Abstract

Innovations, the proliferation of technology, and competition have led to the emergence of mobile payments as telecommunication companies try to offer better services to their consumers. Interestingly, banks, major retailers, and mobile manufacturers have all being in a rush trying to scramble for the huge potential that this innovation presents. A simple observation in some of the big shopping stores, hotels, or even a commuter transport system will show you how mobile phones play an intricate role in people lives. It is now a norm for people to fondle over their phones as they enjoy various services offered by the applications in this gadget. With this observation, it is clear why the mobile payment innovation, is probably the greatest that has occurred in the financial sector.
Keywords: Financial inclusion, Near Field Communication, Unbanked
 

Mobile Phone Payment as a Radical Innovation

Introduction

Just before the start of the Brazil Olympic games, a new world record was set by two banks in Canada and Germany in the transfer of cross-border cash using mobile payment. While international money transfer takes days to clear, the use of blockchain technology enabled ATB Financial to transfer C$1,000 to Reise Bank in Germany using mobile payment in just 20 seconds. This development just shows how mobile money payment has come of age, indeed, an innovation that is shaking the banking industry (Arnold, 2016). The mobile payment platform has strategically established itself as a convenient, cheap, and reliable alternative for cash payments. The adoption of mobile payments has taken shape in the financial sector by the establishment of both sophisticated payment platforms that use mobile apps and simple system that use the USSD system.
The mobile payment has revolutionized the financial industry in developing economies in Asia and Africa by enabling individuals who for a long time had been excluded by “brick and mortar” banks to access financial services. …
 

Literature Review

Innovation simply refers to an alteration in the manner that processes and activities work in order to come up with efficient, simple and more value adding ways of operating. Nonetheless, the implementation of new brilliant ideas is what matters and not the discovery of an idea. To emphasize, Burkus (2013), gives the example of how various companies such as how Kodak failure to develop digital cameras enabled Sony to use this technology. Similarly, Xerox failure to make computers enabled Steve Jobs and Apple to make sophisticated and user-friendly personal computers.

 
In developing countries, for example, the mobile payment platforms control a more share of daily transactions than banks. M-Pesa, a Safaricom mobile payment platform in Kenya, accounts for more than two-thirds of the transaction volumes processed in the country’s payment system…

The USSD Mode of Payment

With the development of the internet such as through a connection to the undersea fiber cable, most countries have been able to connect to the high-speed but the cheap internet. To elaborate, in 2011 East African countries, Kenya, Somali, Uganda, Tanzania, and Djibouti become connected to the EASSy (Eastern Africa Submarine Cable System), undersea fiber optic system that promoted the development of mobile communication in this region (EASSy, 2014)…

Mobile Payment Application

Unlike the use of USSD for mobile payment, developed countries’ mobile payment is slightly more sophisticated than the ones used in developing countries.  In general, the point of sale machines in these countries use Near Field Communication (NFC) systems, chip-based Secure Element (SE) system, or cloud-based Host Card Emulation (HCE)…

Mobile Commerce

Mobile commerce refers to simply the act of using the mobile phone to buy a digital product remotely from a website or a from a proximity store. There are various ways that can be used such as the direct carrier billing…

Background

The mobile payment sector has four major players, user-centric, acquirer centric, mobile network operator-centric, and bank-centric. Karnouskos (2004), opines that the mobile network and the bank’s operators will be the dominant players n the long-term…

History of Mobile Payment

The current mobile payment platform, which is mainly geared towards the near-field communication, has developed from more simple current systems. Mobile payments use both contactless and non-contact methods…

Conclusion

To sum up, mobile payment services have had a revolutionary effect on the financial industry as well as in many economies. In the financial industry, mobile payments have destabilized existing infrastructure since more people have continuously switched to this platform…

References List