Tag: m-payments

Mobile banking has become a highly desirable market in Africa

| August 19, 2014

Banks are now vying for a top spot in this marketplace where the potential for growth is astronomical.

The African marketplace is providing a rather unique mobile banking opportunity to financial institutions that are looking into new areas of considerable potential, as the majority of people there have cell phones, but do not have bank accounts.

This provides the opportunity to use mobile technology to bring services to a fresh banking market.

This concept is far from simply being theoretical. Mobile banking is already seeing explosive growth in many countries throughout Africa and now banks are hoping to be able to step into these economies in order to make sure that they don’t miss out on this new revenue stream. At the moment, many of these services are currently dominated by telecom companies, as is the case in Kenya. However, in that country, one of the largest banks in the country – Equity Bank – is entering into the battle in order to reclaim some of the turf that it has traditionally called its own.

Currently, M-Pesa holds the top spot as the most popular mobile banking service in Kenya.

M-Pesa gives an individual in Kenya the ability to use a mobile wallet for receiving payments, sending funds to other users of the service, or even withdrawing cash from agents at roadside stands and convenience stores located throughout the country. The company, itself, is owned by Safaricom, which is a Vodafone Group subsidiary in Kenya.

This service is providing banking services to individuals and business owners who have previously been unbanked. That said, it offers them a range of service that are highly useful to them. For example, it means that their funds can be kept in digital form so that their risk if they are robbed is considerably lower. Furthermore, individuals who live in rural areas but who migrate to the city to work there for weeks or months at a time can send funds back to their families without having to make the physical trip.

The M-Pesa mobile banking service first launched in 2007, and now it is handling an estimated $18 billion in annual transactions. This from individuals ranging from the pedicab drivers in Mombasa to the cattle herders in the distant villages of the Rift Valley, and everybody in between; nearly all of whom have previously been unbanked despite the fact that they make up approximately 43 percent of the economic output of the country.

Mobile payments acquisition of Caviar made by Square

| August 14, 2014

This purchase will open up the opportunity for smartphone transactions in food delivery.

Caviar, a startup business that provides meal deliveries from high end restaurants, has now announced that it has been acquired by mobile payments company, Square, broadening the opportunities available to both organizations.

This will provide people who order their meals through the service with a new way to pay.

The option offered by Caviar, itself, is quite appealing to many consumers, who would like to have prepared gourmet dishes delivered to their offices or homes, as opposed to the quick delivery options that are currently available. That said, the acquisition by Square will bring an entirely new level of technology to the service, as these customers will be able to use mobile payments to be able to purchase their meals.

The acquisition by the mobile payments company is expected to be a deal worth about $90 million.

While Square started out as a company founded by Jack Dorsey (of Twitter fame) and Jim McKelvey in 2009, that provided card reader dongles that turned smartphones and tablets into devices that could process transactions, it has progressed quite a distance since then. The company is always working to expand itself, as its revenue margins are quite slim (at 2.75 percent per transaction) even when taking into account that over 50,000 restaurants use the service. Last year, the company lost $100 million, and it is believed to be continuing to blast its way through cash.

A Yankee Group senior analyst, Jordan McKee, explained that “Initially Square’s business model focused on the low volume merchant, so scaling is certainly very difficult.” He went on to say that “Now, we’ve seen Square trying to find ways to generate sustainable revenues.”

As a part of this effort Square has spent the last year launching a number of additional mobile payments tools and services in order to better serve its client base as it opens up new streams of revenue. Among them, are Square Capital, which provides merchants with cash advances in the form of an interest loan, and Square Cash, which allows for rapid money transfers via email.

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