A new way to pay our bills is about to start — the mobile payment. The “m-payment” is already present in Brazil. It involves paying your bills through authentication via cell phone, similar to a credit card when we type the password in order to confirm the transaction. There are currently several methods being implemented around the world and some have been working for years, such as Premium SMS based, Mobile web payments, and Contactless NFC (Near Field Communication).
The methods being developed in Brazil are the Premium SMS based and the NFC. The first method involves the customer sending a payment request via SMS text message to short codes (special telephone numbers). Once the transaction is approved, the merchant is informed about the payment success and the transaction is concluded. The second method is used mostly for purchases made in actual stores (as opposed to Internet purchases) because it requires a special mobile phone equipped with a smart-card. The card concludes the transaction with a reader module, requiring authentication. One of the main reasons for using these two new technologies is to integrate and adapt credit card, debit card, transportation, and meal voucher payments to a mobile phone.
Although the Brazilian financial system is solid, modern and well-distributed, 49 percent of the population is still deprived of banking services, which means there is a great demand for mobile financial products by millions of people. A contributing factor is the huge presence of cell phones in Brazil – about 106.9 percent. This means there are currently more cell phones than people in Brazil! Thus, the stage is set for mass adoption of services offered by mobile devices.
Brazil is poised with the necessary banking knowledge that is essential to the success of mobile payments. However, some obstacles still need to be overcome. For example, the lack of coordination among the various companies that offer this service — telecom operators, banks, and large retail chains need to understand and respect the needs and operations of each other. They all must learn to work together. Also, since mobile payments are new, there is a large legal gap resulting from the absence of regulation. There is a lack of clarity in the banking laws, which do not define the legal parameters of non-financial institutions, such as a wireless carriers offering payment services in Brazil.
Judging from this scenario, experts agree that it is unlikely the Brazilian market will have a single universal system for payments via mobile devices in the near future. However, if we look back just a few years, how long did it once take for a merchant having one card terminal to process all the different “plastic” options? Payment services have improved dramatically in a short period of time. Nevertheless, the future expectation for mobile payments is enormous. There are currently 1.6 million mobile transactions performed annually, but this number is expected to reach almost 12 million by 2014.
* Article published on Curitiba in English.
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