Did the Developed World Steal Mobile Payments?


 

Once upon a time, a mobile payment was performed by transferring value from one mobile phone to another. In Africa, we had MPesa and that is what we understood as a mobile payment. There were confusing semantic issues, but these revolved mostly around the difference between “mobile payments” and “mobile banking”.

The difference here is quite easy to resolve. With “mobile banking”, there is normally an account at a financial institution involved – banking, whereas with “mobile payments” the need for financial account was mostly not required. You still need some relationship with a mobile operator (who hold the account in the background) - mobile.

Generally, we in Africa had a clear idea of how a “mobile payment” worked. If you scan the international financial media today, you will see that, actually, there is another way to transfer value from one mobile phone to the other – NFC (Near Field Communication).

Yes, this is true. You do not send anything from one mobile phone to another with NFC, you have to touch another NFC device, which could or could not be a mobile phone.

The mobile phone needed to do NFC is usually a smart phone that has special stuff in it to enable NFC. We all know that our “mobile payments” that use SMS and USSD work on any phone.

In fact, it was designed to work on every phone and definitely the cheaper phones. However, there are significant difference in what we know as “mobile payments” and payments made with NFC. An NFC device can interact (pay) another device that is NFC enable, but not a mobile phone.

A consumer with a NFC mobile phone can make a payment to a NFC enabled PoS terminal which is not a mobile phone. Therefore, my position is that for a transaction to be labelled as a mobile transaction there should always be two mobile phones involved.

If there is only one mobile phone involved then the transaction should have another name! Since by far the majority of African “mobile payments” meet my definition, and because we are the champions at it, I say that we get to make the rules around the definition.

As for NFC transactions, I think the developed world should spend some more money and come up with a more appropriate definition for its use.