Really Apple? Tanazania Leads US in Mobile Payments

I was in Tanzania a few weeks ago. One of the conceits that we have in the US is that we lead the world in technology. That is true in many areas but in mobile the US is a laggard. Just look at the fuss made about NFC payments in the new iPhone given that Japan had mobile payments over a decade ago.

Another area where the US is a laggard, or maybe it is the same area, is the capability to move money around by phone. In rough numbers, the world has only 2B bank accounts, 1B credit cards but 7B mobile phones. If you were starting from scratch you wouldn’t base a payment system on giving every customer cards and giving every merchant a reader, you would find a way to leverage the mobiles that everyone already has.

The area where this is most advanced is the area where banking is least advanced so there is not really any infrastructure to compete with. That is the M-Pesa system (pesa is the swahili for money) first introduced in Kenya and then in Tanzania. Driving around in Tanzania there were M-Pesa signs everywhere. Every bar, every little store, even little tents set up at the side of the road. M-Pesa was launched in 2007 by Vodafone subsidiaries.

How successful is M-Pesa? In a nice coincidence the Economist published just the table that I needed over the weekend. In Kenya, there are more accounts than there are people. In Tanzania there are only about 420 accounts per 1000 people but the value of all the transactions is a staggering 65% of GDP. It is “only” 55% in Kenya with even greater penetration. It is even 18% in Afghanistan (where it is called Roshan but it is still run by Vodafone).

People use M-Pesa for all sorts of things but one thing is that children working in cities can easily transfer money back to the villages where their parents live. In the past, since there were banks only in the city, there was no way to do this other than getting on a bus for what might be a very long round trip. The child goes to an M-Pesa store and pays the money in to transfer it to his or her own phone account. Then they transfer it to the parents account using the cellphone network. The parent goes to an M-Pesa store, shows the code on the phone and collects the cash.

Another area where US centric opinion tends to underestimate things is the size of internet and mobile businesses in China. For instance, China Mobile has over 750M subscribers. So that is not just twice the entire US population, it means that it is almost 3 times as big as the US carriers (AT&T, Verizon, T-Mobil, Sprint etc) put together. They plan to put in about 500,000 LTE base stations in the next few years. The scale is amazing.

How about internet commerce? Amazon is the world leader, right? Not even close. Since Alibaba just went public in New York last week you might already have seen this, but Alibaba is over twice times Amazon’s size, with $269B versus Amazon’s $116B. They do an astounding $9,368 per second of business. I sometimes like to point out that a modern semiconductor fab depreciates at around $20/second but this is a couple of orders of magnitude larger.

There was lots of noise when WhatsApp was purchased by Facebook. In China, the equivalent service is called WeChat (you can use it in the US too but it is mostly people who know someone in China who seem to). It makes far more money per person than WattsApp (although it has fewer subscribers but is growing exponentially).

So don’t assume the US leads in everything unless you actually know the facts.

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