Prepaid and Remittances Key To M-Payment Growth

Prepaid and Remittances Key To M-Payment Growth

Lafferty report highlights opportunities for prepaid service providers and remittance operators

London, 8 June 2009

A new “Mobile Payments” report from Lafferty Group concludes that m-payments will have significant implications for the $300 billion cross-border remittance market. It also states that high mobile phone usage in the important unbanked and youth markets, coupled with key features such as easier reload and the ability to carry multiple schemes on a phone, will make mobile a preferred option for prepaid service providers.

The acceleration of mobile phone usage among the unbanked, who currently have limited access to payment mechanisms, and the continuing importance of remittance transfers made by migrant workers underline the potential for new innovative mobile payment solutions. In developing countries where less than 30 percent of individuals have a bank account, it is not unusual for 80 percent of the population to own a mobile phone. Unbanked customers have traditionally been targeted by prepaid schemes and there are tremendous opportunities for cashless transactions.

Michael Lafferty, Chairman of Lafferty Group, said “M-payments offer a huge opportunity for the prepaid industry, both through providing unbanked consumers with a medium through which to make electronic payments and as an attractive means of payment for low value transactions. It’s not just in developing countries. In terms of customer acquisition / retention, prepaid mobile schemes could provide early adopters with a competitive advantage in targeting young unbanked individuals. Moreover, the potential for multiple payment vehicles to operate on the same mobile phone provides opportunities for prepaid in both closed and open loop areas.”

Globally, the cross-border remittance market is huge, with an estimated market size of $300 billion, expected to increase to $500 billion by 2012. Mr Lafferty explained “Cross-border remittances could play a key role in the growth of remote mobile payments. The existence of a ubiquitous global telecoms network and large numbers of individuals wishing to transfer funds cross-border, in many cases to people without bank accounts, provides a huge potential market.”

Whereas banks currently account for just 30 percent of cross-border remittance business, the report suggests that potential new solutions could provide banks with an opportunity to increase market share using mobile technology and undercutting current fee structures.

In considering the wider potential growth of mobile payments, the report warns that the more the banks hesitate to enter the mobile space, the more alternative payment suppliers are likely to fill the void.

The Lafferty ‘Mobile Payments’ report was commissioned by the Prepaid International Forum (PIF) and by Money Transfer International (MTI), an international trade association promoting the development and interests of the global remittances industry.

Notes to editors: Lafferty Group provides research, intelligence and advisory services to banks and other providers of retail financial services worldwide. The company’s activities include international Councils – where senior financial industry executives meet regularly to share best practices - conferences, newsletters, reports and customised research and advisory services.

ENDS

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