Mobile Payment is not a new concept in the commercial world, in the early 2000s when European mobile operators started launching GPRS-based data services they had targeted payments as a key opportunity. But, as with a lot of innovations that come before their time, the infrastructure was not fully developed, the services not completely streamlined and most importantly the customers’ behavior and mindset had not yet adapted to this concept. By the mid-2000s the mobile payment services were reasonably successful in Japan and South Korea – markets that are known to be early adopters of ICT and mobile technology.

By the later part of the 2000s the market identified the unique and different needs of the developing market and this period saw many innovative solutions being brought to market specially for the developing markets. For example in Kenya M-PESA, a mobile-phone based money transfer and micro financing service, showed how simple mobile phones could be used to leverage the mobile infrastructure to overcome the lack of standard payment mechanisms and costlier infrastructures prevalent in developed countries.

In the mobile payments ecosystem there are two partially separate ‘worlds’ we need to look at –

(i)                  Developed economies and markets – in this world the ecosystem is driven by the increasing penetration of smartphones and supporting applications. The Mobile Payments infrastructure in this ‘world’ is constituted primarily by the smartphone services framework and innovative applications that integrate mobile security, accessibility and wide range of supported protocols. In this world the value proposition of mobile payments for the potential consumers is the convenience of using their most used or ‘closest’ appliance (smartphones) to identify (search), compare (reviews, best price) and purchase (payment processing services, delivery services).

(ii)                Developing economies and markets – in this world the ecosystem is driven by the increasing adoption of basic mobile phones as reliable ‘service outlets’ and the improving mobile infrastructure resulting in greater accessibility and lower cost of owning and operating a basic mobile phone. Unlike in the developed economies, in this world the smartphone penetration is not that high and thus this world follows different parameters and rules for the mobile payments ecosystem. Here the value proposition for the potential consumers is the higher accessibility to products and services that they would not be able to access without a reliable payment gateway.

With these two worlds and two sets of rules and needs currently we are seeing different types of innovative solutions cropping up in both the worlds and these solutions are bringing the ecosystem closer to the unique needs of the market and the consumers.