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Mobile payments: Moving beyond the credit cards

Mobile commerce and mobile payments have passed another important threshold: in many countries, more people are using their phones – than credit cards – to buy things.

In a recent BuzzCity survey of some 3300 mobile consumers, we found that the number of people making mobile payments has tied or surpassed the number of people using credit cards in 17 out of 23 countries.

This trend is most evident in places like Bangladesh and South Africa, where other forms of electronic payment – credit cards, debit cards, pre-paid cards – are common, but not ubiquitous. In Bangladesh, 28 per cent of mobile consumers told us that they use credit cards; in South Africa, it’s 15 per cent. In both cases, more than twice as many consumers now use their phones to make daily purchases (55 per cent and 36 per cent respectively).

From a regional perspective, m-payment adoption appears strongest in Asia. In Bangladesh and Pakistan, more than half of all mobile consumers use their phones to make purchases. We’re seeing strong adoption rates in India, Philippines, Sri Lanka and Thailand as well. In Europe, mobile payments are most popular in the UK; in Latin America, Guatemala leads the way.

Overall, nearly one in four mobile consumers (24 per cent) now use mobile payments compared to 17 per cent for credit cards and 12 per cent for debit cards. Mobile payment use has grown more than 50 per cent since our last poll in 2013.

While mobile payments are on the rise, the most common way of paying for items bought via mobile is still cash. Sixty-four percent of mobile consumers tell us that they either pay cash at the store or upon delivery.

Prepaid Cards
We are also seeing increased adoption of reloadable prepaid cards (which generally look like ‘traditional’ Amex, MasterCard and Visa cards). Eighteen percent of mobile consumers use prepaid cards to pay for items with their phones and 12 per cent use them for daily purchases.

As prepaid card offer some of the same theft and loss protections as credit cards – plus you don’t need to have a bank account to get one – we expect growth in this sector to continue to rise, particularly for online shopping.

Mobile Banking
Two years ago, only about one in four mobile users told us that they used their phones to bank. Now, at 42 per cent, that ratio is closing in on one in two.

At the same time, we’re seeing a decline in the number of people who do not have a bank account at all.

Yet despite the rising popularity of mobile transactions, the majority of consumers only learn about mobile banking services from TV ads. Less than 20 per cent hear about mobile banking direct from a bank or from a mobile ad. At the same time, there are still a lot of misunderstandings – and even apprehension – about m-banking. While most consumers now know that they can bank with their phones, each time a new feature is released, consumers need to be educated about it. There’s often a sense of insecurity associated with new features that needs to be overcome as well. Banks need to reallocate their budgets to use multiple channels – and mobile, in particular – to better reach out to consumers.

The Bigger Picture
Mobile commerce and mobile payments only came into being 18 years ago in 1997. Less than two years ago, BuzzCity documented how mobile payments had overtaken cheques. At that time, my colleague Hisham Isa wrote, “How long do you think it will be before (mobile payments) surpass credit cards?” Now we know the answer.

Daniel Brandt is the Vice President (Business Development), BuzzCity