The mobile phone is catalysing virtual currency and payment development across the globe, says Geraldine Mitchely, business development manager for mimoney, virtual currency powered by Standard Bank which resides on the mobile phone.
This fact, she says, is enabling platforms for e-commerce to compete and converge with the physical retailing environment. Mitchely was speaking at the Online Retailing Conference and Exhibition held at the Indaba Hotel in Fourways last week.
“Mobile phones have become the centre of people’s lives,” Mitchley says. “They reside in the palms of our hands and enhance the things we do every day – communication, entertainment, shopping and payments.” She adds that mobile banking is now the fastest-growing retail banking channel, and that it is changing the way retailers interact with customers.
There are estimated to be 45-million mobile phones in South Africa. “This increases online connectivity by three times its traditional penetration, and is more than twice the size of the active banking market. We have already seen banks partner with mobile operators as sales of mobile far outperform the rate of debit and credit cards issued."
While there is a drive to provide wallet and API solutions on smartphones as new retail channel entrants, payment innovation on the mobile phone, particularly in developing countries and in South Africa, tends to concentrate on the movement of cash between sender and receiver.
“These virtual money solutions are servicing a previously underserved market, and our retail partners are enjoying phenomenal month on month growth with these services," Mitchely says.
A staggering amount of money is being spent in virtual form around the globe. For example, online payment mechanism PayPal's total payment volume for 2010 was nearly $92-billion and demand for Apple paid-for downloads totalled over $300-million in September 2010 alone.
In South Africa, only 0,3% of total retail revenue is attributed to online sales, although the country’s online industry is valued at R2-billion a year.
“Virtual currencies and mobile connectivity will rapidly change these statistics, as we watch the payments landscape change at warp speed,” Mitchely says.
She cautioned that the ubiquitous adoption of e-currencies as serious contenders to cash, credit and debit cards was dependent on their being easy to use, convenient, secure and having low to no transaction fees.
And because of its convenience and proliferation, mobile phones themselves are becoming the payment instrument of choice over card, EFT and cash payments.
One of the latest developments, near field communications (NFC) technology, or tap and pay technology, turns cell phones into devices that deduct the price of an item off one’s virtual cash balance when they are tapped against a payment point.
mimoney is powering NFC transactions across university campuses, transit networks, events and loyalty eco-systems, assisting the growth of adoption of virtual currencies.
While NFC products are still in their experimental life stage, Mitchely believes mimoney is the virtual money system to empower NFC.
“We have designed mimoney in such a way as to be open to integration with all other payment platforms. It is thus bank agnostic, and can enable payments in any mobile wallet, NFC card or phone in the virtual space, or at physical point of sale,” she concludes.
At the same time, this South African Reserve Bank approved e-currency continues to gain market share by taking steps to ensure that it is as attractive to both retailers and consumers as possible. Over 25 merchants already accept mimoney, and this number grows every month.