Impact of Mobile Payment Applications and Transfers on Business
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Date
2019-12-20
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IGI Global (Business Science Reference).
Abstract
Since M-PESA, the first African mobile money platform, was launched by Safaricom in Kenya in 2007, the growth of mobile money transfer (MMT) has adopted a quantum leap in growth in certain developing countries. For instance 96 percent of households currently outside Nairobi [Kenya] have at least one M-PESA account (Logan, 2017). This adoption is significant and is currently changing and upsetting the financial landscape of these nations where the MMT has been adopted. Agrawal (2009) defines mobile money transfer as the use of a mobile phone in order to transfer funds between banks or accounts, deposit or withdraw funds, or pay bills or use of a mobile device to purchase items, whether physical or electronic.
Accordingly, Orozco (2003) illuminates that MMT service is an aspect of a broader concept emerging in the electronic payment and banking industry referred to as Mobile banking. Irrefutably the double-digit growth of MMT in Africa has been credited to the progression of the platform beyond peer-to-peer mobile payments to include paying for shopping, utility bills such as school fees, water, rent and electricity, receiving dividends, and diaspora remittances. This trend has led Logan (2017) to admit that the impact of MMT to poverty reduction a definite result of improved financial behavior – by facilitating easier transactions and safer savings – and changes in the occupational choice of users. This trend has forced corporates to adopt mobile money linkages and transactions to maintain their market share heavily due to consumer convenience posed by MMTs. For instance, Kenya Power a power utility company in Kenya estimates that 80 per cent of the utility’s 654,953 pre-paid customers buy electricity tokens through mobile money platforms. Kenya Airways, the Kenyan national carrier has adopted mobile money payments now make up one per cent of total air ticket sales in 2015 .Without a doubt the as the World Bank (2009) notes the primary function of MMT services has been to reduce the costs of making payments from one individual to another, especially across large distances . Adam and Walker (2015) posits that as a result mobile money tends to increase the macroeconomic stability of the countries contrary to popular expectations that it would destabilize the conduct of monetary policy in those countries. For instance M-PESA as part of economic expansion and customer convenience the transaction costs in Kenya has significantly reduced for instance, during its launch the average distance to the nearest bank was 9.2 kilometers, eight years later in 2015 the average distance to the nearest M-PESA agent was a mere 1.4 kilometers (Logan,2017). MMT tends to increase the velocity of money in circulation because it cuts the transactions and time costs of making retail payment prompting efficiency of transactions desired by customers (Nampewo & Opolot, 2016).
MMTs triumphs in Africa have been tried and tested and they are being replicated around the world. Recent inventory by the social venture credit SMS suggests that there are at least 23 distinct MMT, operating or pending in 20 countries following the success of MPESA (Pulver, & Gunnar, 2009). These places include Greenfield deployment in Indonesia launched in 2009 and the SMART Communications’ Island Activations Program in the Philippines. M-PESA like infrastructure was even adopted by the leading Afghan mobile network operator, Roshan, anticipate building an M-PESA-like infrastructure in Afghanistan by end of 2010 (Pulver & Gunnar, 2009). Mobile money users are able to form more diverse risk-sharing networks, it’s not surprising that users, compared with non-users, tend to receive more remittances from more people (Logan, 2017). Kamukama and Tumwine (2012) notes that the proliferation of mobile payments may disadvantage commercial banks by weakening their liquidity positions but they are now adopting the same platform to do business efficiently.
MMT is vital in enabling households to lift themselves out of extreme poverty (Logan, 2017). The innovations in the financial sector, including mobile money, have been shown to have statistically significant positive long-run effects on money velocity in Uganda (Nampewo & Opolot, 2016).
The intention of the authors of this book is to bring to the fore an in-depth assessment on the impact of mobile payment applications and transfers on business and customers; keenness has to be drawn on how the emergent area of mobile money technology has changed relationships in business organizations and consumers.
Mobile payment applications have spawned the world over and have been adopted to varied business needs and settings particular to Sub-Saharan Africa. The advent of MMT has had a significant impact and has borne a momentous stride on business entities and the general economic systems although with a considerable resistance due to complacency in use of cash and card systems; security assurance in mobile transactions, underlying risks associated to innate ability to data privacy. The impact of mobile payment applications and transfers on business and customers is therefore current and appealing to all stakeholders whether in the Telcom industry, management, mobile money operators as well as policy analysts; all will find this book being a valuable tool for career development, practitioners and academics.
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Citation
Opati, T. Z. (2019). Impact of mobile payment applications and transfers on business (T. Z. Opati & M. K. Gachukia, Eds.). IGI Global. https://doi.org/10.4018/978-1-7998-2398-8