phone to make a payment but a mobile payment to the street vendor selling Beetlenut in Port Moresby in Papua New Guinea means something totally different to the merchant banker checking their account balance in a CBD café in Sydney Australia.

I attended a mobile payments conference several years ago at which one of the speakers (an individual from a well respected financial institution) attempted to classify the act of performing telephone banking from a mobile phone (as apposed to using a land-line phone) as mobile banking!  You see the problem?  Ridiculous!

Checking a bank balance via Smartphone app might appear to be similar to checking an account balance via an M-PESA or Globe GCASH mobile wallet but very different things are happening behind the scenes.  Ok, so you ARE using a mobile phone but the type of mobile device and where and how the money is accessed in the background including the payment ecosystems are fundamentally very different.  Does this matter?  Possibly not but it can be very confusing to the consumer and as an industry we have a responsibility to provide accurate information to the consumer.

Believe it or not, when it comes to making simple payments using a mobile phone, the payment platforms in emerging markets are often more sophisticated and offer more functionality than many banking platforms in the developed economies of the West.  How can this be so?  In the same way that emerging economy’s have by-passed the fixed-line telephony infrastructure phase of telecommunications rollouts and have jumped directly to mobile networks, the same has occurred with payments.  In emerging markets, mobile payment systems are not necessarily constrained by the legacy architecture of 40 year old banking systems.

In the second part of this blog topic we will discuss in more detail what the different mobile payment models are, how they work and where they are used.

Harold Dimpel is the founder and CEO of mHITs Limited an Australian based developer and operator of mobile payment services.  In Australia, mHITs operates the mHITs SMS payment service that allows consumers to send and receive payments by SMS text message.
 mHITs is also working in emerging markets in the design, deployment and operation of mobile payment solutions for the so called “unbanked” (people who do not have access to traditional banking services).  For more details visit www.mhitslimited.com.