The world is not quite ready for mobile payments presently but if MasterCard’s latest report is to be believed, we are not far away. This has been revealed by the ‘MasterCard Mobile Payments Readiness Index’ (MPRI) report that gauged the readiness of 34 countries across the globe for mobile payments.
The MPRI runs on a scale of zero to 100, with 100 representing complete replacement of plastic cards by mobile devices, an unlikely scenario. In MasterCard’s judgment, the point of inflection—the stage at which mobile devices account for an appreciable share of the payments mix—is a Mobile Readiness score of 60.
According to MasterCard the readiness of countries to adopt mobile payments are based on six different success factors, namely:
- Consumer Readiness: willingness to use mobile payment and current usage of the three payment types.
- Environment: Economic, technological and demographic elements, such as Internet access and per-capita income.
- Financial Services – Depth of the financial services sector, including accessibility and affordability, and penetration of digital (plastic card-based) payments.
- Infrastructure – Mobile phone penetration, network coverage and breadth of NFC terminals.
- Mobile Commerce Clusters – Partnerships among financial services, telecommunications companies, governments and technology providers.
- Regulation – Structure and efficiency of each market’s legal and governmental bodies.
The report reveals that no market has progressed to the inflection point of 60 on the mobile payments adoption curve and no country has hit the dart. There are no standouts— with the possible exception of Kenya—and no one country has a monopoly on success factors. There is an opportunity in every market.
Though no one country meets the expectations, Singapore tops the ranking not because it has a monopoly on all success factors but because it has an upper edge in all of them. The country has 100% mobile coverage, 70% Internet penetration and 68% mobile phone penetration. It also leads in the regulation category with “well-developed laws in relation to information and communication technology.”
It is interesting to know that US, a country famous for plastic money and superior growth in terms of mobile payments than other countries, ranks third on the list.
“While scoring quite well compared to other markets in terms of integration, there remains much work to be done in the United States. That’s one of the reasons mCommerce is so far ahead of other varieties of mobile payments: The infrastructure, especially as regards the roles and responsibilities of the players – is already in place. The existence of Isis and Google Wallet do much to boost the United States’ score; but until both these projects begin to achieve air speed by engaging all players, it’s still in the early days.”
Talking about APAC, the report suggests that the needs of mobile payments vary in scope between developed and emerging worlds. This is fuelled by the fact that Kenya ranks fourth on MasterCard’s index despite having little infrastructure or mobile commerce clusters. Yet, it is precisely this lack of infrastructure that has led Kenya to be one of the most ready countries in the world for mobile payments because it is building a new transactional model almost from scratch.
A very different market from Kenya is China, not simply in scale, but in character. In China, the consumer base is ready for at least two types of mobile payments—Peer-2-Peer and m-commerce—and the telcos are ready to oblige them. It is financial services stability that needs to be focused and worked upon.
India ranks 31.5 on the index, driven by high scores in the Infrastructure component, because it has a high number of mobile phone subscriptions and has made considerable investments in telecom over the past few years. Financial Services scores were a bit lower than average, due to the limited number of cards in circulation among Indian consumers. However, when it comes to Regulation, India is once again middle of the road compared to its global counterparts.
India’s intellectual property protection scores are specifically low, along with the procurement of advanced technology products. India’s score is weighed down by its overall Environment, which ranks second to last. India has significantly low household consumption expenditure per capita; the percentage of Indians using the Internet is 7.5 percent compared to an Index average of 52 percent.
The report says Indian consumers are below average from a consumer readiness perspective. But the familiaritiy and willingness to make use of mobile payments is high in males, rather young males between the age group of 18-34 in a higher income bracket.
MasterCard presupposes that there is a distinct need for mobile payments, though in developed countries, mobile payments are not based on need, but rather on creating extra value for the consumer. Talk about developing countries and Kenya has already taken the lead through M-Peer. Others are following suit learning from them, like Airtel Money in India, but there is still a long way to go. Whether mobile payments will deliver an easy, seamless ecosystem that creates that kind of value remains to be seen.
- Link to MPRI report.