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Mobile Wallet Services are Coming to Developed Nations

There's a significant mobile technology innovation that was originated where you might least expect it. To date, the most meaningful new financial services offering that was created specifically for delivery over mobile communication networks has occurred outside of the most mature markets.

Moreover, as mCommerce via smartphones finally starts to gain traction across a few developed regions, a number of markets in sub-Saharan Africa and emerging Asia have already experienced a different kind of mobile money revolution.

The basic mobile phone has enabled individuals in these highly under-banked markets to achieve first-time financial freedom, to the extent that by the end of 2014 more than 15 countries had more people with 'mobile money' accounts than those that had traditional bank accounts.

According to the latest market study by Juniper Research, the number of mobile money transfers is expected to increase by nearly 150 percent in 2015 to more than 13 billion transactions.

Juniper has also observed that with U.S. social payment service 'Venmo' now experiencing transaction traffic approaching nearly $1 billion per quarter, leading American social media companies were now introducing their own financial services offering.

As an example, Snapchat has partnered with Square to deliver a person-to-person (P2P) financial services offering, while Facebook launched a U.S.-wide service last month. But most traditional U.S. banks have yet to respond to these latest developments.


Meanwhile, the Juniper global market study found that in China, both the WeChat and Alipay software apps saw astonishing spikes in P2P traffic during February 2015.

This was the result of result of 'red envelope' P2P gifting activity when WeChat users engaged in more than 3.3 billion P2P transactions in just 6 days over the Chinese New Year period.

In developing markets, the research found that while mobile airtime top-up accounted for the largest share of transactions, there had been a significant increase in the deployment and adoption of new services -- such as micro-lending, small savings and micro-insurance.

Juniper believes that mobile network operators were well positioned to deliver key data for risk assessment in the form of customer top-up histories, social media usage and location data, which could be subjected to big data analytics applications -- to provide information for consumer credit scoring.

"The beauty of mobile-based micro-insurance is that, for the first time, the un-banked can be afforded protection against natural disasters. Without it, a farmer suffering crop failure could lose his livelihood," said Dr Windsor Holden, managing director at Juniper Research.

Other findings from the market study include:

  • There are now 17 markets, the majority in sub-Saharan Africa, where the number of mobile wallets exceeds the number of banked individuals.
  • Mobile network service providers are expected to generate $2 billion from mobile money services this year, rising to $4 billion by 2018.

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