Mobile Money: How Singapore Compares to the Rest of the Worldby Dora Ziambra October 10, 2019
Mobile money has changed the face of finance since the concept was pioneered in Kenya nearly 20 years ago.
We can broadly define mobile money as any monetary value stored on a mobile device, be it a feature phone or a smartphone, that can be used to make payments.
Thanks to increasing levels of internet access, mobile money now exists in every global market. There are currently 866 million mobile money accounts and $1.3 billion is transacted every day in 90 countries around the world. In South Asia alone, the adoption of mobile money has grown by 46% over the past five years.
Like other parts of the world, each market in Asia applies the technology of mobile money in a different way.
So what are these variable business models – and how do places like Singapore stand apart from other regions?
To answer this question, we need to go back to where this financial revolution began.
The rise of mobile money finds its origins in sub-saharan Africa.
In the early 2000s, UK government researchers noticed that Kenyans were using mobile phone credit as a kind of proxy currency. People would trade goods and services in exchange for mobile air time.
This led to the establishment of M-Pesa, one of the world’s leading mobile money transfer providers. Systems like M-Pesa brought financial services to billions of people who did not have access to a traditional bank account.
Crucially, the system was designed to fit the needs of an emerging market. The simplest phone can be used to pay for goods at shops all over Africa, even in a rural village without electricity.
While other markets have developed much more complex mobile money models, the concept was pioneered in Africa and it remains a crucial part of the economy in most African nations.
China is the canonical example of a mobile money society. Mobile payments are integrated into every kind of transaction, from buying groceries to ordering a taxi. Even gifts to family members are now handled by mobile wallets.
China’s “red envelope” tradition, in which people give red envelopes of cash to loved ones on celebration days, was digitised by WeChat in 2014. On New Year’s Day 2016, the app recorded 2.3 billion red envelope transactions.
China’s AliPay is the world’s largest mobile payment platform, with an estimated 1 billion users worldwide. While Chinese and African mobile payments may look worlds apart at a technological level, they are remarkably similar in function. Both offer a simple, digitised way for people to make instant payments for almost any service available in their respective markets.
European markets have been slower to adopt mobile money as 92% of European citizens already have accounts with mainstream banks. That hasn’t stopped digital challenger banks appearing, however, and many offer a mobile wallet product as part of their service.
Money transfer services like Azimo allow users to send money internationally, and also integrate with mobile top-up networks in Africa and elsewhere.
These products allow users to access mobile money in a variety of ways, such as by integrating their payment card with Apple or Google Pay. Nonetheless, it seems that bank accounts will remain dominant in Europe for the foreseeable future.
Singapore and Southeast Asia
Singapore is rapidly becoming a cashless society, with players like Singtel Dash, Grab Pay, DBS Paylah and around 25 others fighting for a share of the competitive mobile wallet market.
The Monetary Authority of Singapore started accepting applications for digital bank licenses in August 2019. These licenses will bring new challenger banks to Singapore with a range of financial products aimed at increasing adoption and encouraging loyalty.
Mobile money adoption continues to rise in ASEAN countries. Some 19% of the population are now registered users, up from 3% just five years ago. With 80% of market share still on offer, there is plenty of room for growth.
In the last year alone, mobile payments grew by 24% in Vietnam, 19% in Thailand, 17% in Malaysia, 14% in the Philippines and 9% in Indonesia, according to the PwC Global Consumer Insights survey.
The complexity and diversity of the global mobile money market shows that there is no one-size-fits-all solution, and it’s clear that different providers will continue to offer specialised services that meet different needs.
For many markets, digitised versions of existing bank accounts, such as credit/debit cards that integrate with Apple and Google Pay, will continue to grow. In others, bank accounts are being left behind completely.
One thing, however, is certain – the future is mobile.
Featured image via Unsplash