Media coverage of the mobile payments industry tends to focus on the big: big tech firms, big financial institutions, big retailers and the big markets for end-users where the promise or reality of success can be measured in the billions.
But ever since the first mobile payments were made, the image promoted by this focus has been woefully off-base. Because mobile payments are even more about empowering not just the small and medium-sized enterprises (SMEs) that are responsible for more than half of all jobs, but also “microenterprises” all the way down to the sole-proprietorships that in some developing countries still constitute the basic unit of commerce.
This naturally follows from the broader ways in which the benefits of growing mobile usage accrue to smaller businesses involved in the mobile value chain.
Recent research by the Boston Consulting Group and Qualcomm details how those SMEs that adopt mobile technologies can race ahead of their peers. The survey, undertaken in six key global markets, found that SMEs that “go mobile” either to better connect with customers or just to streamline their own operations are growing their revenue twice as fast – and adding eight times as many jobs – as SMEs that don’t.
“For a subset of SMEs that we call mobile leaders, mobile has proven to be an enormous boon,” the report argues. “These companies stay ahead of mainstream mobile adoption, riding each new advance to improve productivity and efficiency in operations, connect with new customers and markets, and compete with much larger players”
Intriguingly, the large percentage of SMEs in emerging markets (75%) which have seen measurable revenue growth due to “going mobile” is almost 50% higher than the one-half of SMEs in developed markets that have reported such success. As a result, mobile is seen as a way to narrow the gap between rich and poor countries while at the same time leveling the playing fields on which SMEs compete with larger and better-capitalized firms.
The same goes for mobile payments.
While at the moment there are little granular data on how SMEs around the world are taking advantage of mobile payments, BCG says that the emergence of low-cost and easy-to-use mobile payments present a major opportunity to small firms in emerging markets, which typically boast high rates mobile penetration but are typically “underbanked” or otherwise hobbled by relatively primitive financial infrastructures. (You can read more here about the crucial importance of emerging markets to the future of mobile payments.)
The opportunities – and, for those firms that fail to take advantage of them, costs – are different from market to market. In the UK, for example, Visa points to the need for small retailers to adopt mobile point-of-sale (mPOS) tech to avoid alienating the large and growing share of younger shoppers who are strongly biased against businesses that don’t accept card payments.
As the global mobile payments races from $210 billion in 2010 to an estimated $630 billion last year to we-can-only-guess in 2020, SMEs and microenterprises are likely to be the prime beneficiaries. And this is even more the case for smaller firms in the sort of dynamic emerging markets where Cellum – itself the product of the SME sector in a small country – has successfully launched mobile wallets. (You can read about our work in Thailand here, and in Indonesia here.) So while the media will continue to focus on what the big players in mobile payments are up to, the real action will be much closer to the ground.