Mobile Money Competition

It’s no surprise the mobile phone’s influence socially and economically in PNG. Digicel have obviously been getting praise for allot of their innovations with their services and thankfully they really are a catalyst for mobile based services.

But a blog post by Martyn Namorong got me thinking about the real economic efficiencies that can be achieved with the mobile phone. More specifically in his post he stated that recently in an INA seminar, QUT Researcher Amanda Watson pointed out that mobile phones rurally were being used more as a social tool as opposed to an economic tool.

A local cocoa producer Amanda interviewed on Karkar Island told her that he did not feel that there was any economic benefit from using mobile phones. She clarified this statement by adding that this may be due to the fact that other enabling factors such as market information and transport systems weren’t in place.

She further highlighted that some practical and policy recommendations were required to make mobile phones effective economically. She noted that the cost burden of mobiles phones was still too high for many subsistence farmers. These costs were related to recharging of credits and phone batteries as well as the fragility of handsets. She said that the benefits of opening up of the mobile market to competition should now be used to add impetus to opening of other sectors of the economy to competition.

So again, that key word competition. Digicel brought the true meaning of competition to PNG, but competition must still exist in the market.  If the cost of using mobile phones is still expensive and prohibitive for the rural population, how much will it cost to do business via mobile phones?

We recently developed an SMS banking simulation software for BSP (see here and here) and it occurred to me during the job that perhaps mobile banking was a service better run by a bank as opposed to a mobile phone operator. My reasons are as follows:

  • Banks already have your bank Accounts so the direct access to your funds for purchases should mean less hidden transactions fees,
  • Banks are regulated by financial security requirements,
  • Banks already have EFTPOS relationships on a wider scale with vendors which can quickly be transferred to mobile payments,
  • The more banks involved, the more competition so that we can see how cheaply we can get mobile banking running in the market.

When it comes to money and trying to get the best deal for your business to get ahead we should always have competition to choose from. Mobile banking should not be the service of just one company.

*Read more about Digicel’s Cellmoni service here and here