Mobile Payments In South Africa

7.2 Major Research Findings
The deployment of mobile payments depends greatly on the addressing the needs of consumers, as they are the critical players to adopt and determine if a mobile payment product is successful or not. The proposed systemic research model was based upon a broad literature review of mobile technology adoption, integrated mobile network operator related key constructs influencing the deployment of mobile payments. Each stakeholder therefore needs to use the research model in an all-inclusive and systematic way by taking into account its own strategy and goals and those of the other actors. These constructs are; accessibility, affordability, availability, competition, regulatory, model and strategy.
The research confirms that these seven constructs influence the deployment of mobile payments in South Africa for mobile network operators. These constructs were either promoting or inhibiting the deployment of mobile payments for each case, depending on the mobile network operator strategy, interaction and alignment with other actors, the marketplace, innovation and regulatory environment. The propositions testing their relationship evidence indicate that the key success constructs in the mobile payments ecosystem have different effects on mobile payments deployment and these differ in each case in the same country and also for the different countries. This is a key contribution to this research, that is, the confirmation of the key success constructs that positively or negatively influences the deployment of mobile payments in South Africa. Also that these are different for each case and country even with same parameters of MNO.
The South African cases in this research are so diverse in the deployment of mobile payments as they show a failed replication of a successful product in Kenya, a failed deployment in South Africa, but successful in other African countries and a failed deployment in the local market due to lack of understanding of the mobile payments ecosystem in South Africa. Consequently, the deployment of mobile payments requires the cooperation of all stakeholders in the mobile payments ecosystem. Each actor needs to create enabling conditions for the deployment of mobile payments in congruence with one another.

The market place, innovation and regulatory environment in each country are different and their influence of mobile payments deployment different too. The quantitative data confirmed that each country has a different set of factors that positively influence the adoption of mobile phones and hence mobile payments deployment.
The lack of information or data availability to conduct strategic planning or to make decisions based on the usual management tools available in the mobile payment environments is a challenge in Africa. Mobile network operators have to find information on the 'ground' about customer needs, the market environment and regulatory issues they have to deal with as they deploy mobile payments. Case B as an emerging multinational company, has mastered how to manage African markets with institutional voids, lack of data and how to succeed in these markets when deploying mobile communications. Coupled with innovation, including local personnel in their teams, Case B's strategy is each country they enter; determine the country needs, regulatory issues, key stakeholders collaborate with and align company goals and strategies with to successfully deploy their mobile communications and later mobile payments products. The evidence is the company's expansion to 22 countries in Africa and the Middle East. Hence, Case B's successful mobile payments deployment in the other African countries is the involvement of all stakeholders in the ecosystem and creating enabling conditions for the deployment in congruence with the other actors.
In South Africa regulations are a constraining factor for successful deployment with the other factors at play in the market environment. The entrenchment of South Africa's financial and regulatory institution in the market dictates how the market operates. Competition is high with a regulatory environment that is not flexible for actors to innovate and succeed in this mobile payments ecosystem (a complex and complicated space). Also, Expert DFK emphasizes the cultural issue that South Africans are extremely individualistic, which cascades to South African stakeholders in the mobile payments space operations. For instance, South Africa is developing a cooperative banking payments platform whilst the SADC (Southern Africa Development Council) banking association is developing a cross border payments platform for the region. It is business unusual. This is an intriguing phenomenon for scholars to do research in a unique market environment in Africa and South Africa in particular where some EMNC's are able to succeed in the markets with 'institutional voids' and manage the 'social era' dynamics profitably. The main conclusions of this research are:
i) The replication of a product from one country to another does not work. Each country has own set of key success factors that positively influence mobile payments deployment. The market place, innovation and regulatory environments are key issues critical to guide the deployment process as shown in the evidence. The actors' goal alignment, interaction and interplay of relationships in the mobile payments ecosystem follow through for a successful deployment.
ii) Generalization is not applicable and each case or country has to be dealt with individually. Case A is not able to replicate the 'success of M-PESA' in South Africa. Case B's strategy works in spite of changes in the environment as shown by the DEDOOSE graphical analysis (Section 5.5).
iii) The study places a lens on the 'Social era' phenomenon in the mobile payments ecosystem. The customer is at the epicenter of the systemic research model. Actors need to know what the customer needs are and develop solutions in congruence with them and the other stakeholders in the ecosystem. Case C had an agreement with the supplier of Flash Mobile Cash and the distributor Pepkor Capital, but clearly their strategies were not aligned. The acquisition of Flash Mobile Cash by Pepkor Capital and usage of all mobile network operators instead of only Case C indicates any actor in the mobile payments ecosystem can be a key player and lead the deployment of mobile payments. This can feed into the design and development of solutions, deployment and success of mobile payments products. The driver of the product was also 'acquired' or 'skipped' with the product leaving Case C with no champion for mobile payments deployment and no product.
iv) The research confirms that regulation is a key success factor in the mobile payments ecosystem as it shapes the services and products that can be deployed. It impacts the usage and determines the success of the deployment of mobile payments. The research confirms that the stringent regulatory environment in South Africa is a barrier to the successful deployment of mobile payments, whereas in Ghana, Uganda and Kenya regulatory was an enabler as it supported the deployment efforts and was flexible.
v) In South Africa a clear determination and collaboration needs to be made with regards to the appropriate agency(s) to provide regulatory oversight for mobile payments as the convergence of this ecosystem strangles over different sectors with divergent regulatory frameworks. Once this is determined, collaboration, interaction and sharing of knowledge are imperative to enable and effectively regulate the sector.
vi) The training of key executives is necessary so they can understand the industries they are regulating and keep up to date with all the changes thereof. The overlapping regulatory bodies need to be ahead or at least on par with technological changes and innovations in the mobile payments space to be able to address some of the challenges of the market in line with government policies for financial inclusion. Policies need to be in line with the market realities of the country. This will enable the regulators and policy makers to draft enabling policies and regulate effectively.
vii) The Department of Communications (DOC) is in charge of ICT policy making and this includes mobile payments. The SARB regulates the financial industry, ICASA regulates the telecommunications industry and there are various other agencies tasked with overseeing compliance with these regulations, for example, Competition Commission, Consumer Protection Agency, Universal Service Agency, Financial Services Council, etc. These entities have divergent frameworks that need to be aligned to effectively regulate the sector and collaboration amongst them is imperative. Policy makers should create an enabling environment that fosters the adoption of mobile payments. Interestingly, the DOC held an ICT Indaba (conference) in June 2012 for the African diaspora. The Communications Minister of the time, Dina Pule said the ICT Indaba sought to 'ensure that ICT fulfilled its potential as an enabler of economic growth and job creation, not only in South Africa but throughout the continent;' hence, attaining the Millennium Development Goals in Africa. The ICT Indaba was held in collaboration with the ITU, other African countries and experts from other emerging countries such as China, Malaysia, and India to name a few. However, industry experts are very sceptical of the outcome of this as leadership and sponsorship was mainly by the big operators and the emerging players were left out. Another lack of collaboration and cooperation in the South Africa market place. A collaboration of all players in South Africa, Africa and globally is critical for the industry to move forward and be competitive as the incumbents mostly protect their 'territory'.
One can confirm and conclude that mobile network operator businesses need to make intelligent investments and recognize how the whole mobile payments ecosystem is changing. Mobile network operators need to understand the promoting and inhibiting factors for mobile payments deployment whilst aligning their strategies with the two (telecommunications and finance) industry's change trajectories. How can the mobile network operators remain relevant in the mobile payments ecosystem with the emergence of new players and new technologies? A whole view of the actors, marketplace, innovation, regulation, interplay and collaboration, and network effects of the mobile payments ecosystem in South Africa and Africa are imperative for the deployment of mobile payments to be realized to sustainable levels.
The research also bridges the gap between consumer centric studies on mobile payments adoption and mobile network operators' mobile payments deployment centric studies that are very scarce. In addition, it advances and closes the gap between diffusion of technological innovation studies backed by IDT and TAM ( extensions) models by using interpretative actor network theory. In summary, the research was designed to examine and understand the mobile payment adoption progress in South Africa from a mobile network operator perspective and determine why South Africa lags behind other African countries in this space when it is the largest economy in Africa. This question is answered throughout the research with evidence showing mainly the stringent regulations, highly competitive mobile payments landscape, high banked population, high urbanization ratio and innovativeness of highly skilled South Africans deploying their mobile payments products in other African markets with more enabling environments and higher consumer need.
The limitations of this research are:
7.3 Limitations
The research used qualitative case study and some quantitative research to test the research model propositions for mobile payments deployment. The study is limited to, mobile network operators and the results show that mobile payments deployment factors differ from mobile network operator to mobile network operator and also differ from country to country. The comparison of South Africa and other African countries was a limitation as the comparison was based on the same mobile network operator operating in that country which introduces some bias. The limitation of the research model is that some literature was not identified during the literature review. However, at the end of the research process, the researcher revisited literature to search for any recent relevant articles for this research and these were incorporated.
Another limitation of the research model is that not all constructs affecting mobile payments deployment were included in the investigation due to time, distance constraints, and more so the constructs not supported by previous studies. This model examined the factors that the researcher chose based on literature review as more relevant to mobile network operators as they were used as cases to test the propositions. These constructs selected to frame the current research are limited to the market environment, regulation, model, and strategy employed from various studies in the mobile payments adoption context for countries and stakeholders.
The case studies and expert interviews for this research focused on mobile network operators. The extension of research scope to include a few other actors in the mobile payments industry to validate and guide the final research model was also a limitation as not all stakeholders were included. These interviewees were handpicked and are recommended by the companies after evaluating their expertise, experience, and involvement in the mobile payments industry in South Africa, another limitation.
The research had a geographical limitation as the study is based in South Africa and the African countries where the South African mobile network operators have a footprint. The quantitative part of the research (comparative data analysis of statistically available key measures) for mobile network operators in South Africa and the other African countries was limited to available secondary data. The comparison to confirm or reject the research proposition why South Africa lags behind other African countries was limited to secondary research and one qualitative response by interviewees. By limiting the level of the research some of the relationships shaping both actors and the relational works in the mobile payments ecosystem were not covered.
An extension of this research to investigate the adoption of mobile payments across the entire ecosystem in South Africa and other African countries would be interesting.
7.4 Research Contribution
This research made an academic contribution by developing a systemic research model for analysing the constructs that influence mobile payments deployment by mobile network operators in South Africa. The review of the theoretical underpinnings of previous models and their supported hypothesis on mobile payments adoption, online adoption, mobile banking, mobile internet adoption, mobile wallet adoption, used to retain the seven constructs guided by the actor network theory domains framework and propose the systemic research model as an integrated framework for mobile payments deployment.
Also, as an interpretive case study approach was used, having a long engagement with research participants' instead of a snapshot view made a methodological contribution. This was done to follow up on issues as this industry changes every six months and to clarify issues as the research progressed. The research also presented the patterns of mobile payments deployment for mobile network operators. Using the elements of the framework to describe other theoretical contributions, Table 25 below.
The research contribution can be criticized in that the systemic research model only used seven constructs guided by actor network theory domains and thus aligns to the positivist approach and may introduce bias in understanding the mobile payment issues. The study used an interpretive case study approach with multiple sources for data collection which are highly subjective, face-to-face interviews, document analysis, website content analysis and observation reduce bias. Also, different case studied, including different country contexts of mobile payments deployments.

Domain of Framework Research Contribution
Market Place ' The customer is central to the systemic research framework. The research reveals that all actors in the market place matter. The deployment of mobile payments depends on the whole ecosystem and all players must be considered and this study used the mobile network operators' perspective. Aligning of actors is critical for any deployment to be successful.
' Accessibility, affordability, availability and competition of the mobile payments are a collaborative effort of all the actors to meet customer needs. The presentation of these constructs in different patterns for each case based on interaction with other factors and actors in the ecosystem contributes to knowledge and understanding the mobile payments in South Africa.
Innovation ' The diffusion of mobile payments is centred on meeting customer demands, real or perceived. Understanding how and why consumers use mobile payments is critical. The different technologies available, SMS, USSD, NFC, compete and affect the deployment of mobile payments. South Africa deploys advanced mobile payments whilst other African countries deploy simple SMS mobile payments.
' Also the model/partnership and individual strategy the mobile network operator employ influences the deployment of mobile payments. Bank led model failed for Case B in South Africa whilst successful in Uganda, Ghana as other factors are at play and interact differently. Social era ethos followed in other African countries.
' The successful deployment of mobile payments depends on the context in which technology is used, competition, strategy and model used by the operator and nature of the technology.
Regulatory ' The research emphasized that the stringent and inflexible regulations in South Africa are the main reason South Africa lags behind other African countries in the deployment of mobile payments. No collaboration between the different regulators whilst in the other African country regulation is flexible and developed by the other actors in the mobile payments ecosystem. Traditional strategy operating rules and ethos evidently still used in South Africa.
' There is an elaborate view of the complexities of regulatory issues influencing the deployment of mobile payments, overlapping regulations, regulator skills, compliance interpretation and enforcement.

7.4 Implications for practitioners
Several implications for practice for different stakeholders in the mobile payments ecosystem are offered by these findings. The cases in this research offer deep insights and practical information of lessons will guide future research in this emerging area to chart enabling policies for practitioners, policy makers and integrate the various factors that influence mobile payments adoption according to the systemic research model. The research will assist practitioners to holistically understand the marketplace, innovation and regulatory environment they operate in. Identify and overcome barriers, identify key actors to collaborate and align their strategies with, enable traction, increase mobile payments adoption in South Africa and emerging wider economies. Practitioners should revisit their mobile payments strategy and look into cross industry collaboration, interoperability instead of closed loops and silos, policy and regulations resulting in positive network effects. Also to learn from the different patterns of mobile payments deployment from the cases studied.
i) Cross industry collaboration - Cross industry collaboration is imperative for successful mobile payments adoption. This is necessary so actors can share the financial and operational risks as no one actor can succeed alone apportion benefits accordingly. MNOs identify correctly their own goals and interests, and those of other stakeholders, align and communicate these goals effectively with the other actors. The cross industry partnership will bring certainty and establish a set of common standards for mobile payments. Have integrated/unified standards and a sound business model.
a. MNOs have to find power through a shared purpose, and build fast, flexible, and fluid organizations. Expert CMR suggests that one payment clearing and integrated portal are a necessity where all actors in the mobile payments ecosystem can access, with no forced partnerships or alignment to other actors. This will force all actors to collaborate, interoperate, and have one standard for the ecosystem and one database for the country. Merchants and distributors or agents need to be included in the cross industry collaboration for actors to align their strategies, goals, and interests to increase traction and reach critical mass.
b. Collaboration and cooperation of the financial and telecoms regulatory bodies is necessary to afford sharing of knowledge and involving MNOs to better know the industry and align all stakeholders' interests.
c. Customer power is central to any stakeholders' strategy as to succeed; traditional strategies must be realigned to the changing realities of the market and consumer demands to attain growth into new markets. Thus creating value going forward is necessary to realize new markets and revenue streams.
d. A mobile payment platform supplier is already piloting such a platform in South Africa after getting a license from the SARB. The question is, can a supplier lead without cross industry collaboration in the mobile payments ecosystem in South Africa as evidence from the participating experts indicates they have not been included in its design or solicited for inputs?
e. The Banking Association on the other hand has an initiative to create a payments platform for the SADC region? Where does this fit in South Africa, region and continent? How will it affect the deployment and adoption of mobile payments?
ii) Close loop and silos - The existing mobile payments solutions and services offered are fragmented and closed loop. This is a fragmented approach by mobile network operators and this research shows that they cannot go it alone in this mobile payments ecosystem.
a. Case A has a 'go it alone' strategy; partnered with a bank due to regulatory requirements. Evidence shows less than expected uptake of M-PESA (SA). For other stakeholders, the mobile network operator pushes its own agenda; interest and not taking into account the other actors' interest and goals. Do strategic synergies with the banks exist? No. Problematization, translation, interessment and mobilization of other actors, that is an alignment of interests is not explored. Research evidence suggests that this lack of integration and collaboration with each other reduces the value of mobile payments. This makes deploying mobile payments more expensive and cumbersome for the consumer to adopt hence the lacklustre adoption of mobile payments.
b. Some actors are now moving towards products not aligned with one bank or mobile network operator with some limitations to taking out your cash. How will a mobile network operator respond to new products like FNB Geo-payments, Flash Mobile Cash? These work across all networks with no closed partnership agreement with one mobile network operator necessary. Is the partnership beneficial and profitable to the mobile network operator too?
c. Case B proved to be innovative after its first deployment of mobile payments failed, then redesigned a more innovative product now successful in Uganda and Ghana and deployed in other markets. The lessons learnt were incorporated into the design. Added to that is Case B's experience in managing its business with no prior data to work with no firm strategic plan in developing countries. In South Africa, Case B has designed innovative products, one deployed in a joint venture with Standard Bank and other mobile network operator-led. How these products perform in the market is still to be determined.
iii) Regulatory ' mobile payments will thrive if regulatory agencies and policy makers champion and create an enabling regulatory environment for mobile payments adoption. South Africa has clear divisions of sectors and who regulates what, whereas other African countries have 'super regulator'. One regulator cannot afford to regulate all financial sectors as this may cause divisive attention and lead to ineffectiveness. It is imperative that a demarcation of the appropriate agency to provide regulatory oversight for mobile payments be determined taking into account the various agencies involved with the convergence nature of mobile payments. Training of regulators and collaboration of regulating agencies is imperative to effectively regulate mobile payments.
iv) Innovation
a. Interoperability - A common platform to integrate mobile payment services would help increase the value and encourage competition between the services (similar to roaming agreements) within South Africa. This would in effect reduce barriers to entry for new mobile payment service providers, reduce prices, improve service quality, and, in turn, increase mobile payments adoption. However, cross border interoperability would be difficult due to the different regulatory environments in neighbouring countries.
b. Case B is piloting cross border mobile payments in Uganda, Ghana, and Kenya, as the regulatory environments in these countries are supportive.
v) Positive network- the positive network effects and revenue could be realized if actors collaborate and align their mobile payments strategic goals and interests. A reduction of inhibiting factors and an increase in promoting factors for the adoption of mobile payments will see the sector reach critical mass. Establishing network externalities in the mobile payments ecosystem is imperative. At launch, the mobile network operator has to attract as many merchants and consumers with appropriate incentives (fair revenue sharing, good commissions for agents) and rewards as soon as possible to attain critical mass. Reduction of churn as a mobile network operator strategy creates network effects within each service, but integration across mobile network operators and countries would increase transaction volumes and hence more revenues. A case-in-point is text messages; mobile payments can also have the same network effects and increase revenues for actors.
7.5 Areas of Future Research
The research pointed to several areas in the deployment of mobile payments that are issues of further research as follows:
' As this research focused on mobile network operators, first, future studies could look into other actors, merchants becoming key players, regulators, technology providers with regard to the deployment of mobile payments and retest the systemic research model accordingly.
' In South Africa the bank led model is applicable by law. Further research is needed in the light of the new technologies that can surpass the key players in deploying mobile payments like Pepkor Capital with Flash Mobile Cash, FNB Wallet, Apple and Google in South Africa and beyond the borders. How the interoperable products compete and succeed in the mobile payments ecosystem?
' The research findings found that regulation is the main inhibitor to mobile payments deployment in South Africa, but a promoter in the other African countries. Further research is needed to investigate the role of regulatory in the deployment of mobile payments. This will offer insights to regulators and policymakers on the best way to create an enabling environment provide guidance and how to regulatory compliance managed?
' The competition on voice and data revenues for mobile network operators is fierce, there is a proliferation of open products that work with any network like Geo-payments (FNB South Africa), bKash, Beam in Bangladesh, due to a broad network of partners, distribution 'spaza stores, the 'social era' and social networking platforms, there is a plethora of emerging players in the mobile payments ecosystem. Changes in technology innovation occur almost every 6 months, hence, research should be done in short spaces of time for mobile payments deployment to keep abreast of these technological developments. Studies on the effects of such competition on mobile network operators, as other actors enter and lead mobile payments deployment to clarify future trends.
' Further research is required to determine the role and extent of legislation needed to provide a viable, secure, and a fair enabling environment that supports mobile payment services locally and internationally. The research questions are then, 'How do regulatory standards influence mobile payment services, and what kind of legislation is needed to support mobile payment services in South Africa and Africa'? This could be extended to determining which institutions should have authority to regulate mobile payment services within South Africa. Also, what regulatory changes are needed to provide an enabling, fair and secure environment for all actors in the mobile payments ecosystem in South Africa?
' Finally, the same questions can be investigated for the different African countries. In Africa there are 'Institutional and regulatory uncertainties' longitudinal research on the changes in regulatory and technological changes would benefit academia. A case in point is Ghana and Nigeria, where the deployment of mobile payments is happening side by side with regulatory changes as they investigate the best policies and regulations to enable mobile payments adoption. Also, studies on how the changes of not allowing mobile network operators to participate in the mobile payments ecosystem in Nigeria and the changes thereafter by having them participate.
' Further research needed to investigate the aspects of failure, discontinuation of mobile payments deployment in South Africa and the successful deployment of the same operators in other countries.
' More research can expand the systemic research model and interpretive case studies in developing and developed countries to further understand the deployment of mobile payments.
' The theoretical application used for this research was an institution and actor network theories, further research using other diffusion theories will improve understanding of how mobile payments develop and add to the mobile payments literature.
' Further research on customer power in the 'social era' to understand how businesses move from the traditional strategies and the impact this has on the mobile payments ecosystem.
7.6 Summary and conclusion
The actor network theory contends that mobile payments adoption is different for different countries because of the degree of synergy between the key actors in each country, how its consumers associate value to it and the efficiency of incumbent technologies. Whilst it would ordinarily be expected that advanced economies with multiple cutting edge mobile network and banking technologies like South Africa would be lead in mobile payments adoption, the same is not true. The reason for this is that the results of the research indicate that each mobile network operator has a different set of key success factors even though all operate in the same country. Similarly, a different set of key success factors applies to the same mobile network operator operating in different countries. The outcome of the research is that South Africa is a unique market with different key success factors, way ahead of the other African countries technologically and with innovation in the mobile payments ecosystem.
This research therefore confirms the validity of the Actor Network Theory that the success of mobile payment adoption depends on the whole mobile payments ecosystem; actors, interaction and interplay of the actors involved, technology, regulations in the market and pre-existing market conditions in the market place. The research also illustrates that factors influencing mobile payments deployment vary for each stakeholder in the mobile payments ecosystem and no one country or stakeholder has the same key success factors.

Source: ChinaStones -

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