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Doing business ccOrdINg TO A rEPOrT Some doubt whether models,” the researchers say. “One jointly published by the Bill and small business uses it to help parents A Melinda gates Foundation and market demand is make more timely school-fee payments, consulting firm McKinsey & company, strong enough while another uses it to establish informal an expansion of the kind of mobile-based savings groups. Even non-payment money-transfer system that M-Pesa organisations are finding ways to use the already successfully operates in Kenya new payment infrastructure. For instance, could be a boost to other African Bridge International Academies, a low- nations’ economies. in most African countries. However, cost, for-profit educational franchiser, Mobile money is not mobile banking. there has been doubt from potential found that M-Pesa could help it obtain Mobile banking (or m-banking) allows investors as to whether market demand real-time financial data that enabled it to cellphone users to access financial is sufficiently strong – apart from in become more trusting of franchisees and services wherever they are, whereas Kenya, where M-Pesa has achieved good reduce record keeping.” mobile money is money transferred market penetration and become a global When digital payments take hold, as by a cellphone owner to another benchmark for similar services. they did in Kenya, consumers eventually person. The name also applies when According to the report, government profit from the related savings, the report someone uses their cellphone to pay for regulators in many African markets are states. The cost of making remittances via services or goods. paving the way for e-money and the entry M-Pesa is about half that of other formal “In most of sub-Saharan Africa, only of non-bank operators. “Business models domestic-remittance services. Moreover, a small percentage of upper-income and systems for electronic remittances customers can instantly send payments households enjoy the convenience of – both domestic and international – have from their cellphones, instead of travelling card-based online and mobile banking already been well tested in other markets an hour or more to distant bank branches. payments – while most consumers still around the globe. These factors should Many customers in sub-Saharan Africa pay with cash,” the report says. make it easier for digital payments to need bank services but simply live and “One study shows that more than leapfrog the costly development of formal work too far from a branch office, the 90% of retail transactions in parts of banking by introducing advanced mobile researchers say. Kenya remain cash-based and gallup [payment] systems,” the researchers say. “Equally important is that electronic research’s survey of 11 countries in payments bring financial services to sub-Saharan Africa found that more than Lack of consumer research vast numbers of unbanked and under- 80% of adults there have made account But they pose a key question: Why, then, banked families. They dramatically payments or remittances with cash. have many businesses with solid track “given the lack of digital payment records in mobile money services around penetration, consumers, banks and the world hesitated to venture into these governments are still bearing the high seemingly high-potential African markets? Mobile Money cost of cash payments – costs associated They speculate that a lack of market transactions to with manual acceptance, record research about what consumers in various keeping, counting, storage, security countries want, plus a dearth of detail MushrooM Mobile money and transportation.” about the risks involved and investment According to the 2013 Gemalto As higher operating costs are normally required, may be acting as a deterrent. Netsize Guide – a comprehensive passed through to the consumer, reducing “As with most new business ventures, services could boost cash transactions could result in lower limited information is available about the reference work on the state of global mobile commerce (also costs for consumer goods and services. nature and size of markets, the investment known as ‘m-commerce’) – There would also be opportunities for required, the risks involved and, most there are more mobile money increased online retailing (as potential importantly, the nature of customer needs african consumerism customers would have a more viable and preferences. New research and accounts than bank accounts in Kenya, Madagascar, Tanzania market analyses can help in reducing that payment system); for businesses selling and Uganda. knowledge gap,” the report notes. big-ticket items (where cash transactions The 81,8-million users that are According to the report, broad are difficult or even dangerous); and for businesses where up-front deposits are acceptance of mobile-based digital currently registered are expected on a continent where an estimated 80% of adults still make required (for example, accommodation payment platforms can have wide-ranging to increase to 381-million by payments with cash and most people remain unbanked, the bookings, travel reservations and car hire). benefits for African economies. 2017, with the total value of The researchers say the required “In Kenya, for example, many start-ups opportunity to signifcantly increase digital payment options could mobile technology penetration to make are attempting to incorporate M-Pesa transactions mushrooming from US$44-billion to US$395-billion. be a game-changer for both businesses and consumers. such a system work is already in place as part of their entrepreneurial business 52 strategicmarketingafrica Second quarter 2014 Second quarter 2014 strategicmarketingafrica 53