Theme 4, Unit 2 - Mobile payments

Question 1

What are mobile payments ?

Answer 1

Refer to the use of a mobile device (smartphone, tablet, or feature phone) to make transactions or transfer funds between parties.

Question 2

What is the two key features of mobile payments ?

Answer 2

• Digital Fund Transfer.
• Convenience.

Question 3

What are the different types of mobile payments ?

Answer 3

• Mobile Browser Payments (checking out in online store).
• In-App Mobile Payments (transaction is completed within a dedicated mobile application like uber).
• Mobile/Wireless Credit Card Readers (convert mobile devices nto point-of-sale (POS) systems).
• Contactless Mobile Payments (apple pay).

Question 4

What is the systemic risks of mobile payments ?

Answer 4

• Potential risks such as credit risk, liquidity risk, and settlement risk.
• If a mobile payment system is inadequately regulated, it could lead to significant disruptions in the financial markets, potentially triggering broader economic instability.
• Systemic risk refers to the potential for widespread disruption in the financial system if payment systems are not sufficiently safeguarded against these risks.

Question 5

Why is regulation essential ?

Answer 5

• Consumer protection against fraud etc.
• Prevention of money laundering.
• Market integrity to ensure consumer trust.

Question 6

What are the risks assosciated with non-regulation of mobile payments ?

Answer 6

• Money Laundering..
• Consumer Protection.
• Privacy Issues.
• Regulatory Uncertainty.
• Systemic Security Risks.

Question 7

What is mobile money ?

Answer 7

Mobile Money is a specific subset of mobile payments, often used in emerging markets, where users can transfer funds, pay bills, and make purchases via their mobile phones without requiring a traditional bank account.

Question 8

What are the characteristics of mobile money ?

Answer 8

• No Bank Account Required.
• Facilitated by Telecom Providers.
• Electronic Wallets.
• Broad Accessibility.

Question 9

What are the challenges with regualtion of mobile money ?

Answer 9

• Banks Act restricts the ability to deposit and manage money without a bank account, creating hurdles for mobile money services.
• The regulatory environment around mobile money is still developing, and scholars are divided on whether mobile money should be regulated as a banking service or as a separate entity.
• Other pieces of legislation, such as FICA and RICA, play a role in managing fraud, anti-money laundering efforts, and privacy in mobile money transactions.

Question 10

What are the theoretical underpinnings of mobile money ?

Answer 10

• Social Theory of Money, money is a social construct and can be redefined to include mobile money as a legitimate form of payment.
• Credit Theory of Money, mobile money systems can be viewed as extending credit by allowing users to make transactions based on future payments.
• Post-Keynesian Theory, this theory stresses the role of credit creation in an economy, and mobile money systems can facilitate borrowing and lending outside traditional banks.