Mobile P2P payments will be polarized

It's "just a matter of time" before mobile person-to-person payments become mainstream in the Asia-Pacific region, but the first embracers will likely be polarized between advanced and developing markets, according to a Frost & Sullivan analyst.

According to an ABI Research survey conducted in November last year, 34 percent of users from Japan, Taiwan and South Korea registered interest in mobile person-to-person payments. This figure was higher than the 16 percent registered in the Western European countries of Germany, France and the United Kingdom, and an even lower 9 percent in the United States.

Mark Beccue, the ABI senior analyst who wrote the report, pointed to the low market penetration of players such as PayPal in the Western markets. He said the low levels of interest could be due to consumers' easy access to banking facilities in these countries.

Marc Einstein, senior ICT industry analyst at Frost & Sullivan, agreed that a lack of access to cash facilities tends to steer users to mobile banking as an alternative service, but pointed out that countries such as Japan and Korea have advanced mobile markets, with users readily embracing services on their devices.

On the other hand, emerging markets such as the Philippines are also success stories for mobile remittance, Einstein said, speaking to ZDNet Asia in a phone interview.

This has been fueled by tie-ups between carriers and payment merchants in the country, which has enabled the mobile payment ecosystem to take off there, he added.

Last month, mobile payment provider Boku announced a partnership with Philippines telco Globe, to facilitate payment on the merchant's platform by Globe's virtual money subscribers. Western Union also has deals with Globe and another carrier in the country, Smart Communications, to allow mobile money transfer services.

Einstein highlighted Kenya as an example of a country with very little access to banking facilities, and one which has enjoyed a "massive boom" in mobile payments. Fifteen percent of the country's GDP passes through the SMS-based mobile money transfer system M-Pesa, launched by mobile operator Safaricom in 2007, he said.

This leaves countries "in the middle" like Singapore and Hong Kong trailing in the mobile remittance space, he suggested. These countries have the combination of easy access to banking facilities and have been comparatively slow to advancements in mobile services compared with Japan and Korea, he said.

Walled garden of mobile payment
Another impediment in such markets as Singapore and Hong Kong is the lack of cooperation between mobile operators, payment vendors and financial institutions with regard to payment on-the-go.

Einstein said a typical scenario would see one merchant tied up with a payment vendor, and supporting only the latter's method of payment. This makes ubiquitous access more difficult, he said.

In the case of mobile person-to-person payments, the level of interoperability is even lower, where payment tends to require the same applications and the same devices, he added.

Online payment merchant PayPal recently updated its iPhone app to allow users to "bump" cash transactions between iPhones. Both users need to have the app and respective PayPal accounts. A cash transaction is then sealed with a physical bumping of the two devices together.

The app licenses technology from a company called Bump, which has also released a program allowing people to "bump" contact information between iPhones.

PayPal's Rahul Shinghal, regional mobile product head of Asia-Pacific, said in an e-mail interview with ZDNet Asia that the company expects the Bump technology to ease the process of transferring cash as users are not required to key in their details.

Prior to the "bump" feature, PayPal users had to enter their contact details for money transfers. Shinghal clarified that PayPal does not reveal users' bank account details, so their security is protected.

Einstein said apps such as this could help raise user acceptance of mobile person-to-person payments, ultimately moving vendors to invest in the payment ecosystem.

But first, app makers need to ensure interoperability between supported devices, he noted.

Shinghal said support for other mobile devices is in the works, but it depends on each device's hardware support for motion detection, since that is required for the "bumping".

The free app is ranked top in the finance category on the U.S. iTunes store, and is within the top five in many countries in the Asia-Pacific region, he said.