It may seem like Americans have harnessed their cell phones to do pretty much anything and everything. But while Asian teens pay for train tickets and necklaces with a swipe of their cell phone and Kenyans use prepaid minutes to buy real-world goods, Americans seem stuck on paper money and credit or debit cards — behind both high-tech first world countries and the developing world in using phones as a wallet.
Forrester, an independent market research company, reported from a 2010 online survey that less than 6 percent of American adults have ever used mobile payment. In Japan and Korea, however, the practice is widespread. According to consulting company Accenture, 69 percent of respondents to their recent survey in Asia said they favor using cell phones for most of their payments, compared with only 26 percent in Europe and the U.S.
This isn’t surprising to Kamal Quadir, founder of a company called CellBazaar, which connects 60 million Bangladeshis in a cell-phone-based, Craigslist-style virtual marketplace.
Less than 5 million people in Bangladesh have access to a bank account, Quadir said, which is why mobile money is popular there in a way it isn’t in the U.S.
“We have 60 million mobile phones, and almost no debit cards. If we had had 60 million debit cards in the country, we probably wouldn’t be able to make this happen,” Quadir told InnovationNewsDaily.
How it Works
In advanced mobile payment systems, imbedded chips tap into a cash account, access credit cards or link to bank data, which allow a phone to make “proximity” payments — waved in front of a sensor that communicates transactions wirelessly with the device.
This January, Starbucks launched what it calls the largest mobile payment program in the U.S., allowing customers with smartphones to download an app that essentially turns their cell into a Starbucks card, which can be waved in front of a sensor to pay for coffee. Paypal offers the opportunity to transfer money to other users through phone proximity — clinking phones together to transfer funds. But compared to the ubiquity of these systems in places like Korea and Japan, U.S. use is low.
The success of mobile payment in these leading countries is partly due to widespread use of phones equipped with near-field communications (NFC) technology. With an NFC-enabled phone, and movie theaters and train stations boasting thousands of NFC receivers, Japanese or South Korean consumers need only wave their cells to buy almost anything.
Developing World Cell Money
But the benefits of mobile payments aren’t limited to countries with advanced technology. In fact, nations with some of the least developed banking and communication infrastructure and some of the poorest residents are huge markets for mobile money. According to Quadir, without the benefits of accessible banking services or debit and credit cards, poor workers embrace the chance to use the only available network — cell phones — to manipulate money.
And without the infrastructure to provide landlines, cell phones have become hugely popular in the developing world.
“Landlines in most developing countries are next to impossible to get,” said Vijay Mahajan, a professor at the McCombs School of Business at the University of Texas at Austin. “When you get a landline, the whole neighborhood shows up for a celebration.”
Quadir’s CellBazaar, which he sold in 2010 to Telenor, allows users to post goods for sale, and browse items they’d like to purchase, either using a computer, an Internet-enabled cell phone or via phone calls and text messaging.
His next project is a mobile money system, called “bKash,” which will allow Bangladeshis to access and transfer money using mobile phones. A network of local shops will be outfitted to transfer physical money into mobile money and vice versa for a fee. Once mobile, the money can be traded to other users across the country instantly.
Mobile money has also taken off in Africa, most notably a program called M-PESA in Kenya, which provides much the same service Quadir envisions for bKash. According to the United Nations, the Democratic Republic of Congo and Zambia also have similar services. In places like Kenya, it’s much easier to just send someone some of your cell phone minutes via text services than to find a bank, get cash and buy them a birthday present, Mahajan said.
In many of these countries, new systems like bKash and M-PESA are capitalizing on a populace that has already embraced resourceful methods like trading minutes for goods and services. Similarly, a robust cell phone culture in places like Japan and Singapore has helped fuel the spread of their mobile payment systems.
Here in the U.S., we seem to be far behind either end of the spectrum — married, for now, to the leather wallet.
This article was provided by InnovationNewsDaily, a sister site to TechNewsDaily.
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