Infrastructures Underlying Mobile Payment Systems

Work-in-progress post examining mobile payment systems through Vertesi’s notion of seams.

Background

I’ve been wanting to talk for awhile about a really interesting phenomenon to me and that is the rise of mobile payment systems in the U.S. I find this phenomenon interesting because while I was living in Kenya — a place that has generally poor physical infrastructure — there already existed an astoundingly easy system to use to send money across distances. To see how the U.S. is now tackling building this system on top of its existing infrastructure is revealing of the challenges and potentials that arise out of different existing infrastructures.

Mobile payment systems combine two highly complex infrastructural systems to enable people to send and receive money through their mobile devices. Because of the complexity of both financial and mobile network infrastructures and how they differ across countries and regions, these systems end up looking different since they essentially involve different design challenges.

Seams

We can examine these two instances of mobile payment systems through the language of seams laid out by Vertesi in, Seamful Spaces: Heterogeneous Infrastructures in Interaction. According to Vertesi, “the language of seams and seamfulness posits that each system lies in messy and even unarticulated local overlap with other systems.” Seams deal with the aspect of having many possible ways “to patch systems together into local alignment.” (Vertesi)

One can think of U.S. mobile payment systems such as Paypal, Square Cash, and Venmo as examples of seamless experiences whereas systems like M-PESA as an example of a seamful experience.

Mobile Money in the U.S.

Paypal web page: https://www.paypal.com/webapps/mpp/mobile-apps, captured Oct. 11, 2015

In the U.S., transferring money through our phones looks like using apps such as Venmo, Paypal, Square Cash, Google Wallet, or Facebook’s new money transfer feature. Regardless of which app you use, you need A) a smart phone to download the app, B) data or an internet connection to run the app, and C) an existing accredited bank account to connect to the app.

Mobile Money in African Countries

In many African countries, such as Kenya, transferring money through phones is quite simple. In the previous 8 months, the Kenyan mobile money system, M-Pesa, saw an increase of 21% in cash transactions while transactions through plastic cards fell by roughly the same margin (Munda). Through this system, people can send and receive money without any of the components (i.e. A, B, C) above. People add cash to an account connected to the SIM card on their phone, then text an amount of money to another phone. The person receiving the money can send the money on, or they can cash out through an M-Pesa agent.

Seamless

In the U.S., mobile payment systems are designed to be seamless experiences. With the push of a little button with a cash symbol, you can send and receive money electronically that can be easily deposited or withdrawn from a bank account connected to the mobile payment system. Accounts are connected, devices are connected, organizational entities are connected — all to make the cash transfer really easy to do.

But why do mobile payment systems in the U.S. even have to be done with smart phones? The answer perhaps lies in its existing infrastructure — and more specifically in “the inertia of the installed base” and how it “inherits strengths and limitations from that base” (Star, 382).

At play in this seamless environment are the existing infrastructures — the power of the mobile network operators as well as mobile phone producers, uniting with the existence of existing financial institutions, the culture of smart technology, and the convention wisdom of the seamless user experience. In this way, infrastructure both “shapes and is shaped by the conventions of the community of practice” (Star, 381).

Seamful

In contrast, the M-PESA system is an example of a seamful experience that is both a product of its infrastructure as well as one of its local context. In fact, the M-PESA system was a product of the “infrastructural incompatibilities and limitations” that Vertesi speaks of because the system was initially developed as a tool for facilitating microfinance loan repayments for poor people in Kenya who had limited access to existing financial systems and technologies. However, after the system was implemented, people started to use it not only to send money to pay back their loans, but to send money back and forth amongst themselves. The beginnings of M-PESA were therefore an example of “fleeting moments of alignment … that is driven by local context and local needs” (Vertesi).

Because of this, the system has clear seams in the infrastructure that supports this process. When one cashes in and cash out, he/she does this in person through a network of agents who act as mini-banks/mini-ATMs. This network — the agent network — was one of the key infrastructural innovations that had to be created to extend financial services to the unbanked poor. The radical invention was the agent networks which “[reordered] the physical world in ways considered useful or desireable” (Hughes, 53). Additional innovations involved reconstituting the relationship between the mobile network operator and banks, and importantly, the regulatory structure to oversee all of this.

Each of these components subtly morphed existing structures and systems, putting mobile network operators in the position as pseudo-banks for the unbanked populations. However, all of these re-organizations give the organization a quasi-monopoly status and roughly 78% of mobile phone subscribers are signed up through Safaricom, the mobile network operator (Munda). This represents another seam in the system. Because you need a Safaricom SIM card to open an M-Pesa account, the service ends at the point of the end of Safaricom’s mobile network infrastructure.

Seams and Overlapping Systems

Seams can expose us to the “messy and even unarticulated local overlap with other systems.” M-Pesa is an example that highlights the infrastructural innovation — the Agent Network — that was created as an innovative way “to patch systems together into local alignment.” (Vertesi) For M-Pesa, rather than adding additional layers of complexity, the agent network bridged a gap using local resources in a connected network of service providers.

This illustrates that innovation can be driven through unexpected ways and that seams that expose underlying complexity provide an opportunity for innovation that fits local contexts. It also highlights an interesting point about seams. We have a cultural expectation that things should be seamless. Yet one of the delights of things is learning how they work. Having seams that are visible can actually give some control back to the people who are using the infrastructure and who may be able to come up with new ways to leverage it to provide services to people.

Innovations and systems change over time and new alliances and competition will always form. As Hughes says, “one person’s infrastructure is another’s topic, or difficulty,” underscoring the continuous process of negotiations between competing and overlapping systems. In fact, one of the big topics in mobile money is the issue of interoperability — the lack of integration across different systems — in particular, the interoperability of schemes, networks, and parallel systems (Benson and Loftesness). This barrier puts pressure on other service providers driving financial institutions to develop their own mobile money technology and systems.

As we develop more technologically-advanced futures, viewing systems through the lens of seamful experiences can be a powerful tool for uncovering innovations and designing for local contexts.

References:

  • Benson, C. and Loftesmess, S. (2012). Interoperability in Electronic Payments: Lessons and Opportunities. http://www.cgap.org/sites/default/files/Interoperability_in_Electronic_Payments.pdf, accessed October, 2015.
  • Janet Vertesi, “Seamful Spaces: Heterogeneous Infrastructures in Interaction,” Science, Technology and Human Values 39.2: 264–284.
  • McKay, C. and Mazer, R. (2014).10 Myths About M-PESA: 2014 Update. http://www.cgap.org/blog/10-myths-about-m-pesa-2014-update, accessed October, 2015.
  • Munda, C. (2015). Kenya: Mobile Money Transfers Hit Sh1.81 Trillion in Eight Months. http://allafrica.com/stories/201510090668.html, accessed October, 2015.
  • Susan Leigh Star, “The Ethnography of Infrastructure,” American Behavioral Scientist 43.3 (1999), 377–391.
  • Thomas P. Hughes, ‘The Evolution of Large Technological Systems’, in Bijker, Hughes & Pinch (eds.), The Social Construction of Technological Systems (MIT Press, 1987) pp. 51–82.

Perspectives from Group Discussion

  • Seams as opportunities for innovation
  • Infrastructure and seams in three perspectives: system stability & risk, usability, political and individual choice
  • Seams of the visible experience vs. seams of the functional experience vs. affordances
  • A perfectly seamless experience as a false goal