The growth of mobile-payment systems in Africa is skyrocketing at an astounding rate. In 2002, only 3% of people in the entire continent had mobile phones; by 2010, that had increased to 48%. The GSMA’s latest ‘Mobile Economy’ report highlights that at the end of 2016, 65% of the world’s population had a mobile subscription, with this total set to reach five billion by mid-2017. By 2020, it is anticipated that almost 860 million new subscribers will be added, taking the global penetration rate to 73%.
In developing countries, such as Africa, we know that 2.5 billion people are unbanked. However, over 1 billion of these people have access to a mobile phone. M-Pesa is the leading mobile money service, allowing customers to securely send, receive and store money via a mobile phone. These are not smartphones; these phones have no bells, whistles, or apps. What they do offer their owners is access to goods and services without the need for cash, credit cards, or even a checking or savings account. The incremental growth in mobile phone take- up has been less about the technology and more about meeting the needs of its users, who often are without hard currency – 66% of Africa’s continents inhabitants do not have access to a formal bank account.
This new ability to create financial interactions with an unbanked population brings great opportunity for businesses operating outside Africa to extend their customer base. Africa is of particular interest, with mobile gaming gaining real traction in this region, notably in Uganda, Rwanda, Kenya and Nigeria are experiencing a massive outbreak of online betting. The mobile wallet market is growing, from $18.7billion in 2014 to $260.3 billion in 2020.
By offering alternative payment methods, there is a real opportunity for gaming and gambling companies to increase revenues to untapped customer segments in Africa. However, many operators still have concerns around fraud protection and ease of implementation.
Clearly, payment providers have a major role to play in enabling the secure transition into this market. First and foremost, merchants and businesses must be ready to offer a payment mechanism that does not hinge on the end user having a bank account, ruling out a reliance on credit or debit card payments. Tola uses the mobile operator’s existing billing relationship with the mobile user to allow the user to pay for goods and services direct from their mobile. This provides a frictionless payment mechanism that takes away the hassle, cost and risk associated with card payments, allowing gaming and gambling operators the ability to simplify mobile payments.
Using the mobile phone in this way simplifies user identification to reduce the risk of fraud, while simultaneously taking away the hassle that comes with the need to input long card numbers, expiry dates, billing address details or password security. The added value is the real-time payment verification process. Security is provided at check-out with a one-time 4-digit pin received in an SMS to the customer’s mobile device.
To authenticate a credit card payment, the consumer must enter their PAN, Expiry date, CCV2, and Billing Address. The payment is subject to the 3D secure process. This involves three entries selected from a predetermined password. By contrast, the simple four-digit PIN code is only sent to the handset of the mobile phone in question. If that isn’t you, or you don’t return the PIN within the hour, the transaction is not completed.
Closer to home
The UK market for mobile banking is well established, however, mobile payment technology is constantly changing with businesses looking for quick and seamless payment methods to improve mobile commerce and enhance the overall experience. In a recent survey of UK consumers, we found that almost half (45%) of people say it would be easier to place and pay for online bets if they could pay directly from their mobile, with nearly a third (32%) saying that this would likely lead them to place online bets more frequently.
As gambling and gaming businesses begin to develop their mobile propositions, consumers will naturally begin to find favourites. The winners in this loyalty game will be those that can offer the best end- to-end experience. In March 2016 alone, there were over 7500 different physical betting shops in the UK – add to that the online presence of each of these brands, and the added growth of online-only providers, competition is stiff.
This rivalry heaps on the pressure to reactivate existing users and continue to engage new customers. The successful operators, and those that will succeed in increasing revenue streams, will be those that provide a high quality, innovative offering from beginning to end, giving the customer exactly what they want. In this race, the payment mechanism can no longer be a ‘back office’ afterthought.
The debate continues around whether gambling success is down to luck, or skill. Roman philosopher Seneca said that “luck is what happens when preparation meets opportunity.” Gambling operators would be wise to follow this ethos, using technology to ensure they can capitalise on market potential.