Factors for Success of MFS

It’s a time of cashless financial transactions anytime, anywhere.

There are more mobile phones than any other device used in the market. This is inspiring fact for manufacturer and service provider to develop value added services exceeding the needs of usual telephony. If mobile phone has become essential part of life than why exclude it from financial services. This lucrative opportunity starts a wave of mobile financial services (MFS) for banking, trading, and payments. It’s an innovation of contact less vending, ticketing and payments by taking advantage of wireless and other communication technologies.

A research done by Juniper Research predicts that 612 million mobile phone users will generate more than $587 billion worth of financial transactions by 2011.  This report shows the potential market growth of MFS. Merchant or service provider, payment service provider, Network operator, mobile device manufacturer and End User are participants in a complete MFS framework. And addressing the need of each component will only ensure the success and give dimensions for future work. In the following section i discuss the different factors impacting the MFS.

Consumer Needs: Changing social environment easily effect the need of technological demand and development. Increasing purchasing power, consumption habits, lifestyles and greater mobility creates the development of different payment systems. But the success depends on the number of participation and volume of transactions. The popular modes of payments for purchases are cash, checks, debit and credit cards. Establishing another alternate financial system requires to address different factors like security, privacy, cost, expressiveness, convenience, system quality and technology anxiety.

Business Model: For an effective and sound business model, it is important to have agreement and cooperation among stakeholders such as merchants, financial institutions and mobile carriers. Here merchant play a significant role as both adopters and promoters of new system. It is very important to develop a mobile payment platform and business model that not only fulfills the needs but also attracts more and more retailers and financial institutions to join in.

Technological development Focus: Network, device and application; these are three components of the MFS technology. Different wireless technologies such as Bluetooth, Infrared, WLAN IEEE 802.11, RFID and Near Field Communication (NFC) are used in developing mobile payment system. Development and enhancement of technology should address the basic necessities like availability of services, system quality, fast transaction, ease of use and security. Primary focus of a customer is always how security and privacy are tackled in proposed system,

At present mobile payments are only used for purchases of mobile content, vending and ticketing and a large market segment is still waiting for it. I strongly believe that deployment of Mobile financial services should be to complement existing traditional payment services not to replace.