Each geography demands different needs, hence i do see the said options may address certain set of value chain.

i would assume the target as INDIA and look at the scenario with the following.

We are a huge market for mobile and we continue to grow at a phenomenal rate (YOY) with wide penetration, at the same time we lack basic banking facilities to the said same areas.

Mobile money can address the challenges faced by the unbanked, underbanked and banked segment.

We are a market for 1000 rupees handset as well as 40,000 rupees handset. So the solution can be USSD for one segment and NFC for the other.It would be fair to state that the service shall not be handset or carrier dependent.

If we tend to look at the value chain, i believe with the current system the MNO cannot be a bank, so why not bank join hands with MNO and create value addition. ( banks can serve more accounts- financial inclusion, MNO will have the trust of a bank and much needed revenue as the airtime charges may not add value in the long run , but the VAS can )

With mobile portability already in place, UID on the drive, customers will have the freedom to choose the operator and UID would complete the compliance cycle

One method for me to accept payment from you would be if my mobile could physically accept your chip+PIN card with the funds routed to either my mobile account or my configured bank account.

I’d appreciate any views held on this as a strategy for business. Target markets for such a device for example ?

[1] The end user/subscriber experience has to be really simple & intuitive.
[2] Though you mention that for the end user it may look simple, in reality I am not aware of any real MMT systems/deployment.
[3] It has to be made secure as well as simple for the end user to have confidence to start using it & do large transfers.
[4] As always, the regulatory bodies will start rearing their heads with unnecessary issues which should not affect the end user experience.
[5] MMT has to be made available for B2B, B2C, C2C & C2B transactions.
[6] Those who would be promoting/launching MMT need to have hell lot of patience for the technology to catch on & later on be prepared to handle the huge transactions that will be made. I dont feel MMT to be a big hit in the market as soon as its launched as the subscribers will be very apprehensive about the security, that too in conventional markets. Once the same is popular with people, the transactions will be huge as is the case with internet banking.
[7] There should be no major restrictions in the transactions based on their operator or bank accounts. It has to be very similar to normal banking. This will be a major roadblock for its success.
[8] The billing systems (post & prepaid) systems should be revamped to support MMT.
[9] Last but not least in markets like India, where churn is very high, it needs to be seen how operators ensure revenue loss after a MMT is done by a subscriber but simply throws away his sim card after the transaction.

Let me know your thoughts on this.

Niranjan Srinivasan
Wataniya, Kuwait

Excellent articles written by you especially Business case. Keep it up !!
Regarding Mobil epayment, can you pl let us know about India regulatory concurrence on this?

One thing is the most “intelligent and feasable” business model, another is what the industry and interests involved want. In my opinion the collaboration model will be the best solution. Each one takes care of its own core competences.

In the 80s (at the begining of on-line payments, POS and ATM) I participated and implemented a national network of POS and ATMs using the Collaboration model, in Brazil. It worked fine (and still does..). It is called 24 Hours Bank (and has, nowadays, more than 30,000 ATMs, 20 banks and financial institutions, and deals with more than 2 million transactions/month).
You can see them at: http://www.tecban.com.br (unfortunately in Portuguese,
obs: but google translation solve that issue).

Cheers,
Mario Luis Tavares Ferreira

Until I can go nearly anywhere and be confident that my payment method will be accepted you’ve created a debit version of Discover Card. Without that confidence I will require a large incentive to constantly try and fail to use my payment method or specifically seek out locations that accept that method.

So who is positioned the best? Well, IMHO, it’s the carriers. They have the current customer base to entice other players (banks and retailers) to play along by dangling access to a huge number of current users. They have the hard cash from selling “air” to help retailers pay for the hardware needed to receive the payments and comm. providers to change their systems. Likewise, and this I think is key, they have something with which to entice customers to use the system without costing them too greatly: minutes and services. If they can convince customers to accept minutes or services as their loyalty payment for using the payment service rather than cash (in the form of actual cash, like Discover pays, or cash they use to purchase points or miles), they would be in great shape.

I’d guess that the unbanked world would have the same issues except receipt of money into an account and paying other people with it would have a larger benefit thereby lessening the importance of the retailer. And for banks, I’d guess the “branch-in-a-pocket” argument works better in Mali than Manhattan. Still, who better than the carrier to provide the service? I’d guess if they could provide access to an account and bill from that account, they could sign monthly accounts rather than providing access for prepaid phones.

If I have to choose a winner that could actually make change happen rather than simply benefit from an eventual (if ever*) consumer shift to mobile payments I’ll take the carriers.

Daniel

The Smart Card Alliance conducted a research study recently which indicated that North American stakeholders agreed that the collaboration model is most appropriate. I believe this applies to mature markets with mature POS infrastructures. See http://www.smartcardalliance.org/pages/download
We are waiting for the major brands, issuers and mobile operators to agree on a ubiquitous standard based on NFC.

For developing marketings without mature POS instrastructures, like Kenya and Philippines, a mobile operator-lead model is gaining traction. This is because 1) banks did not typically pursue the unbanked segment, 2) texting money P2P and to payment merchants and billers is a dramatic improvement over traditional alternatives. Now that it’s become a success, the Kenyan banks are demanding regulatory intervention. “Too late, sour grapes” I say!

In countries like India and Bangladesh, texting to pay recurring bills could be a great improvement for the average person who queues at a bank with a coupon/giro to pay utility bills and the like. The error-prone manual nature of this process required people to hang on to paper proofs-of-payment. Offering a text-to-pay with an automated electronic proof-of-payment on the cell phone would save hours per month spent queing.

Regarding the special case of DoCoMo – although at 1st blush it’s a carrier driven model, under the covers DoCoMo has created an ecosystem, in the same say that Apple has done with iPhone. Their open platform “takes all comers” including banks to deploy their applications on the DoCoMo platform. DoCoMo is not greedy about collecting a lot of revenue from this activity; they just aim to drive more traffic onto their network. This strategy has resulted in daily usage of the NFC capability – in fact 20% of their customers use it 2-3 times per day, a much higher take-up than seen with any other implementation.

Thanks for giving your comments.

I write on this blog in my personal capacity and the views expressed here are not reflective of the views of my employer. I am not in a position to comment on my employer’s position.

The largest drawback of bank/carrier dominated model is that the use of mobile payments is limited to one bank/carrier.

Collaborative model involves too many players and thus the fee grows too big – not interesting to the merchants.

I somewhat agree to Steve, that we need a disrupter, because existing business models have been on the market for a long time and much money has been “burned” in developing/sustaining these models.