Mobile payments systems in Malaysia: Its potentials and consumers’ adoption strategies.

M-payment (mobile payment) is a point-of-sale payment made through a mobile device, such as a cellular telephone, a smart phone, or a personal digital assistant (PDA).

M-payments include:

• transactions through the mobile network
• payments in brick and mortar storefronts
• bill payments
• person-to-person transfers to friends and families

Several companies in Malaysia have launched the mobile payment systems such as:

• REDtone International Bhd.
• Maxis
• Maybank
• Hong Leong Bank
• Mobile Money International Sdn Bhd
• MobileExec Sdn Bhd.

Potentials of Mobile Payment Systems:

Statistics show that as at September 2007, there are a total of 22.1 million mobile subscribers in Malaysia with a population of 27.3 million. By looking at the large number of mobile subscribers, it is no surprise that our country has the potential to effectively use mobile device as a transactional device.

In addition, the large number of feature-rich mobile devices, third generation (3G) mobile networks, and the emergence of Near Field Communications (NFC) technology are combining to create an environment where the mobile phone could become the next generation payment device.

However, the telecommunications bandwidth is still insufficient in our country .The introduction of third-generation (3G) networks have been slower than expected. Currently, there are only two mobile cellular service providers (Celcom and Maxis) available in Malaysia. Two more operators have been awarded 3G spectrum but have yet to make their commercial debut. This technology should be improved to fully support efficient mobile payment for customers in Malaysia. Furthermore, there are only approximately 1 million 3G Subscribers in Malaysia.

Consumers’ adoption strategies:

• Cost-transaction fees:
  The traditional alternatives available to consumers to pay for a product are difficult to beat. The advantages of physical cash exchange are clear: it is simple, fast, and there is no additional cost involved. Because of this, most mobile payment systems should provide the service free to consumers, and continue to do so because switching back to cash is very easy for all consumers. In the area of merchant acceptance, the transaction fees compared to debit and credit card systems are important.

• Cost-transaction fees:
  The traditional alternatives available to consumers to pay for a product are difficult to beat. The advantages of physical cash exchange are clear: it is simple, fast, and there is no additional cost involved. Because of this, most mobile payment systems should provide the service free to consumers, and continue to do so because switching back to cash is very easy for all consumers. In the area of merchant acceptance, the transaction fees compared to debit and credit card systems are important.

• Ease of use:
  Ease of use of M-payment should be emphasized. There should be a few simple steps to conduct M-payment rather than demanding consumers to go through many steps to complete a transaction. The ease of use of M-payment relative to other payment methods such as credit card and debit card is an important factor to consumer adoption of mobile payments.

• Independence:
  The hardware and software needed to conduct M-payment should be independent. The more independent the system, it will lead to the higher the acceptance of M-payment system. The additional installment of hardware and software will be costly to merchants and they might refuse to adopt M-payment system.

Conclusion:

The future of mobile payments will be determined each party involved in developing enhanced mobile payment services. The network operators, mobile devices providers, financial institutions, merchants and service providers must agree on a common approach and standards for mobile payments.

Besides that, they also must have a clear understanding of the opportunities for success, offering the customer interest and value, and work collaboratively in the design and development of services. With everyone moving together towards a common goal, the future for mobile payments looks very bright indeed.

Now let us enjoy a video clip about the mobile payment systems. (^_^)

Want to know even more? Visit these Web pages:

• Factors Affecting the Successful Introduction of Mobile Payment Systems
• Trends and Markets in Malaysia Mobile Service
• A Bright Future for Mobile Payments

~By SieW YinG~