by Christian von Hammel-Bonten
December 15, 2015

Mobile banking and mobile payment have become trends around the world. Each culture has its own way of using this innovative technology

In regions such as Asia, Africa and Europe, payment and banking by smartphone has advanced impressively in recent years, developing from an interesting future technology into a viable payment option. At the same time, there couldn’t be greater disparity in the areas of application across the various continents. Among other factors, this is due to the fact that mobile phones are used as wallets in a variety of ways.

In the following weeks you will find further blog posts about preferred payment methods in different countries all over the world. Now, here is a first overview about how people worldwide use their smartphones as a wallet:

In Africa, mobile banking is a key factor for driving progress

In Africa, for example, mobile phones and smartphones are above all used for banking, both to make payments and transfer money. Well, on first thought, mobile money might seem to be rather alien to those regions where ATMs, credit card terminals and landline connections are a rarity. However, it is precisely this lack of infrastructure that has facilitated the use of mobile phones and smartphones for banking in Africa and India. In these areas, almost everyone owns a mobile device, so it is perfectly logical that they would conduct their banking in this way.

With their mobile device, users can handle incoming and outgoing cash payments, pay bills and top up their prepaid mobile phones. They can buy bus tickets and much more besides. P2P payments (send money back and forth between users) are easy, with the phone number simultaneously serving as the bank account number. Especially in diverse economic areas, mobile banking as an effective substitute for the poor banking infrastructure has become important for a functioning business and finance system. It is therefore a real driver of progress.

Contactless payment is commonplace in Asia’s developed economies

Mobile phone wallets have also been a successful concept in Japan and South Korea. Although mobile payment via near field communication (NFC) has been possible for quite some time, it has only risen to widespread prominence over the past two to three years.

Asia is currently experiencing a boom in all areas related to contactless payment. This is because the Asian continent is extremely diverse, which means that the preferences for payment and payment systems are equally varied. Mobile payment has been very successful in the highly developed Asian countries on account of strong market acceptance and relatively well-developed mobile internet services.

Whether in a taxi or out shopping, credit and debit cards have long stopped being the only contactless payment options. Now, according to recent information from the Chinese central bank, the number of mobile payments via smartphones was in the second quarter of 2015 more than five times that of the same period in the previous year. Innovations on the Asian market include payment methods such as AliPay, MoneyOnMobile and PayPal boost the trend. The many individual applications are keeping the competition for customers alive.

Mobile money plays a main role in countries like the Philippines

The fact that Asian consumers are very comfortable with using their smartphone as a wallet has allowed the m-commerce market to boom. Experts from market research company eMarketer are predicting that purchases via mobile device will amount to a record USD 334 billion in Asia and account for half of all online shopping this year.

While mobile payment is already common in the highly developed Asian economies, the topic of mobile banking is also decidedly relevant in vast countries like the Philippines. In Vietnam, online payment via electronic banking, telephones (Internet Banking and Mobile Banking) has just developed in several recent years but is really booming. Similarly to Africa, mobile telecommunications companies are cleverly ensuring that citizens have access to basic financial services.

By 2020, all POS terminals in Europe will be equipped with NFC

 In contrast, the situation in Europe is rather different and relatively fragmented. Although cash continues to be the top payment method in some countries, discussions about abolishing cash altogether are taking place in other European countries. Plastic credit and debit cards continue to be extremely popular. However, ever more providers are collaborating with discount stores and major department stores, for example, with the aim of more greatly integrating mobile payment into everyday life.

Accordingly, credit card provider Visa is expecting a significant surge in contactless payment with cards and smartphones over the coming years. Visa Europe Manager Volker Koppe anticipates that all POS terminals in Europe will be equipped for the respective payment options by 2020.

 UK is far ahead when it comes to mobile payment

In Europe, mobile payment is most widespread in the United Kingdom. The UK is way out in front with regard to payment via smartphone. Especially in London many businesses accept mobile payment from smartphones via NFC, from Transport for London to local coffee shops.

Solutions in France and Spain also provide a strong indication of the direction in which the trend is headed. An excellent example for the whole industry is French mobile operator Orange’s payment app Orange Cash. Alongside mobile payment solutions, it offers integrated coupon and loyalty scheme functions with easy and intuitive user interfaces.

 Different countries, different customs – especially for payment

Even if countries are not yet all at the same level, the trend is clear and irreversible. Mobile payment is steadily growing, above all as a result of the ever-greater ubiquity of mobile devices, apps and acceptance of mobile and contactless technologies.

This technological progress is at times precisely what drives human behaviour. Regardless of continent or cultural circle, this progress is contingent on secure, simple and fast solutions that offer additional benefits. For Europe, at least, it can be said that mobile payment is not the next step towards replacing cash and credit cards, but simply another alternative that is on the rise.