Mobile money: Does it add up?

Report questions the merits of m-wallet services in developed world
Mobile money: Does it add up? Pyramid Research, Research, Surveys

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Despite a few m-wallet success stories, it remains unclear whether m-payment services are attractive enough for operators in developed markets to justify the millions of dollars invested in these services, according to a report from Pyramid Research.

Providing m-payment services for the unbanked has a clear and immediate effect on the operator’s churn rate and revenue, but in the developed world this is still more of an expectation, according to the report.

“The revenue potential associated with m-payments services for the unbanked is large and immediate. Safaricom launched the service in April 2007; in just two years, in 2009, M-Pesa accounted for 10% of the operator’s mobile service revenue, and in 2012, 19%,” said Stela Bokun, senior analyst at Pyramid Research. “On the other hand, the ecosystem needed for m-wallet services to become mass market in the developed world is very complex and takes a long time to build.

“It took around one decade after the initial investments for NTT Docomo’s m-payment service to yield relatively sizable revenue, 9.3% of total service revenue in 2012,” Bokun added.

 

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