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Iii) GPRS/Java solutions – involving downloads. As noted above downloading solutions to an “enhanced” phone is considerably easier, and an increasing number of people have higher quality phones, or soon will have them. It is likely that most people who are banked now have phones that can handle such downloads. This business model is perhaps the most contestable as the downloadable application can be from a bank, mobile network operator or any other third party. The drawback remains that the solution is no more secure than accessing the internet, and to compensate the provider for the associated risk transaction fees tend to higher.

What Might The Future Hold? The future industry terrain will be governed by issue of customer ownership and platform. Whereas the mobile operators will continue to have the greatest natural market share and brands, their ability to use this to lock customers into products and services they provide will probably diminish. In the current weaker global market conditions, and with even some emerging markets achieving saturation in the mobile phone market, it seems likely that the cost of enhanced phones will continue to fall, and their penetration will continue to rise. Over time, and as happened with the internet, this will give greater advantage to whoever has the best application and marketing campaign to get the application on to the user’s phone or to attract them to their mobile enabled web site.

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In this respect the announcement that Nokia phones will in future come with a pre-loaded Nokia money solution that enables some form of card to card payment (as it is based on a service provided by Obopay, http://www.obopay.com ) signals the start of much greater competition over what application will define the mobile payment space. What does this mean for mobile operator led strategies? The mobile operators face an interesting dilemma. Their mobile payment services currently leverage three “assets”: their ability to provide services from the SIM card (and their control of the SIM card), their ability to determine the prioritisation of messages and an extensive distribution infrastructure (that was originally set up to sell airtime).

However some mobile operators have an explicit strategy to use their mobile payment platforms to allow users to purchase airtime with a significant rebate. This entails considerably cost savings for the MNO, as the cost to deposit funds into a mobile account are typically much cheaper than the amount a MNO pays to its reseller network. However it is not in the long term interests of the reseller to sign up customers to a mobile money service, as to the extent to which the customers stop purchasing airtime via the agency network, their business will decline. Resolving the complexity of the role of the reseller in promoting the mobile payment service is thus a key element of the design of the business model.

In some instances the MNOs are dependent on the agents to promote mobile payments, although because of the rebate offered to users it represents a long term threat to the agents’ business. This contrasts with M-PESA in Kenya where no rebate is offered, precisely to protect and promote the interests of the agents, who play a key role in customer registration and payments. In the Philippines the dilemma is resolved by having separate sales and service channels with the resellers not being responsible for the sale of the service. At the same time it seems that for the customer, instant access to airtime at a discounted rate remains one of the key drivers of the adoption of mobile payments in most markets. For banks and MFIs, the opportunity is to play catch up. Few have yet been able to reduce their total cost to service low income customers through leveraging mobile as a low cost channel, but at least in South African banks and several rural banks in the Philippines, there is sufficient experience and customer acceptance to start to consider mobile as a core part of the