Are global mobile phones succeeding where cards are failing?

Still seven billion fraud opportunities

By Tim Harvey, CFE, JP

tim-harvey-80x80   Global Fraud Focus: Examining cross-border issues

In June, the number of active mobile phones (or cellphones, as they say in the States) nearly exceeded the global population — rising from 6 billion in 2013 to more than 7 billion in 2014. (See GSMA Intelligence.)

Using mobile phones to make payments is nothing new. Mobile network operators began M-Pesa (M for mobile, pesa is Swahili for money) in Kenya in 2005. The service now has 17 million accounts. M-Pesa succeeded, in part, because Kenya is a large country with long distances between few banks. (See Enabling mobile money transfer: The Central Bank of Kenya's treatment of M-Pesa, the Alliance for Financial Inclusion.)


Only one in five Kenyans have access to traditional banking. However, now they can deposit, withdraw and transfer money, and make payments with their mobile phones. (See Expanding the Financial Services Frontier: Lessons From Mobile Phone Banking in Kenya, by Mwangi S. Kimenyi and Njuguna S. Ndung'u, Brookings.)

Many other companies offer a variety of ways to make payments using mobile phones. They include mobile airtime accounts, QR codes, mobile banking apps and "near field communications," in which a consumer simply holds a mobile next to a point-of-sale register. (See Five UK banks to launch Zapp NFC and QR payments, by Rian Boden, January 15, NFC + world.)

Increasingly, more merchants are using mobiles (and other devices) as point-of-sales' registers with such services as Square. In the U.K., the British Banking Association has launched Paym, a service that allows users to transfer money into personal banking accounts with only the receivers' phone numbers. (See Mobile phone payments system to be launched by banking industry, BBC News – Business, March 10.)

Adrian Kamellard, chief executive of the Payments Council, said in the BBC article, "The service has the potential to link up every bank account in the country with a mobile number — millions of people will be able to use it this year and we look forward to expanding Paym even further, so everyone can benefit from this easy, secure new way to pay."

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