The Russian operator VimpelCom has announced a strategic partnership with the credit card company Mastercard. Mastercard will use its mobile payments technology to integrate within VimpelCom's integrated telecommunications services. VimpelCom aims to provide mobile banking and payment solutions to both banked and underserved customer base.
Mobile payment solutions are becoming increasingly popular in developing markets as it offers a very secure method of transferring money to individuals in remote locations. It also offers a range of bill payment and basic savings account solutions particularly in cash driven markets where standard money transfers are expensive and highly administrative to manage.
Vimpelcom currently has around 212 million subscribers in 18 countries. The mobile payments partnership with Mastercard will be particularly popular in Cambodia, Laos, Algeria, Bangladesh, Pakistan, Burundi, Zimbabwe and Central African Republic. While mobile money solutions are becoming increasingly popular aided by the positive impact of M-PESA in Kenya, mobile operators can offer a more efficient service and offer the solution in undeserved rural areas where basic banking services are almost non-existent.
What next for mobile money solutions in emerging markets?
In its most basic form, mobile money solutions work by registering a user to a mobile money service provider to create an account. The user then is able to give cash to the nearest agent who will transfer the money to the intended recipient through another local service agent. The handset is again used to inform the quantity of money transferred, the location of transfer and further authentication. In more advanced markets mobile payments can use the same principles embedded in NFC devices. However with little NFC penetration in emerging markets operators are capitalising on more traditional mobile payment services.
There are now a wide range of mobile money services for developing markets, these services go beyond basic money transfer and extend to customer to merchant transactions, where purchases can be made by the handset to the a seller in perhaps a cafe or restaurant. Other operators and vendors have recently launched these services.
Turkcell's mobile wallet: Turkcell's mobile money solution was one of the first to incorporate NFC into the system. Turkcell's NFC payments products have experienced slow adaption however is using a face to face payment system to enable users to make physical payments with their handsets. The service allows the customer to load a range of debit or credit card details onto their handsets giving them a payment choice at time of purchase.
Etisalat's Flous: This digital wallet service allows money storage, instant transactions through debit or credit cards and even entering the home or office with an NFC key. The service has recently been marketed to accept payments from coupons in news papers or even at the airport allowing the customer to select a delivery address and time.
Although NFC is a popular technology and fast entering the mobile sector, it is important that operators in developing markets still focus on mobile money services that do not require an NFC equipped handset. Turkcell for example experienced slow adoption to mobile money services as much of its customer base did not have access to a NFC enabled mobile phone. Loyalty schemes should also be adopted to promote the service as it develops curiosity and repeat business if there is an incentive to keep purchasing via a mobile payment rather than a cash payment.