How can mobile wallet payments cover a “non-banking” population of the country?
Mobile wallets are the kings of media agendas
I’ve been writing a lot about the use of mobile payments for the last couple of weeks, probably, still influenced by the research of Juniper Research, which I am referring to in my latest posts. We see an increase in the use of mobile wallets like Apple Pay and Google Pay in Ukraine. A lot of payments are made with the use of mobile devices in favor of different goods and services — if at the points of sale there is a technical possibility to accept an NFC payment (not a card, but a smartphone). Supermarkets, clothing stores, and boutique galleries — the smartphones are rapidly moving to the rank of payment instruments, especially among the most active audience — young people in the age of 20–35 years old, following the trends. They always keep their smartphones in the hands, thus taking out an ordinary wallet is simply not necessary. For such users, an argument “why shall I pay cash, if there is a card?” is not relevant anymore. They have been using cards for a long time. That’s why Apple Pay and Google Pay got so popular.
But how about people who use a bank account in a more traditional way — as a point of receiving a salary and then withdrawing it from an ATM? Or those who do not trust card transactions because of the risks of phishing and so on? Earlier, I mentioned that fintech business is building a bridge of trust between such people and banks through its services. In the transactional business this process is called “financial inclusion”. One of its tools — mobile wallets with electronic money — like banned WebMoney or Ukrainian GlobalMoney. They provide the necessary alternative to card payments without the need to share your passport data, ID code etc with the service provider. This is a standard practice for the emerging markets — and the Ukrainian payment market, despite its success in e-commerce, still remains evolving.
The existence of e-wallets is important not only in terms of the fact of having a payment alternative, but also as a method that involves new customers in the online payment process, rather than simply getting existing ones from the competitors.
QR and NFC payments — drivers for the growth in the number of payments and the average check
A good example is a mobile wallet M-PESA. Remember, I talked about it a few months ago? The project was founded in Kenya not just as an alternative to a very small number of bank branches in the country, but as a lifeline for people who do not have access to financial services. It uses the mobile balance as a balance of payments — both for Internet payments, and NFC-terminals. At the moment, more than 100 000 merchants have registered in the wallet, and by 2023 the turnover of transactions in the Middle East and Africa will exceed $16 billion per year.
Another case is the payments with the use of QR code, which Mastercard has already launched and is actively implementing in Ukraine, mainly for the public transport payments in the regions. The partners of our company LeoGaming have an ambitious goal — to connect 40 million of merchants by the end of 2020. The main obvious advantage of QR-payments is a speed. There is no need to search for a website or enter the application. There is no need to enter SMS confirmation codes.
Mobile wallets of both types create the conditions when cashless payments become available to a much wider audience. In the case of card wallets, it is simply convenient, and electronic money also provides an alternative for “non-banking” users and an important anonymity. The task of fintech-companies is to realize these opportunities in the specific services. Bonuses, cashbacks, unique offers, no commission — even all of these have existed before, they are still necessary. Because people are expecting this.