Mobile Payment Systems

In the last few years, usage of mobile phone devices has increased all over the world prompting significant socio economic impacts. In the foreseeable future, it is evident that the impacts will continue to shape the world in different ways. Specifically, mobile phones have increasingly been used to make payments has gained specific prominence in recent years. The benefits of the mobile payment technology have, however, not been uniform across the world owing to the different environments. In the developing world, mobile payments have resulted in economic development through increased efficiency and financial inclusion (Aker & Mbiti, 2010). On the other hand, the technology has had positive impacts, albeit relatively lower, in the developed world. The reason for this difference stems from the fact that the developed world has had ready access to financial services and thus the adoption of the mobile payment technology has been on a much lower scale.

Mobile payment is not a single type of payment but one that encompasses a diverse set of classes with unique benefits for each class. Broadly, the definition of mobile payment refers to a variety of financial transactions that are initiated with a mobile device. The manner in which mobile payments are made across the world produces different impacts on the consumers. It is no doubt that the uptake of mobile payments has been irregular across the world. For instance, the emergence of mobile payment technology in Africa has been more than a blessing at a time when efficiency in financial payments was low. Today, one can make payments for goods without having to produce cash money at shopping tills in Africa. The personalization of the experience has driven more people to use the technology as they deem it like a personal bank. Before, the uptake of such payment methods as debit cards and credit cards was viewed as a reserve of the rich and affluent members of society due to the cost implications that followed their use. However, with mobile payments, consumers can make payments without being charged a penny.

In the developing worlds, there are more than 160 mobile payment products with about 90 of these being in operation in Africa. The highly successful MPesa system from Kenya is an example of the success of mobile payments in Africa. In fact, more than 75 percent of the people in Kenya use mobile money to make transactions. The benefit of having mobile payments bridges the gap of not having bank accounts at leading financial institutions. Mobile payments thus provide consumers with an option of saving their money and even getting loans from the same platform (Frederick, 2014). Essentially, the consumers can make payments for purchase of goods while still sending money from the comfort of their homes. In addition, the system provides an alternative where financial service providers cannot provide ATMs because they deem them unprofitable.

In the developing world, mobile payment systems have the benefit of increasing financial inclusion through the provision of efficient electronic payments. The development allows for banks to achieve wider reaches in areas where branch networks are not a feasible option. In fact, most of the banks in the developing world have adopted the use of mobile payment systems through SMS and USSD channels. Another advantage of mobile money systems is in the transfer of funds from one user to the other. This use of mobile payments is important to the consumers in that it facilitates the financial remittances at both domestic and international levels. In essence, people living in urban centers can now comfortably remit funds to their folks and relatives in the rural areas.

In addition to the personal uses of mobile money systems, the same have been used in the efficient and affordable point of sale purchases. The use of mobile payments in supermarkets and shopping malls has increased in recent years in the developing world pointing to the growing penetration of mobile money systems. Moreover, mobile money systems are further used in consumer to business payments using the mobile devices. The emergence of this use of mobile devices is effective in transactions in remote locations where carrying large sums of money is risky (Aker, 2010). Further, mobile money systems are also used to pay for utilities and necessities in remote locations such as electricity and water bills.

In the developed world, there is already an access to established electronic systems of payments. The use of smart phones to wire payments through such applications as the NFC in the developed world has gained traction in recent years. Moreover, the people have inclined towards the use of mobile internet technology in making payments for the utilities such as house rents and parking fees. Traditional mobile payment methods such as PayPal continue to gain relevance in the developed world whereby consumers can link their bank accounts to the PayPal accounts. The use of PayPal largely restricted to online transactions and purchases and is viewed as a safe way of making transactions. The use of contactless methods such as NFC continues to provide an alternative method of making payments without having to use the more risky card payment method.

The trend towards mobile payments has increased the competition among service providers thus increasing the value that consumers get from such developments. In addition, the use of mobile payments requires that service providers put in place safety measures to avert the risks of tapping and hacking of systems by malicious users. Consumers are much more likely to incline towards system providers that provide the highest value benefit while safeguarding the security of their transactions. The emergence and uptake of mobile payments is a positive sign for competition as it provides alternative platforms for financial transactions. In such cases, the financial institutions are kept on toes due to the competition that prevails when mobile payments are at play.

The fact that mobile phones are more accessible than other forms of payments makes them an ideal bet in terms of financial transactions. The implication of having mobile payments taking over the financial markets is positive to both the businesses and consumers (OECD, 2012). The consumers have the advantage of an efficient mode of payment for their purchases. Essentially, the consumers can order for goods while at the comfort of their homes and make payments while awaiting their delivery. A negative implication of the use of mobile payments is the vulnerability to security breaches and the consumers may be exposed to fraud. Hacking of the systems is an increasing threat in the use of both mobile and internet money systems raising concern over the use of such systems. The business community also benefits from efficient payment methods through the advancement of mobile payments. Transactions are equally fast therefore making sales more effective.



Aker, J. C., & Mbiti, I. M. (2010). Mobile phones and economic development in Africa. Center for Global Development Working Paper, (211).

Frederick, L. I. (2014). Impact of Mobile Money Usage on Microenterprise Evidence from Zambia.

Aker, J. C. (2010). Information from markets near and far: Mobile phones and agricultural markets in Niger. American Economic Journal: Applied Economics, 2(3), 46-59.

OECD Economic Surveys. (2012). Paris: OECD Pub.



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