by Richard Handford
Michael Joseph is an iconic figure in mobile money circles. After all, he used to be CEO of Safaricom which runs M-Pesa, the most famous mobile money service in the world. Last year, he was appointed as the World Bank’s first fellow and he is currently Vodafone’s managing director of mobile money. So when Joseph speaks, people tend to listen.
Speaking at last week’s GSMA NFC & Mobile Money Summit 2012 in Milan, the M-Pesa pioneer did not mince his words. Mobile money has not been as successful as it could, or should, have been, he said. Operators must invest in distribution and be patient about making a return on their investment. In developing countries, that means building up networks of agents to serve the operator in the long term. “Mobile operators who try to make money in six months are going to fail,” Joseph told listeners to his keynote. “You need three to four years for any kind of profits.”
Later in a Q&A session, he elaborated on the same theme, urging patience and arguing against short-term thinking. “For CEOs the bottom line is all-important today,” he lamented. But the rewards for adopting a long-term vision can be significant. “It can make a massive difference to customer retention and what you can charge,” he said.
Joseph explained how M-Pesa maintained customer loyalty even after number portability was introduced to a Kenyan market where Safaricom offered a premium-priced mobile service. The operator lost only 16,000 users out of a base of 18.5 million in the two years after the launch of portability, he said, a testimony to the stickiness from running the mobile money scheme.
Of course other mobile money schemes have struggled to emulate the success of M-Pesa. And the slow and methodical approach has its critics too. Speaking at the same event about deployment, Orange’s Thierry Millet, the operator’s VP of mobile payments and NFC, acknowledged the pace of NFC rollout in France “could seem frustrating”.
Orange’s aim is to make NFC ubiquitous ahead of a big push by the operator in its home market next year. All new point-of-sale terminals in France are now NFC enabled, he said. And 400,000 terminals in total will have been activated by Q2 2013.
Another operator aiming for significant take-off with NFC next year is China Mobile, which also talked about its plans in Milan.
Even one of the backers of Google Wallet, a bogey man for the mobile industry, pleaded for some patience. The service’s backers have always known it would take time to get right, said Tomasz Smilowicz, MD, Head of Global Mobile Solutions, Global Transaction Services with Citi, speaking in a keynote.
The first card in the Google Wallet (aside from its own pre-paid card) was a MasterCard-based Citi card so the US bank has been there from the start. It was there at the launch of the service a year ago and witnessed the recent revamp which sought to increase the number of cards in the wallet.
Another bank with first-hand experience is BNP Paribas, whose payments innovation manager, Bruno Prexl, gave a realistic assessment of its progress with NFC. He spoke about a “chicken-and-egg problem” whereby users want to know they can use NFC handsets widely while merchants look for high adoption among users before making an investment in contactless infrastructure. “We must break this circle,” said Prexl. Nobody at the event would disagree with that thought.
The editorial views expressed in this article are solely those of the author(s) and will not necessarily reflect the views of the GSMA, its Members or Associate Members.