A new report from Celent predicts that in many developing markets, mobile payments are starting to spill over from the person-to-person realm into payments originated by businesses.

The report, “Mobile B2X: The Next Mobile Payment Wave in International Markets,” said the new mobile business-to-exchange sector of mobile payments will likely succeed because it will address numerous pain points that have plagued cash for decades such as high processing and handling costs, security concerns and the need to spend considerable time to access it.

“Once businesses start to adopt mobile payments, transaction volumes are expected to increase drastically,” said Red Gillen, senior analyst at Celent, San Francisco.

Celent is a research and advisory firm that helps financial institutions formulate business and technology strategies.

Mobile development
According to the firm, it is only a matter of time before increased competition leads to the commoditization and price compression of mobile payment services offered by wireless carriers.

Celent predicts that in developing countries where the majority of the population is unbanked, mobile business-to-exchange can play the role that direct deposits play in industrialized countries.

The ability to displace cash in cash-heavy markets can translate into massive opportunities.

Mr. Gillen said the world will see a lot more mobile business-to-exchange payments in the future and that mobile-based salary disbursements could be huge.

Mobile business-to-exchange could be used for payments made by retailers to wholesalers for receipt of consumer goods, salary, commission and pension disbursements made by companies and governments to individuals and social benefit distributions from companies and governments to individuals.

Institutional benefits
The study found that mobile business-to-exchange will present an opportunity for financial institutions.

A majority of mobile person-to-person payment services in developing countries are dominated by wireless carriers that own customer relationships. Most of the customers in countries such as Asia and Africa are unbanked.

Now, mobile business-to-exchange payments will provide an entry point for banks, given that banked entities such as businesses and governments will be major market participants.

Banks will be able to offer new treasury and cash management services that let commercial clients’ payments or receivables be pushed through the mobile channel.

Celent said mobile business-to-exchange payments represent new revenue streams for banks and an opportunity to break the carrier’s stranglehold on mobile payments in unbanked countries.

“Financial institutions need to try to identify technology vendors that will offer a single interface to multiple mobile carriers and mobile payment schemes, as interoperability will be key,” Mr. Gillen said. “Banks do not have the resources to integrate with multiple players.
 
“The challenge will be for mobile carriers and banks to build up their cash-out agent networks, as despite the growth of mobile payments, people are still very much going to want cash,” he said.