Mobile payment systems have created a flexible infrastructure that has made digital currency available to people previously locked into the cash-only economy, according to Hannes van Rensburg, Fundamo Founder.
Van Rensburg told a forum at the Gordon Institute of Business Science (GIBS) that the future of the technology lies in the opportunity to develop more mobile products, such as savings and insurance applications, that wouldn’t have been possible in a cash-only economy.
Having launched the first mobile banking solution in 1999, van Rensburg founded Fundamo, which proceeded to become one of the world’s most advanced mobile financial service platforms.
The platform has been deployed in more than 34 countries across Africa, Asia, and the Middle East, offering mobile financial services to unbanked and under-banked mobile subscribers including person-to-person payments, bill payments, wireless airtime top-up, and ticketing.
The company was acquired by Visa in 2011 for $110 million.
Future of mobile payments and opportunities for the industry
Van Rensburg said the development of mobile payment systems was “a revolution that many are not aware of.” He called mobile payments “a relevant and real technology,” especially for those who were locked into a cash-only economy.
Mobile payments had broken through the interface between cash and technology, and the ramifications of this were not yet fully understood.
“If you live in a cash economy, it is incredibly difficult to budget and to save. The majority of the global population doesn’t have access to electronic payments,” he explains.
While Fundamo was a commercial success, van Rensburg explained that the technology is also about fighting poverty and being able to educate people about money by giving them access to the history of their transactions and spending patterns.
In countries such as Kenya, Pakistan and Bangladesh, more mobile payments are made than transactions of any other kind.
Van Rensburg said he did not regret the sale of Fundamo to Visa in 2011. While the company had 30% market share at the time, it began to bump into big brands such as Nokia mobile payments and SAP, as the technology became mainstream.
“Although our product was better, their brands were bigger,” he says.
Fundamo contacted possible buyers and settled on Visa, after a protracted process, as van Rensburg “felt they were the right partner for our clients, our staff and for the price.”
Following the acquisition, Visa began to roll out payment system mVisa, which is Fundamo technology, in an effort to connect mobile payment systems across applications.
Van Rensburg explained that mobile payments still operate on a closed loop system, linked to a specific payment device or system. Building an open loop would enhance the efficiency of mobile payments and their interoperability.
While it is unlikely that card technology will be phased out in the near future, especially in the retail environment, van Rensburg said mobile payments are likely to replace transactions such as online card payments, person-to person and business-to-business payments in the near future.
Digital currencies or cryptocurrencies, in which encryption techniques are used to regulate the generation of units and verify the transfer of funds, such asBitcoin were not likely to be used on a wide scale, as the cost would simply be too high. While Blockchain, the public ledger of all Bitcoin transactions, is a technology with good characteristics, “there is too much hype around cryptocurrency and Bitcoin,” says van Rensburg.
On being an entrepreneur
As an entrepreneur, van Rensburg said he was driven by the need to go somewhere that hadn’t been chartered: “Entrepreneurs are saddled with the burden of wanting to change things.”
Van Rensburg said those who run start-ups and are waiting for the moment to sell and exit their business must remember that this comes with a loss of purpose.
“There is always a way. An attitude of perseverance is the difference between success and failure. As a start-up, find your identity and stay true to it,” was his concluding advice to entrepreneurs.