Banker S.A. March 2012 | Page 15

Mobile Payments
‘leapfrogging’ banks in a
race to offer mobile
payments at a lower cost.

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“Mobile operators in Africa are taking advantage of their
ability to ‘leapfrog’ the expensive switching systems of
banks and money transfer organisations to bring their users
mobile payments at lower fees,” says Deloitte.

Roger Verster
Financial Services
Industry Leader
at Deloitte

A snapshot analysis of m-payment products in Africa
showed that most of the existing m-payments products are
presently provided through partnerships or relationships of
some form.

“These lower fees are a major driver in the increasing
popularity of mobile payments (m-payments), as costs are a
major concern to many who earn low incomes,” said Roger
Verster, Financial Services Industry Leader at Deloitte.

“Several large mobile network operators have teamed up
with major financial institutions to offer mobile payments
and have strengthened their positions further by creating
coalitions with institutions, trusted brands and digital
technology providers. This is most likely due to the
regulatory restrictions imposed on network operators as
they do not hold banking licenses,” said Verster.

“Presently there are two concepts that are instrumental
in changing the game regarding the use of m-payments,”
Verster said.
“The first is a fundamental focus on m-payments through
the introduction of novel mobile payment systems that will
function as card replacements in existing environments.”

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“Side-by-side with this drive will be a concentration on
new lower-income mobile payment systems that are
focused on promoting financial inclusion, viral distribution
and personal transactability.”
“Though these concepts may sound similar they are, in
fact, very different. They seek to achieve the same goal, but
operate across different levels of the social-spectrum.”
“It can therefore be expected that both these systems
are likely to co-exist for many years to come. Indeed,
the current ecosystem is multifaceted and changes in
technology for the near term are likely to add additional
levels of complexity to this environment,” said Verster.

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Designed and produced by Creative Solutions at Deloitte, Johannesburg. (803528/Mar)

Mobile Payments Advertorial.indd 1-2

Based on its analysis, Deloitte suggests that there are four
possible mobile operating models that may evolve across
Africa with varying degrees of financial institution and major
network operator involvement.
The first, led by financial institutions, could see one or more
institutions launching a mobile payments solution. They
would partner with major network operators as required to
co-develop products or deploy them jointly to reduce risks
and investment costs.
By leveraging RFID sticker technology, financial institutions
could also bypass the major network operators by issuing
stickers that can be placed directly on, or inside, mobile
devices.
“The need to invest in infrastructure and R & D mitigates
against this approach. This is required before m-payments
technology standards are defined so the technology can
reach critical mass and then obtain mass retail acceptance
of the technology. The inability to integrate an RFID sticker
directly with a mobile phone also limits future functionality,
and will result in a model that is vulnerable to more
integrated offerings,” Verster said.

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