Posted by Bethany Frank on 02 Nov 2015
Mobile payments are already expanding in many major markets worldwide. Although growth in the United States has been slower than one would expect, mobile payments have been a boon to developing economies such as Kenya and Bangladesh. Even in the United States, major household names such as Starbucks are making notable breakthroughs in the space.
In 2014, mobile payments represented 7% of global electronic transactions. Many economists and financial analysts expect the mobile payments market to continue growing through 2017. Already home to a robust microfinance industry, Bangladesh is one region that has seen a sharp increase in mobile transactions in recent years. Its fierce adaptation of mobile payments has largely been fueled by a company called bKash.
For many in Bangladesh, delivering money to loved ones is an absolute necessity and one that was risky in the past. Launched in 2011, bKash has become a lifeline for millions of its daily users in Bangladesh. It allows users to utilize their mobile phones to deposit, withdraw, and transfer money. Users can also pay utility bills and purchase goods (though on a limited scale) using bKash. The company reports processing more than 70 million transactions per day.
Mobile money transactions have also taken off in Kenya thanks to a company called M-Pesa. Much like bKash, M-Pesa allows users to deposit, withdraw, and transfer money. Since its success in Kenya, M-Pesa has partnered with regional banks to expand in Afghanistan, India, South Africa, and Eastern Europe. By 2013, over 17 million Kenyans were using M-Pesa. The Economist also reported that about 25% of the country's gross national product flowed through the mobile platform in 2013.
Before platforms like bKash and M-Pesa, many in developing economies had little choice but to send money to relatives through sub-standard or completely unofficial means. The lack of accessible financial services in both Bangladesh and Kenya allowed mobile payment platforms to fulfill a critical need for millions in these regions, leading to great success for innovative financial tech companies and even greater financial freedom for their users. Mobile payment platforms have empowered millions to gain control over their own finances.
It's possible that consumers in the United States have been slower to adapt to mobile payments because they have different financial needs. From credit cards to prepaid services, there is no shortage of other well-established payment methods for Americans to choose from when deciding to make a purchase. But despite the challenges and competition in the ultimate first-world market, mobile payments have been picking up steam. In 2013, Starbucks CEO Howard Shultz remarked:
“No single competency is enabling us to elevate the Starbucks brand more than our global leadership in mobile, digital, and loyalty. Starbucks is a clear leader in mobile payments and we are encouraged by how consumers have embraced mobile apps as a way to pay.”
After beta testing, Starbucks’ mobile payment system finally became available nationwide at more than 7,400 store locations this past September. Dubbed “Mobile Order & Pay”, the app gives customers the ability to place an order and pay before entering a store, thereby allowing customers to bypass lines and simply pick up orders at their location of choice. Starbucks recently announced plans to expand its mobile service to Canada.
Mobile payment platforms like bKash, M-Pesa, and Mobile Order & Pay by Starbucks indicate growth in mobile payments worldwide. As mobile phones continue to play a central role in modern life, many companies would benefit from providing consumers with mobile payment options. Visit our Resource Center to learn more about mobile payments and innovation.
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