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Being a mobile payment professional, I have always been curious to identify the elements influencing mobile commerce business in emerging nations. The growing ubiquity of mobile phone users proves the potential of mobile money & extension of services to unbanked population. Above all, most of the financial institutions, telcos, vendors are also endorsing mobile payments, however, the challenges are inevitable.  In the recent news, International Finance Corporation, a member of World Bank Group is supporting Nepal to develop an efficient national payment system to regulate all electronic payment mechanism in the country.  This should be a great initiative to develop the infrastructure in the country in order to promote mobile money, nevertheless, there are other segments as well where we should emphasis on.

In spite of last few years of chaos in Nepal, competition among the financial institutions, money remittances hubs and telcos has proliferated. There are evidences of financial institutions actively serving the populations in remote areas for money remittances while telcos are engaged to expand the telecommunication spectrum to serve every corner of nation. Integration of telecommunication system with financial institutions will be surely urging a revolutionary changes to the traditional banking in remote areas.  As of now, mobile phone users practice sending air time transfer to another phone, similarly a basic phone can also be used to manage financial arrangements. As a progression, very soon we will be using our air time for shopping. The gigantic volume of remittance has also been the major factor to induce the technological advancement in the region.

In any region across the world,  the business model for mobile money could be Bank driven, Telco driven or Parternship Led. The regulatory frameworks and AML compliance need to be well taken care of before jumping into this space, which eventually strectes a barrier to any privately held company to start mobile money remittances. However, if a new entrant follow a partnership led model with a leading bank or telco they can easily spread to mass and thereby truncate the market size. Considering two or three players in the mobile payments space serving a small region, It becomes mandatory to share merchant and payout agents. It justifies that even if the consumers are reluctant to use the mobile money, the threat of new entrants exist.

Currently the mobile phone is primarily used for voice or data but taking it to next level in under developed countries has been a challenge. There are money remittance hub serving unbanked economies in remote areas through payout agents thus discouraging the people to use their mobile phone as a wallet. As long as these big players are providing substitutes to the services, people will stick to the traditional approach.

Statistics reveals that, Nepal and Bangladesh come in the top 5 countries to receive remittances, however a proficient channel of remittance is still absent in the region. The investment cost to build a seamless receiving end for this remittance volume also introduces barrier to the development. The experience has also claimed that it’s challenging to any one entity to fulfill all of buyer of remittances services.

We comprehend that all the risk involved in retail payments will exist in mobile space as well. However, winning the confidence of customers should be the priority on top. In spite of several fraud cases exist in credit card payment, financial institutions succeeded to obtain the assurance of consumers. In the same way, we can create a trusting relationship and convince them to encourage mobile payments in the nation.

As a conclusion, I would say that we have impressions of live case studies of mobile payments in developed countries and we completely understand the future and benefits of mobile payments. However, educating user about m-commerce, unified receiving channel for remittance, existing traditional way of banking and securities should be addressed on priority basis, otherwise the vision of mobile money will only be fragmentary.