Mobile Payment Services in South Africa

Since mobile payments became possible the whole money transfer market changed in an almost revolutionary way – though not as fast as many consulting firms and market research companies had foreseen. But payment and money itself became another meaning. In this paper we discuss the impact of mobile payments confining them to transactions in which a mobile device is taking part. Today this seems to mean a smartphone. But as we will show this is not true for all parts of the world. After discussing the mobile payment procedures and technologies on which this new type of financial transactions is based the paper gives an overview of the main characteristics of the mobile payments market in general and in special the situation in South Africa where our investigation took place. In a worldwide survey (1Q, 2012) from Ron Shevlin, Aite-ACI on the payment habits of mobile phone users the author defined a special user type: the Smartphonatic who intends to use his smartphone for any reason it can be used for. This means also as a virtual wallet replacing any cards or cash wherever possible. This user type which was seen as a market driver was found also predominant in South Africa where the rate of smartphones on the mobile phone market is still very low, under 20%. But in the whole the figures from this survey suggest South Africa as one of the front-runners in the use of mobile payment services, only beaten by India. Our investigation shows that smartphone users are no drivers on the mobile payments market in South Africa. Not so much because their proportion is still too low but more from reasons which are characteristic for the South African payment market. These reasons are stressed out by all our interview partners who belong to the key players of this market.Cash is still the most common used currency in South Africa. Mobile phones are not the first choice for payments and if so the predominant mobile payment service products are using USSD for which a smartphone is not necessary. Any mobile phone will do the job....