Mobile Wallet – Not just a First World Replacement for Credit Cards
March 16th, 2015 - Posted by Peter Cook
In developed economies with high penetration of debit & credit cards, the positioning of a mobile wallet is really that of an alternative to a plastic card – essentially your card’s credentials stored in a phone. Maybe multiple cards where the user chooses the card that is going to do the NFC type payment.
If we take a purist view on a mobile wallet, these debit or credit cards are only one ‘source of funds’. Equally, sources of funds could be a bank account, a mobile wallet based stored value account, loyalty points account, a membership account or a government voucher. Again, in a first world economy, the greatest number of transactions are from traditional debit and credit card plastic and so this is the low hanging fruit for a wallet system.
In developing nations, some of these sources of funds are not available. In particular, debit and credit cards are not held by consumers and largely they also do not have bank accounts. These large communities of unbanked or underbanked have different sources of funds with which to make a transaction. Maybe it’s their prepaid phone airtime or their mobile money account. Maybe it’s a PIN or Voucher that they have purchased with cash from a local street vendor with which they top-up their stored value account in their wallet to then make a digital purchase.
As opposed to just improving a first world tap and go payment by swapping a plastic card for credentials on a phone, it is in developing nations that a mobile wallet has real life changing meaning as we bring financial inclusion to the next billions. Financial inclusion of these developing nations will become the biggest driving factor of the next decade. We’ll notice more and more countries becoming more educated on financial services and leverage such services.
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