M-payments and the Challenges of E-Commerce in Afghanistan
M-Payments or Mobile Payments is also known payments against goods and services using mobile devices. Mobile payments services are beneficial in developing countries where there is no access to banks in rural areas. All these mobile payments services must be regulated by the Central Bank of the country (Da Afghanistan Bank in Afghanistan).
Mobile payments is a new approach in the financial industry for the introduction of better and convenient financial inclusion. According to the GSMA State of the Industry report for 2013, there were approximately 219 live mobile money services globally, with mobile money outlets outnumbering bank branches in over 80% of markets included in the survey. By mid-2013, there were over 203 million registered mobile money accounts across the globe. In Afghanistan, however, a limited number of the population has access to M-Payments which could be due to the some of the challenges mentioned below.
At the early ages of mobile payments introduction, this activity was performed using USD messages on GSM operators. Now with the introduction of smartphones, Mobile wallet and NFC (Near Field Communication), the m-payments are more enhanced. In addition, smartphones played a vital role in communication and interaction of people’s daily life, which is ultimately associated with a modern life style.
M-payments has a number of benefits in particular to the end users. We witness acceleration and transparency in m-payments process; for instance all the steps of transaction authentication is automated. Taxes, utility bills, mobile top up can be easily performed anytime from anywhere regardless of visiting a bank branch or beneficiary organization to perform such transactions. This results in saving time. Also, less risk is associated in terms of physical cash lost, robbery and theft.
Currently, as stated in Oracle's Simplicity is the Ultimate Sophistication report, “Consumer behavior has been significantly changed, with smartphones becoming an integral, inescapable part of even the most common activities. According to data available in public domain, 4 of every 5 shoppers use smartphones to shop”.
According to statistics, the percentage of users utilizing smart phones in order to find information is 74% and those using them for web surfing are 55%. These days, M-Payments can be considered a basic necessity in rural areas. M-payments is a section of E-commerce. There is no doubt that E-commerce implementation in the country such as Afghanistan requires proper planning and strong commitment. We definitely will face major challenges due to E-commerce being a new concept. Some of the challenges are allocating adequate resources & budget, public awareness and non-interoperability.
Resources and budget: Resources which consist of hardware, software, expertise and finances are important requirements for successful implementation of E-commerce projects.
Public Awareness: As the literacy level of people in Afghanistan is low, we have to make sure that people have enough idea and knowledge of E-commerce. Therefore, Government and in particular Ministry of Communication and Information Technology (MCIT) should arrange training centers and instructors for providing detailed information to the public both in rural and urban areas regarding E-commerce and M-payments.
Non-interoperability: This is another major obstacle in running of E-Commerce in Afghanistan. So, there should be pre-planning and survey done in financial institutes such as banks, payment aggregators and Mobile Network Operators (MNO) or cross checking with top financial and banking systems’ vendors such as Virmati, Flexcube and VISA, Master Card and American Express.
Fortunately, Afghanistan in the near future will have a fully functional national switch, named as Afghanistan Payments Systems (APS). APS is a national country level payments switch which is a gateway to all online local and international payment schemes. It also provides interoperability between both governments and private banks including Mobile Money Operators (MNO) and other payment aggregators. APS has almost crossed major parts of the challenges mentioned above and are in the process of implementation. In conclusion, APS is the best solution to all online-payments in Afghanistan. APS has invested a huge amount of money in preparation of professional infrastructure consisting of hardware, software and IT technical personnel. Therefore, APS will soon be planning programs for public awareness after the non-interoperability phase is successfully solved.