 | Issue: | Latin America 2014 |
| Article no.: | 6 | |
| Topic: | The future of Mobile Wallet is now | |
| Author: | Juliana Honda | |
| Title: | Account Director | |
| Organisation: | TNS Brazil | |
| PDF size: | 205KB |
About author
Juliana Honda is Account Director, TNS Brazil, with ten years experience in market research from which eight specifically in ad hoc projects for telecom and companies in the technology sector.
Extended experience in quantitative and qualitative research in customer satisfaction projects, brand image, segmentation, mystery shopping, among others.
Graduated in International Business from Hawaii Pacific University and post graduated in Market Research from ESPM.
Article abstract
Let’s understand first what Mobile Wallet means. The standard definition of Mobile wallet is the use of phones to make purchases utilizing NFC (near field communication) technology whereby consumers touch their phone to a sensor in order to pay. But Mobile Wallet is a lot more, includes also the usage of SMS or Mobile apps.
Full Article
Several movies such as Back to the Future and Minority Report, and even cartoons such as the Jetsons presented during the 90’s and early 2000’s a world where you can pay by using biometric technology. We’re not in that stage but we are a giving a step forward with the usage of mobile devices as a form of payment.
Why is that? Because Mobile devices have become the most important device of technology, 54% of Latinos consider it as such. And to prove that just think about the last time that you forgot your mobile at home. What a crises! This device is truly empowering the consumer by giving them access to voice communication, be the first access to news, the point to access to the Internet anywhere and anytime, the access to personal music and also a way to access to mobile wallet and banking services.
Mobiles are also the device with a higher penetration. 87% of people in Latin America have a Mobile.
Having said that mobile is the closer device to the consumers, which make it logical to turn it into a payment method.
But let’s understand first what Mobile Wallet means. The standard definition of Mobile wallet is the use of phones to make purchases utilizing NFC (near field communication) technology whereby consumers touch their phone to a sensor in order to pay. But Mobile Wallet is a lot more, includes also the usage of SMS or Mobile apps. Let’s put to examples to clarify what is mobile wallet.
When I enter to the app of a Cinema and buy tickets for a movie. Am I using Mobile Wallet or not? The answer is no. I’m using my phone as a way to pay for my tickets, I could have done the same thing using my computer, this is called mobile commerce (m-commerce).
Another example, in Kenya SAFARICOM, the mobile largest network operator, launched seven years ago, M-Pesa, a system that uses a SMS to allow consumers to pay for products or services in a store, so you send a message with the amount and enter your pin to confirm the charge. This service is now used by 17millons of Kenyans equivalent of 2 thirds of the adult population and around 25% of the country’s gross national products flows through it. Is this Mobile Wallet or not? The answer is yes!
Mobile wallet: the adaptive technology
Almost four out of ten mobile users globally, two out of ten in Latin America have used their mobile phone to pay for products or services either via SMS, a mobile phone app or by touching their mobile phone to a sensor.
The usage in Latin America concentrates mainly on paying for small daily purchases (15%), paying bills (water, electricity, phone) (14%), Paying for groceries (12%), paying for fuel (11%) and paying for transport tickets (10%).
Consumers identify convenience as the key driver of their enthusiasm for mobile commerce. Quickness and easiness are the top driver.
However there are still several barriers to face by this service. First the ones related to safety: four out of ten users in Latin America consider that paying with the mobile is not secure. And second barriers related to the lack of knowledge of the advantages two out of ten consider that the service it’s not needed and one out of ten still prefer to use cash.
Mobile finance providers must be well aware of these nuances as they figure out which services they should offer – and which brands they should offer them through. Target the right markets with the right approach and they are likely to find in mobile wallet a major opportunity for increasing market share.
It’s a joined effort of different players
When talking about the adoption of Mobile Wallet we must also think about the different players, considering: bank institutions, carriers, retailers, handset manufactures, agents and regulators. That should work together in the generation of policies and procedures to apply the charges and gain the appropriate commission.
Retailers for example have a large responsibility on adoption, 68% of consumers trust on the retailers when talking about the drivers of Mobile Commerce (Mobile Banking and Mobile Wallet). In many cases, particularly in Japan and South Korea, this adoption is quickly explained by the ease of payment in-store and infrastructural efforts retailers have made.
Consumers in Latin America are only likely to make use of mobile wallet solutions if they are truly more convenient than using cash or card alternatives by taking 3 actions.
1. Remove friction: Save shoppers time at the moment of checkout
2. Tailored promotions: Save shoppers money on what matters to them
3. Enhance the experience: Save shoppers angst by providing quick and easy to use mobile payment solutions
Let’s see the cases of two brands that have successfully implemented this technology
Mobile Offering like Starbucks app encapsule a range of functions into one interface, offering users a more seamless experience that saves consumers time, money and angst
Users can link their Starbucks cards to the app by scanning its bar code, then use the value stored in the app to pay for drinks and food via mobile
Users can link their Starbucks cards to the app by scanning its bar code, then use the value stored in the app to pay for drinks and food via mobile
The app also keeps track of the rewards they’ve earned through their past Starbucks purchases and allows them to redeem them on the spot
This has led ten million people to adopt the app, carrying out 2.1 million mobile payments via the app each week (August 2014)
La Caixa
The La Caixa mobile banking app makes use of advanced features such as augmented reality to provide consumers with an engaging banking experience
Offers consumers a complete banking experience via the mobile, including the ability to buy tickets for events and movies via the app
App also makes use of features such as augmented reality when locating nearby ATMs and branches to provide consumers with an engaging and entertaining experience
Application is available on all major OS platforms, allowing the service to grow to over one million users conducting six million transitions per month.
Easy Taxi
Easy Taxi is an app to ask for a taxi via mobile that has revolutionized the way to demand this service. The company was founded on 2011 in Sao Paolo and has received several awards for their innovation.
This application change the way you relate with a taxi, you ask for the service and you can see in matter of seconds the name of the driver, his picture, car model an plates. When it drop you can rate his service and even leave a note for other to read. Finally it gathers information of your favorite places, routes you take and time you ask for the service, this way the Easy taxi can position their car units in the time and place needed to cover the demand.
The opportunity: mobile wallet as differentiator
The growth in demand for mobile wallet services makes them a vital differentiator in competitive markets. The availability of mobile wallet services will soon begin to influence consumers’ choice of which retailer to visit, particularly in countries where mobile payments, and avoiding the need to carry cash, are recognized as enhancing personal safety.
In each market, mobile commerce providers must tailor their offers to the level of technology available, the enthusiasm for and understanding of mobile banking, the providers that consumers best trust to deliver payment services, and the nature of the freedom that mobile commerce provides. Freedom from fear and financial exclusion potentially demands very different consumer messaging to freedom from queuing and call centres.
Keys to a successful mobile finance solution:
1. Focus on convenience as a driver for all mobile finance solutions, but remember that convenience means different things to consumers
2. Security and confidentiality concerns need to be addressed to fuel uptake
3. In Latin America, consumers often may not have experience with financial institutions as a whole – educating consumers will be key
4. Ensure that mobile banking solutions are tailored to local handset capabilities and dominant OS platforms in each market
5. Mobile wallet solutions need to save consumers time, money and angst at the checkout for them to be preferred over cash and card alternatives
