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Middle East Consumers Embrace Mobile Wallet Services
Published Aug 27, 2012
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Mobile wallet services, which enable payments via mobile devices, are a potential growth industry in the Middle East, according to experts.
While Asian markets look to be ahead of the pack, with a quarter of Japanese mobile users already managing their finances and paying for products via a mobile wallet, there is good potential for increased adoption in the coming year in the Middle East region, according to a study on mobile device usage by TNS, a technology and business strategy firm.
The study, which polled 48,000 people across 58 countries, found that 37% of respondents in Saudi Arabia and 31% in the UAE expressed high levels of interest in mobile banking.
The study confirms the obvious potential for mobile devices to further infiltrate how we spend and save, but highlights the need for a deeper understanding of consumer needs, the removal of entry barriers and enhanced online security are required before a full embrace can take place.
While consumers across the globe are warming up to mobile transactions for banking and retail, emerging markets are quicker on the uptake than the West, says Steve Hamilton-Clark, CEO of TNS Mena.
"We are seeing a pattern of acceptance in emerging markets, while the cautious West is taking longer to follow suit. It all comes down to the underlying motivations behind adopting new technologies, with trust in online security at the core," he says.
Alexander Rauser, CEO of Prototype, a Dubai-based digital agency, says mobile wallet services are likely to flourish in the Middle East because emerging markets have shown a strong dependency on mobile services.
"For example mobile browsing or SMS services are very popular in countries where owning a computer or having a personal internet line is expensive or hard to achieve for the masses. You'll find a lot of people receiving their news using mobile phones."
"That's why mobile payments are a logical next step for these markets. For example, services like M-Pesa in Kenya have been running since 2007 and can be used for a variety of money transfer and other payment scenarios such as buying a cup of coffee," Rauser tells AMEinfo.
Concerns over mobile payments still linger
Trust also plays a major role in mobile wallet adoption, which is why banks and credit card providers may seem to be the popular choice, but for smaller payments the telecom owned systems such as PayPal or Square could be quite successful, suggests Rauser.
"There are security concerns with any form of payment and these should be sorted out eventually. That's why the idea of handling payments through another party rather than your bank is quite appealing, because in case of a security breach only uploaded funds may be compromised. That was the whole concept of services like PayPal and that's why they have good chances to be successful in the upcoming area of mobile payments," Rauser says.
"Security remains as one of the main concerns for consumers," agrees Hamilton-Clark. "Think of the first few years when online banking was launched - people had major concerns on how secure it is to manage money matters online - today with the maturity status of online banking (via PC) we do not see major security issues."
"On Mobile Banking for instance, about 10% of consumers in Mena feel that their banking matters are in jeopardy in case the mobile phone is lost and misused accordingly. So there is a concern but likely driven by the newness of the services."
Mobile becoming synonymous with payments
Just 10 years ago, credit cards were not widely used outside of the US, with consumers slowly accepting new purchasing mechanics. Credit cards were only widely used for travel but changing consumer habits and ecommerce ushered in plastic payments.
"The same will happen with mobile payments," says Rauser. "It depends on how the system will evolve over time. In order to make mobile payments popular you need three parties involved; the consumers who needs to be willing to use the service, the platform provider who makes the transaction happen and the retailer who needs to be able to accept the payment. All need to grow together to make this economically feasible."
Posted by
VMD - [Virtual Marketing Department]
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