The evolution of mobile wallets and digital payments:
Digital is no longer a word; this is your life. Part of people, economy, and countries. Every country wants to regulate, innovate, implement digital solutions, services and lifestyles. Today we will talk about such a beautiful country, Jordan, and the evolution of mobile wallets in the beautiful landscape. What kind of consumers in Jordan can benefit from mobile money? Does the Jordanian government support enough digital wallets? How do refugees in Jordan get help through mobile financial services? All this and more in today’s report on Jordan and its mobile wallets.
Understanding Jordan’s Population and Economy
Jordan, officially known as the Hashemite Kingdom of Jordan, is an Arab country uniquely located at the crossroads of three continents: Asia, Africa, and Europe. Jordan has been an important center of trade in the Middle East for centuries, connecting east and west. As Wikipedia says, Jordan is considered the highest average income country and in 2010, Jordan is considered the most globalized country in the Middle East and North Africa. According to the IMF, the Jordanian banking sector is also classified as ‘highly developed’.
But what does the number say? The diagram below shows the population and economy of Jordan as of January 2019. With approximately 91% urban population and 98% literacy, Jordan can truly be described as a literate country.
In the late 1990s, the Jordanian government set itself the goal of developing an intellectually competitive IT industry, attracting foreign and local investment, generating valuable jobs, and achieving significant export levels. In particular, aggressive measures have been taken to implement Internet-based technologies to facilitate the desired social and economic development. What happened to the efforts of the 1990s?
The diagram below shows the statistics of users in Jordan who have a mobile subscription, who use the internet, social media, and social media via mobile phones.
Opportunities for the Mobile Phone Industry in Jordan
In August 2019, there were more than 660,000 Syrian refugees in Jordan, about 48% of their children. The vast majority (about 80%) live in urban areas, while the rest mainly live in two refugee camps. The influx of refugees leads to enormous population growth and commercial growth opportunities given the current penetration rate of mobile phones.
The high percentage of young people
Nearly 70% of Jordan’s total population is under the age of 30 and people between the ages of 15 and 24 make up nearly 22%, the majority of the country’s youth. With the help of advanced technologies and at an early stage, the penetration of mobile telephony is growing in the country.
Emerging networks and services
The fixed broadband network is growing and the national fiber broadband network is in full swing. Companies like Orange Jordan launched 4G+ services in 2018 and there are rumors that the IoT [Internet of Things] will move to Jordanian homes and businesses.
Where can banks in Jordan access mobile financial services?
Robust infrastructure and regulatory pressure
Jordan has a healthy regulatory environment and is working on several ongoing initiatives –
1. The Central Bank of Jordan issued a circular on mobile payments in 2010 and published a regulatory framework for mobile money in December 2013, which came into effect in March 2014.
2. In 2016, the Central Bank of Jordan published an operational framework for the mobile payment service that clarifies the process structure, techniques, limitations, and operational environment of the mobile payment service.
3. As can be seen in the diagram below, Jordan’s payment infrastructure is robust and highly developed for banks, NBFCs, and PSPs (payment service providers) to support local and international payments.
The mobile infrastructure provides a reliable and robust broadband network at an affordable price, even nationwide with wireless access. According to the information in the Tanmey Ahjo report, this indicates that internet and mobile coverage was above 100% in 2017. The number of computers in each household was 55.8%, internet access at home was 55.8% and 66.8% of people used the internet.
Manage innovations through technology for rural and remote customers
While mobile money or electronic exchange solutions are available in the Kingdom, they are mainly concentrated in urban areas and dominated by traditional operators such as post offices, ATMs, or bureaux de change. Fintechs and startups can target rural and remote areas with their innovative mobile solutions to gain penetration and visibility.
Targeted at refugees
Jordan is home to the second-highest percentage of refugees in the world. A significant percentage of these refugees are women and children and more than 80% live below the poverty line. In October 2018, the registered mobile wallets with payment service providers for a total of 8,000 Syrian refugees. While these numbers are staggering, they are very small compared to the total population of over 600,000 Syrian refugees in Jordan.
The use of wallets is also superficial due to the scarcity of cash and the lack of trust in the digital ecosystem. Another concern caused by low usage is that refugees don’t get ‘help’ in their wallets, adding an extra step in allowing people to deposit money into their accounts and then use it.
Startups, fintechs, and banks can take advantage of this opportunity and propose innovative solutions, such as a system that directly provides individual government subsidies. By developing their network of agents, banks and financial institutions can also gain trust
Agent or individual entrepreneur support
According to the Central Bank of Jordan statistics for July 2018, there were 1,409 agents in the market. Agents act as a bridge between a payment service provider [PSP] and individuals to use banking services and generate income. However, the report highlights concerns and doubts about the effectiveness of an agent network in Jordan, as issues such as the agent network are not well regulated and are geographically specific.
These issues can be solved with digitization through an Agent Banking solution that can help this infantry digitize deposits and withdrawals, also help people’s financial education, and ultimately help with automatic reconciliation at the end of the day.