It still will take awhile before mobile payments really take off in Brazil. Since the beginning, carriers and banks haven’t agree on who should lead the process. Therefore, no successful business model has been settled on for the m-payment space. For that reason, we can point out just a few isolated mobile payment initiatives – for instance, Oi Paggo, hwhich used to belong to Brazilian carrier Oi and, in September, was bought by Cielo and Banco do Brasil.
Last year, Forrester presented a survey that showed that, in Brazil, 87% of people knew about mobile banking, but very few actually used the service, and many Internet banking customers would rather use mobile devices to bank online. So after years of experimentation, why isn’t the m-payment sector taking off?
There is no single explanation, but several factors indicate that customers have not seen the added value of this solution. Why use m-payment if I have a credit card? Until now, there are not user-friendly applications, nor tools that are easy to manage. In addition, security is another issue that stalls adoption.
However, even though the path is not easy nor simple, players are looking into this potential market. And while carriers and banks compete to see who is going to lead the m-payment initiative, other players are moving forward, including Freedom. The firm developed the platform behind Oi Paggo, and offers the infrastructure for those who want to deliver mobile solutions. “I believe everyone is wondering to have some initiative in m-payment. We’ve been doing that for five years. The infrastructure technology is ready, but business models are still in trials,” says Freeddom’s CEO and founder Cicero Torteli.
Freeddom’s revenue is about US $11.26 million, but the firm is expecting higher revenues due to a contract with the government of Nigeria. The country is home to about 150 million people and there are only 10,000 credit-card machines, according to Torteli. “Nigeria central bank regulated m-payment in order to increase and develop its economy. They nominated one bank to lead that (UBA – United bank of Africa) that hired us to deliver the platform,” explained the CEO.
In Nigeria, said Torteli, only 15% of the population have bank account, but there are nearly 70 million mobile phones. “They are going to use the cellphone as credit card, because the strategy includes agreements with retail stores.” Indeed, the retail sector could be the m-payment leader in Brazil, pushing its adoption, since using mobile phones to buy online seems to be safer than registering credit-card numbers. Torteli reveals that he’s negotiating with some e-commerce groups to use the Freeddom platform to replace their sales mechanism. “They are seeking how to reduce fraud, one way to use mobile e-commerce would be to send an SMS to the buyer to confirm its purchase.”
Maybe m-payments could take off through retail stores because it’s clear they can see a return on investment since they already lose money to fraud.
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