Iman Vidya Kemal, Nofie
(2016)
Mobile payment system: theory and cases of services modularity.
PhD thesis, London School of Economics and Political Science.
Abstract
This thesis applies modularity theory to services using the case of mobile payment systems. We compare three mobile payment projects—Oi Paggo in Brazil, TCASH in Indonesia, and M-PESA in Kenya—as case studies. The study of modularity is influenced by literature from the field of production and manufacturing sciences and the present work modifies and extends the theory. It also demonstrates the potential of modularity theory in managing complexity, increasing flexibility, and achieving efficiency in the service context.
Modularity is a principle that shows how a system can be designed with subsystems while reducing complex interdependencies via standardised interfaces in order to retain efficiency. Modularity offers greater flexibility through recombination and efficiency through economies of scale from reusability. We sought to find how a service provision can be dissolved into coarse-grained service modules that minimise interdependencies and make the whole system more comprehensible.
We argue that, first, the application of modular thinking in services will be likely affected by three key attributes which differentiate services from products: customer involvement, intertwined elements in the final service offerings, and modular packages that incorporate technical and human attributes. These analytical approaches are likely to be valid in those industries that are particularly technology-intensive and incorporate network effects. Second, contrary to what has been proposed by literature on product modularity, we find empirical evidence in the case of mobile payments that transactions between participants such as customers and regulators were mainly conducted at thick crossing points.
This thesis contributes to the emerging literature on modularity in services. First, we test and validate the theory of modularity in services using the case of mobile payment services. Second, we propose a redefinition of modularity in services that emphasises the peculiar characteristics of service provision. Finally, we propose an indicative proposition for service modularity that can be used to help better develop modular services.
This thesis also contributes to literature on mobile payments. We posit that technology-intensive services such as mobile payments should be developed and managed in such a modular way. Not only is it associated with flexibility and agility, modular thinking in services allows companies to maximise compatibility in fulfilling customers’ needs as well as complying with regulators.
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