Saturday, July 4, 2009

Mobile Payment Systems in Malaysia: Its Potentials and Consumers' Adoption Strategies

Mobile Payment System is a new payment method where we can make payment using mobile devices (e.g. Cell phone) instead of with cash, credit cards or cheques. Mobile payments provide quite a number of advantages for its users such as:
1. Security - Two-factor authentication between merchant and buyers to prevent fraud.
2. Convenience - Consumers need not to hold huge amount of cash during shopping
3. Easy & Fast - Buyers only need to integrate their mobile phone to the device and transaction can be done in short time

In Malaysia, mobile payments are being used in various areas:
- Music, Videos, Online Games and other Digital Products
- Transportation Fares and Toll Fees
- Books, Magazines, Tickets and other Hard Goods
- Make payment for phone bills. e.g. Digi

One of the famous Mobile Payments applications in Malaysia is Mobile Money. It provides convenience to buyers where they can buy product online and make payment without having to present at a physical store. Registered users can pay for merchandises bought by only sending a 6-digit security PIN via SMS using a mobile phone.

Besides that, Visa payWave is another example that provides mobile payment services. Technology used is Near Field Communication (NFC), a short range wireless technology that allows communication between devices at close range. Users only need to get their mobile phone close to a tiny computer chip which sends payment information to a card reader via short-range radio frequency waves. The San Francisco Coffee outlet at KLCC is an example that uses Visa payWave.

Study showed that almost 88% of Malaysian populations are subscribing to mobile phone services but there is only 1.8% from them are subscribed for mobile banking and payment services. This result shows only small portion of Malaysian mobile phone users are being exploited to use of mobile payments. Thus, some strategies should be adopted to attract more users to mobile payment. For examples,

1. Educate Consumers about Usefulness and Functions of Mobile Payment
Merchants that provide mobile payment services can introduce method of using and its advantages to its customers via their official websites.

2. Enhance Security of Payments
Merchants can adopt certification program such as VeriSign to increase consumer’s confidence in securing their confidential information when making mobile payments.

3. Well Designed Payment Process
Mobile payment systems should be designed in an easy and simple model so that users are more willing to adopt mobile payments which are still new to them.

4. Collaborate with More Banks and Companies
This can help to enhance customers’ satisfaction when they are able to pay using mobile payment in a wider range of services.

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