The impact of technology on the
Date
2011-05-10
Authors
Kotze, Alta
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Abstract
Mobile phones have transformed the telecommunications industry profoundly.
Phones are equipped with functionalities that open up new business
opportunities to mobile network operators, banks and merchants. Near Field
Communication (NFC) is a contactless application that can be applied within a
mobile phone to enable it transact very much like a mobile credit card or wallet.
The mobile payments environment continues to evolve with various
stakeholders and business models emerging worldwide. Each stakeholder is
motivated by their own set of business case drivers to either pursue or reject the
move towards mobile payments.
Revenue sharing arrangements associated with any of the potential business
models represent both a point of great potential competitive friction and
ultimately the key to a break-through for rapid deployment of mobile payments.
Drawing on the international studies of mobile payments, this report evaluates
the possible business models and revenue sharing arrangements that could
potentially evolve in the South African mobile payments environment. The
report also examines the reasons and business case drivers for merchants to
adopt the technology and “self-organised” solutions. Lastly, the paper includes
an analysis of the possible disruptions that this technology could cause. The
assumption is made that mobile payment solutions will replace cash and card
based solutions and become the payment instrument of choice as it offers more
processing power capabilities than cash and cards.
The research methodology employed in this study was qualitative and utilised
semi-structured in-depth interviews where the content of transcripts were
analysed. Thirteen interviews were held with mobile payment industry experts
and practitioners in banks, mobile network operators and interchange
companies.
The research elicited some interesting findings. Collaboration was regarded as
the most feasible business model and respondents believed that the answer to
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revenue sharing lay within the value that each stakeholder brings to the mobile
proximity payments environment.
Merchants play a key role in the mobile payments environment and their
motivation to adopt the technology relies on the cost benefit continuum.
Merchants are motivated to adopt the technology if it reduces cash handling,
lower shrinkage, increases throughput and reduces the risk in terms of theft.
Merchant “self-organised” solutions in competition with banks and mobile
network operators is a possibility; but an unlikely option considering the recent
deployment cost of upgrading payment infrastructure for contactless smart card
technology in South Africa. Merchants encountered large capital expenditure
during the latter upgrade and they would rather take a “wait and see” approach.
Lastly, it is unlikely that mobile payment solutions will replace cash and card
based solutions except for specific niche markets such as transportation and
fast food restaurants. Both cash and cards as payment solutions are linked to
customers’ perception of the “prestige” of using these payment solutions.
Description
MBA - WBS
Keywords
Phones, mobile, Cell phones, Mobile payments, Electronic payments