Mobile Commerce: New Regulatory Framework Needed
This post in the mobile commerce series provides information about a new study which outlines how the banking and regulatory framework needs to adapt to encourage financial transactions by mobile phones and transform access to financial services in developing countries. This is from a new policy report ‘The Transformational Potential of M-Transactions’ , published by Vodafone in partnership with Nokia and Nokia Siemens Network. The report details new independent research by leading economists from Frontier Economics and Groupe d’Economie Mondiale as well as consultants to the World Bank. The full report, (2.1 MB pdf) can be accessed from a link on this page.
The report shows how these services provide the first real opportunity for many poorer people to get on to a formal “banking ladder” with benefits including reduced threat of crime, time saving and secure savings opportunities.
However, existing banking regulation are inappropriate for the growth of m-transaction schemes. Vodafone, Nokia and Nokia Siemens Networks are calling for regulators to ensure they do not restrict commercial experimentation or limit the schemes to sub-economical scale. Key suggested changes to banking rules and regulation include:
- Review of deposit taking - define and control new ways of making deposits
- Access to the clearing system - to ensure that existing systems can handle the transactions smoothly
- Adaptation of ‘know your customer’ and anti-money laundering - creating safeguards and audit trails
- Interoperability of m-transactions schemes - to ensure fair competition
The report includes work from various investigators and researchers. Since the carriers have a vested interest in pushing for this, I would take the recommendations of this report with a pinch of salt. However some of the conclusions reached here are in line with other studies and from experience of other m-commerce trials and deployments. Standardisation and new rules are needed to help this transition to mobile phone based commerce.
Vodafone Foundation provides a good summary of the findings from this series of studies about mobile banking.
Key economic findings include:
• The first public results on how low-income individuals in South Africa view and use m-banking, showing it is valued as it can be more affordable than traditional banking (94% of users/37% non-users)
• Traditional business models are being challenged as m-banking models are adopted; one third of people in South Africa and Botswana who do not have bank accounts do either have a mobile phone or have access to one
• Airtime Transfer services in Egypt have started to create commercial opportunities for small-time dealers and resellers of airtime, providing a viable and flexible business opportunity for a wide range of micro-entrepreneursKey social findings include:
• Mobile technology and the Airtime Transfer services support social networks through reinforcing existing relationships and enabling airtime to be redistributed across family or friends
• Airtime Transfer services have given women more independence. 52% of the women surveyed for the FFF research said that airtime transfer gave them more freedom with only 5% saying the opposite
Another good article to read is this.
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