[From Stanford Social Innovation blog, 6 May 2014]
For mobile money services to evolve, providers need to support all the activities that go on before, during, and after customers make payments.
The defining characteristic of mobile money is that it works in real time. With real time, customers can get immediate confirmation that transactions related to their account are complete, make immediate use of funds they receive, and check that their balance matches their expectation. Real-time transaction processing ensures that all transactions are properly funded; it also removes counterparty or credit risk, which enables the safe use of a large number of third-party retail stores as cash in/out outlets.
Mobile phones have carried real-time practically everywhere. How can bringing together immediacy, control, and trust not revolutionize money—especially in cases where people have not experienced that combination before?
But the fact that real time is mobile money’s basic ingredient doesn’t mean that all services running on mobile should be evanescent, limited to the here and now. I’ve argued elsewhere that the transition that mobile money needs to make—if it wants to get into everyday use—is from making payments to managing payments. Managing payments essentially means following the lifecycle of different payment types—in other words, adding a time dimension to the present real-time mobile payment service.
Consider the following four categories of examples:
Again, notice how managing the context of these various types of transactions is about seeing payments through their logical time. While the basic mobile money platform ought to remain real-time and credit free, higher-level mobile money services ought to open up possibilities for credit (through products such as M-Shwari, which offers small loans on demand) and bring back a time dimension so that users can incorporate mobile money more easily and meaningfully into their daily lives.
Based on a recent review of mobile money product innovations that I conducted with my former colleague Mireya Almazán, now at GSM Association, there is relatively little product development progress aimed at managing rather than making more-diverse kinds of payments. This is partly because we cannot implement the kind of manageability services described above on simple mobile phones alone; it will require an evolution to richer user interfaces based on web access and especially smartphone apps. ICICI Bank’s iWish service in India is one early attempt to reframe commitment savings products in much more intuitive terms. But we will soon be at the cusp of rapid smartphone adoption in developing countries, and mobile money will get a lot more exciting soon.