Transaction Trends

Use of mobile devices to make retail and store payments will propel financial inclusion in emerging markets, according to a new study from Juniper Research. The firm predicted that mobile merchant transactions conducted by the unbanked will increase from 1.8 billion to 3.8 billion over the next five years.

Kenya and India will be “core incubator markets for merchant services,” said a press release on the study. “Safaricom’s Lipa Na M-PESA product already has over 100,000 merchants enrolled, and by 2023, merchant payment transactions in the Middle East [and] Africa alone will surpass $16 billion per annum.”

The firm cited Mastercard’s QR code-based solution as a “key innovator” in the space. “Previously merchant payments relied upon SMS to facilitate transactions, with customers texting a code to initiate payment; thus the process was slow and inefficient,” said research author Lauren Foye in the release. “With QR code solutions, shoppers simply scan a merchant code to rapidly initiate the payment process.”

To drive further engagement and make digital transactions more accessible, Juniper recommended solution providers offer value-added services, such as microloans and analytical tools, along with SMS-based marketing services.

“Juniper cautions that tariff rates must remain low, citing the fact that Lipa Na M-PESA was obliged to impose a 50 percent reduction in fees last year, both to address customer indifference and ward off competition,” the release stated.