Mobile P2P Hurtling Mainstream, Just Not Here
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12 October 2009
On the heels for of my most recent mobile banking/payments report (The View from the Mobile NFC Finish Line: Bank Economics in a Mature Mobile NFC Payments World), I have turned my attention to the developing markets in Africa, Asia and Latin America. One striking finding is just how quickly mobile P2P payments have spread, beyond the launches of industry "stars", such as M-PESA in Kenya and G-Cash in the Philippines. By my rudimentary count, there are mobile P2P solutions in 23 markets on the African continent, either in pilot or full roll-out. Keeping in mind that M-PESA was launched in early-2007, just 2 1/2 years ago, this is truly amazing. Not only are mobile P2P payments expanding their coverage area, they're going deeper too -- users are in the millions in Kenya, some countries have multiple/competing offerings, and B2B use cases are emerging. This growth stems from the core benefits of efficiency, financial management and security that mobile P2P delivers. This rapid spread in Africa is due to the dominance of a couple of multinational players. Specifically, MTN and Zain are MNOs (mobile network operators) that provide mobile services in various countries. Their approach has been to offer mobile P2P payments in one "incubator" market, and then quickly roll out the same service to other markets. Another multi-national player, Nokia, is also about to enter the fray with its Nokia Money services. In Asia, most MNOs tend to be narrower in national market scope, and thus geographic spread is not snowballing quite as quickly. However, this may be of little concern, as the populations of such Asian countries as India and China provide plenty of market depth. In all markets, increased competition and economies of scale will bring about lower pricing, speeding along mobile P2P adoption even faster. From a developed market perspective, such opportunity certainly has to be tantalizing. No doubt, many players are trying to figure out how to replicate it in industrialized countries. However, during the course of my research, I have found it very hard to draw any meaningful business relevance between what is happening "over there" vs. "back here" -- disparities in payment infrastructures, banked populations, financial sophistication and income levels cause mobile P2P's benefits to resonate far too differently.
You're right, there is quite a bit of buzz in the U.S. lately, but no numbers (perhaps it's still too early). I'm still waiting to see if U.S. consumers would be willing to pay for this.
While there may be some niche applications here, they will pale in comparison to domestic remittance (as you suggest) and "P2b" (person-to-small-business) transactions in developing countries.
You question the business relevance of P2P payments in developed markets. I have been asking the same question. What I cannot see is across-the-board willingness for people in the U.S. to pay a fee to transfer money to someone else. I'm sure there's some amount of opportunity. But it certainly isn't going to solve an overwhelming problem like it has in places like Kenya, where prior solutions included asking a cab driver to deliver money and hoping that it will only cost you his high-percentage fee and not the full amount (if he disappears with it).
Am I missing something? P2P is certainly starting to generate a lot of buzz in the U.S. Where are people finding the business case for this?