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Mobile money services experience fastest growth in emerging markets

Mobile money services for the unbanked, popular in emerging markets, are showing both much faster adoption than m-wallets and related services addressing those with a bank account as well as a steeper revenue curve, according to a new report from Pyramid Research.

From Digital Content to M-Wallets: M-Payment Strategies for Operators highlights the differences between the banked and unbanked, and provides a broader context for mobile operators in general. Pyramid Research takes a closer look at mobile payments, such as the traditional card payment process, the benefits of mobile payments to different elements of the value chain, the positioning of Visa, Google and PayPal, and a description of contactless payments and NFC technology. A comparative, top-level analysis of the 10 mobile operator case studies is provided, where key operator approaches across a range of different markets are examined. Then Pyramid Research takes a more detailed view, focusing on specific mobile payment market segments, namely digital content, online commerce and in-store commerce.

“A fundamental distinction when looking at the mobile payments opportunity is whether the end user has a bank account or not,” says Stela Bokun, Pyramid Research Senior Analyst and author of the report. In markets like South Korea and Japan, typically 90 percent of adults or more have a bank account, while in emerging markets like Kenya, the portion ranges from 25 percent to 60 percent. The distinction is important because the needs of those who have a bank account are very different from those without one, and furthermore there is the opportunity to provide banking and other financial services to those without a bank account.

In Kenya and Tanzania, the contribution of m-payments services for the unbanked to the respective operators’ total service revenue exceeded 10 percent within three or four years. Meanwhile NTT Docomo is not expected to reach such a ratio until this year, eight years after the initial launch of its m-payment services, and SK Telecom is only expected to reach double digits in 2016, six years after launch. This is despite the fact that both Asian operators have been addressing this market for even longer through a number of different initiatives and technologies and made significant investments, notably but not exclusively in financial institutions, Bokun notes.

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