Being able to pay with our phones is certainly one of the most exhilarating experiences in the payments landscape these days. However, there is much more than meets the eye when it comes to the apps responsible for making mobile payments happen. Here’s everything you need to know about mobile wallets.
The importance of mobile wallets
The mobile wallet industry processes around US$2 billion a day, with experts estimating that the US$1 trillion will be transacted annually by 2023, according the 2020 GSMA Mobile Money Report. These numbers are promising, especially when we factor in that mobile wallets are widely available in 96% of countries where less than one third of the population possess a bank account.
Currently, there are around 3.5 billion smart phone users worldwide. By the end of 2021, estimates place the number of users at 3.8 billion. This means almost 50% of the global population would have access to a mobile wallet. The accessibility to both smart phones and mobile wallets represent an unprecedented opportunity for financial inclusion.
What is a mobile wallet?
Nowadays, mobile wallets are associated with mobile money technology, which enables users to do much more than just pay with their phones. These apps have become so robust that they can take the place of bank accounts. For example, you can receive a money transfer or pay for bills. Also, most mobile wallet providers allow you to withdraw cash at authorized locations.
In its most basic form, mobile wallets are phone applications that allow you to store your credit or debit card information. This app then allows you to pay for goods and services without needing to use your physical card. Payments can be made through your phone (for example, at checkout when using a food delivery app), or by scanning your phone at a physical point of sale terminal (POS).
How do mobile wallets work?
Mobile wallets can serve different purposes, and the setup process will depend on the type of mobile wallet you choose. For example, if you’re using a mobile wallet to link your existing credit or debit card, you’ll first need to input your payment information in the app. Once your credit or debit card number is saved in the mobile wallet app, it’ll allow you to pay by connecting with payment terminals through Near-Field Communications technology.
Within your phone, the wallet app will retain your payment information and speed up any mobile transactions.
That being said, mobile wallet apps can go a step further. By utilizing your mobile phone, providers can offer you a wallet account equivalent to that of a bank account. That means you can use your phone number as if it were a bank account number. With this number, you can send and receive money, pay bills, and top up mobile services, etc.
Are mobile wallets safe?
In many cases, mobile wallets are the safest option out there—especially if your smartphone has a biometric identification system (face or fingerprint recognition). Even if your phone is stolen, your passcode or biometric identification would be needed to approve any transactions.
More importantly, mobile wallets providers must follow strict local and international regulations, which means they are obligated to maintain a standard of security.
Your mobile wallet will receive constant updates via your application store, ensuring that it always has the latest security measures in place. At the same time, you can amp up your own phone’s security for an extra layer of protection.
However, please be mindful to only use mobile wallet apps you’re familiar with and that are available for download through your phone’s official app store. This way, you can ensure the provider is following the proper rules and regulations to offer the service.
Ria’s mobile wallet offering
At Ria, we are committed to getting money to where it matters. That means that part of our digital expansion strategy has been heavily influenced by the possibility to foster financial inclusion globally, especially in countries like Africa and South Asia where mobile wallets are flourishing.
Currently, we serve around 204 million accounts across 20 countries through mobile wallet partnerships. Thanks to our pre-existing money transfer network, the second largest in the world, we enable mobile wallet services to provide customers with international money transfer solutions.
Ignacio Rodríguez, Ria’s Business Operations Director, believes in opting for holistic solutions when it comes to connecting customers with their loved ones living in remote locations. “Mobile wallets are providing recipients in rural areas with a safe and convenient alternative to traditional banking. Beyond that, it’s amazing how fast the mobile wallet industry has grown in just 10 years.”
Rodríguez also spoke to the incredible capillarity that exists in Africa, and increasingly in South Asia, when it comes to mobile wallets. “Our brick-and-mortar model relies on there being some infrastructure, financial or otherwise, where customers can pick up their remittances in cash. Now, with mobile wallets, we’ve prioritized partners that can help us reach a great number of customers living in rural areas, as well as offering greater choice for existing customers looking to make the most of our digital channels.”
Sub-Saharan Africa is the region with the highest remittance costs, but it’s also the most developed when it comes to mobile wallets. By powering digital remittances, we can help customers in the region cut other expenses like transportation fees to their closest cash collection point. More importantly, the money is conveniently delivered straight into the customers’ wallets in a matter of seconds.
Latin America is also starting to pick up traction when it comes to mobile wallets. The service is becoming more popular with each passing day. Although we already have some presence in the region, we’re looking forward to tapping into new opportunities as the mobile wallet industry consolidates.
So, yes. That wallet app that has been sitting on your phone for some time? Turns out it’s more than just a handy payment method. It’s a powerful tool for financial inclusion.