Ivo Vegter, local tech journalist and a past fellow at the Hartebeestpoort event, writes an update on his work in making mobile and online payments more accessible to buyers and sellers, local and international, rich and poor.
In pursuance of the ideas we discussed around mobile and online payments at the last GeekRetreat, I proposed a conference to ITWeb Events. They agreed to run one on Mobile Payments, which took place on 3 & 4 November 2009, at The Campus in Bryanston. Both days were well-attended, mostly by delegates associated with payment technologies and banks. I chaired most of the conference, with the exception of the practical workshop on the second day.
It included presentations on a number of bank-led (ABSA, Standard Bank, FNB) and independent payment solutions (MXit, Pocit, WIZZIT, Ukash), some of which are very promising indeed. Technology specialists such as Fundamo were also represented, but the mobile operators, both South African and African, declined invitations to participate.
Two key messages emerged. The first, as Brian Richardson of WIZZIT noted eloquently, is that the internet would not be a solution to banking (or payments) in Africa "in our lifetimes". Moreover, one cannot expect the broader market to have smart phones, or even phones that run Java (only 50-60% of them do). Any technical solutions to the mobile payments or banking problem will have to use very basic facilities, such as USSD, or be developed on the back of initiatives such as the Paypass system (smart-card with near-field communications) contemplated for South Africa's taxis.
The second is that any solution to mobile (or any other) payments in South Africa will require the participation of a licenced bank. This was made abundantly clear in a discussion with Dave Mitchell, head of the National Payment System Department at the South African Reserve Bank, who pointed out that only banks can take deposits, so any system that involves a store of value constitutes banking business. (We didn't have time for a philosophical discussion on why this should be so.) He was adamant that the notion of alternative currencies (such as airtime, airmiles, or MXit moola), or permitting non-banks (such as Paypal) to engage in deposit-taking, was not up for debate. (On Paypal, he said as long as it refused to partner with a South African bank, or acquire a banking licence itself, it would be unable to pay out to South African customers.)
A position paper on "e-money" is due to be published by the Reserve Bank later this month, which will give more clarity on the matter.
The events director and I discussed including internet payments in a similar event next year, since the issues overlap, and this will improve the commercial viability of the conference.
I'm maintaining my interest in the subject, and will likely write more on it in due course. I hope to include an argument with the Reserve Bank about how tightly deposit-taking and alternative currencies should be controlled, and what the best regulatory means of doing so might be. I'm not optimistic that they'll change their policies, but if nothing else, such an argument will be entertaining and enlightening.
Combined with pressure from other angles (such as Silicon Cape's engagement of Dr Mampela Ramphele and other officials), I believe these types of discussions will go a long way to making mobile and online payments more accessible, to buyers and sellers, local and international, rich and poor.
