Pay Buddies by Mobile

11:00 AM Can NTT DoCoMo set another trend in developed markets?

July 3, 2009

2 Min Read
Pay Buddies by Mobile

11:00 AM -- NTT DoCoMo Inc. (NYSE: DCM) will become the latest mobile operator to enable users to transfer money between each other using their mobile phone when it launches its mobile remittance service on July 21. (See NTT DoCoMo Preps Remittance Service.)

DoCoMo has supported mobile payments since 2004 through its Felica mobile wallet service, which can be used as a debit card or to pay for things such as train travel. The new service is different in that customers can transfer up to ¥20,000 (US$208) per transaction to another individual via their mobile devices. The recipient then has the choice of transferring the money to a local bank account or depositing it in a DoCoMo mobile account.

There are two things worth noting about this announcement.

Firstly, it reinforces the fact that operators are working with banks, rather than replacing them. DoCoMo is acting as an agent for the Mizuho Bank, not taking on the banking role itself.

Secondly, transfer services of this kind have so far been associated almost exclusively with developing markets and are usually targeting those who don't have bank accounts -- think m-pesa from Safaricom Ltd. in Kenya, or Bharti Airtel Ltd. (Mumbai: BHARTIARTL)'s trial services with Visa and the State Bank of India that were stifled by regulation, or Globe Telecom Inc. 's G-cash and Smart Communications Inc. 's Smart Money in the Philippines.

Indeed, many of these services are targeted at the international money transfer market, where people working outside their home countries send money home via mobile as a much cheaper alternative to traditional Western Union-style transfer services. This international transfer market is one Juniper Research Ltd. predicts will grow to more than 100 million users by 2013.

DoCoMo, on the other hand, is targeting its new i-Mode-based service at its national market and at people who have bank accounts, possibly several of them. The appeal of the service is expected to revolve around the simplicity of the service, and the fact that a mobile phone number is used to identify the recipient and no bank account details are required. The operator therefore cites everyday examples, such as splitting restaurant bills, as obvious user cases.

Many operators in developed countries around the world will be watching to see if customers use the service and are happy to pay the ¥105 ($1.10) and ¥65 ($0.68) fees for the payer and payee, respectively. These fees, though, do not apply if the funds are transferred to a Mizuho bank account or a DoCoMo mobile account.

— Catherine Haslam, Asia Editor, Light Reading

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