Financial Sector Development in Africa: Opportunities ... - World Bank

Mobile Financial Services in Africa: The Next Generation 59
now make up the largest share of mobile phone sales worldwide; the
cheapest phones of this sort, made in China or Korea, can cost less than
US$100. These phones have the capability of downloading applications
that can, among other things, secure data transmission end-to-end around
a payment or banking-type of transaction, addressing a concern often
raised by regulators. There are a number of implications for mobile financial
services.
First, mobile Internet is likely to boost the demand for mobile payments.
For one thing, it should reduce the cost significantly for providers
and customers. Mobile data may cost 1/50th of the price of an SMS for
an equivalent message size. Furthermore, by opening access to a new
world of digital goods ranging from music to e-books, which can be
downloaded regardless of location, the mobile Internet is more likely to
stimulate demand for remote payment—at present, payees may be limited
to other people on the same network or else defined bill-payment
recipients such as power companies.
Second, the convergence of mobile with the Internet means that
mobile banking users will be exposed to the same threats as Internet
banking customers. The number, spread, and type of viruses infecting
mobile phones are growing rapidly, exposing clients to the same vulnerabilities,
from phishing for credentials to more sophisticated forms of
attack that would lead to unauthorized access to client accounts or data.
Since the phones are connected to the World Wide Web, unauthorized
access could come from almost anywhere. Since many of the mobile
Internet consumers in Africa will be entirely new to the world of banking,
let alone Internet banking, the level of threat will be elevated for these
users. Inevitable schemes and scandals will result in calls for special vigilance
on the part of regulators and providers who are already hardpressed
in some places to deal with issues arising from the far smaller
numbers using PC-based Internet banking.
Third, on the supply side, the use of Internet channels will enable a
whole new range of providers to offer payment services to the public. This
proliferation of new entrants may cause customers to favor providers with
trusted and established brands like banks—banks that may, until now,
have been restricted from offering mobile services by the cost or terms of
access offered by mobile operators. But it will also enable new forms of
competition for retail-payment space. As an example, with over 225
million registered users in a large number of countries, in 10 years, PayPal
has built from scratch one of the largest global retail electronics payments
businesses independent of the international card associations Visa and