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Like its predecessors, the 2017 edition of the Mobile World Congress (MWC) didn’t fail to impress. Over 108,000 visitors gathered in Barcelona to air and share their views on the likely future of the global telecom space. That being said, it was business as usual. The who’s who of the sector put their heads together to discuss the modalities of deliveries, including specific roadmaps, deployment models and investment challenges.

In a nutshell, all discussions were centred on three pillars-investment, innovation and intelligence. It doesn’t stop there of course, but, for the sake of simplicity, I shall focus upon trends that are relevant to our business.

Mobile Money: A decade and Still Going Strong

It would be an understatement to say that mobile money has come a long way, from the 2007 launch of M-Pesa in Kenya.

To illustrate, as per GSMA’s State of the Industry Report on Mobile Money: The Decade Edition 2006-2016, a survey undertaken by the Financial Access Initiative in 2009 revealed that 2.5 billion adults globally were unbanked. Cut to 2016-as per the same report, mobile money is available in two-thirds of low-and-middle-income countries, as of December 2016. Quite a jump, this!

This theme, needless to say, took centre stage at the MWC this year. Various stakeholders-from the bigwigs to those just about starting their journey-announced ambitious plans to enhance their mobile money portfolios. The end game? To ensure an optimum customer experience and continuity of mobile money services, of course!

Visa and MasterCard Take the Lead

It is an interesting fact that when it comes to mobile payments, MasterCard and Visa can’t be too far from the discussions. Needless to say, MWC was no exception. Visa chose this platform to announce its plans of expanding its global payment capabilities. The finance major’s mVisa QR-based payments service is set to expand its global footprint. The aim is simple-to provide simple and secure point-of-sale and e-commerce transactions. The company challenged start-ups to bring digital payments into the realm of Internet of Things, with the expansion of its Everywhere initiative to Europe.

Meanwhile, MasterCard made quite a splash with the announcement of its tie-up with Oracle. The partnership is aimed at enhancing the features of the former’s retail and restaurant-based applications. This is, needless to say, aimed at enhancing the end-user’s experience.


Chatbots: Coming Soon!

Another interesting revelation uncovered at MWC 2017 was that chatbots are waiting in the wings. Permit me to explain-it is no secret that commerce is steadily increasing its influence on messaging platforms. Why? Well, because brands have woken up to the fact that constant customer engagement is an important ingredient to success. Naturally, then, technology players are going full throttle on creating a platform for e-commerce and on monetizing their subscriber bases.

There is a catch, though. Chatbots, indeed, are chock-full of potential. However, issues related to easy and secure integration of payments is the roadblock. This is why conversational commerce is yet to surprise us (the industry).

Net, net, these are interesting times for the global telecom space. Well, on paper, at least. It remains to be seen how many of these trends fare well in the real world. Bets, anyone?

April 20, 2017 0 comment
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NFC technology already supports huge amounts of mobile payments around the world.  Ovum forecasts that the number of consumers using it will hit 939 million by 2019 (in 2015 it was 11 million)  and the value of transactions is expected to reach $115 billion, from $0.7 billion for the same period.

No surprise then that in Africa (in many ways the cradle of mobile money) it’s also beginning to take hold.

Yet whilst many experts have touted NFC as the next big thing, its appeal as a payment technology in growth markets is subject to a different set of barriers and enablers. Here Srinivas Nidugondi, Head of Mobile Financial Solutions at Mahindra Comviva takes a detailed look at the NFC trajectory in Africa.

This article originally appeared in MEF’s most recent  Africa eBulletin which can be downloaded here for free.

Already considered the biggest success story of the global mobile payments space (critics notwithstanding, of course), Africa just added another feather to its cap. It has, like the rest of its peers on the global stage, made room for Near Field Communication (NFC) in its cluttered mobile payments market.

To understand how and why, let’s step back a bit. The fact that analysts are unanimous in their opinion that NFC is the technology of the future is an understatement. To be fair, the technology has certainly managed to garner a lot of attention, not to mention takers!

According to Ovum, globally, the number of customers using NFC-based proximity payments is slated to touch 939 million by 2019, up from a mere 11 million in 2015. That’s not all, the value of NFC-based transactions is expected to reach $115 billion, from $0.7 billion for the same period. No small numbers, these!

 NFC has beaten other contactless payment technologies (like QR Codes, Bluetooth Low Energy, et al) to the punch.

In fact, NFC has beaten other contactless payment technologies (like QR Codes, Bluetooth Low Energy, et all) to the punch. Moreover, the entire payment ecosystem has jumped onto the NFC bandwagon – from original equipment manufacturers like Apple, Samsung and Google to banks to operators like Vodafone and Orange.

In short, NFC is (currently, at least) in the payments spotlight. Now, the next obvious question – where is Africa positioned in this significant development?

Not too far behind actually. With numerous success stories pertaining to mobile payments, adding NFC to the mix was the next obvious step.

To set the context, let’s look at a few facts. As per the GSMA’s The Mobile Economy-Africa 2016 report, the continent accounts for 52 per cent of the 271 live mobile money services launched in 93 countries and 64 per cent of all active mobile money accounts. Mobile money is, needless to say, big.

Here’s the catch though. A majority of such transactions are executed via a USSD code, which isn’t a short process, to say the least. The lesson here is simple: for any payments technology to catch on in Africa, it ought to ideally leverage the popularity of mobile money, while offering the customer a convenient and easy payment option.

Enter NFC. While it is true that NFC hasn’t exactly taken the African payments space by storm, it wouldn’t be fair to merely dismiss it, either.

To this end, telecom operators in the region are currently customizing the technology to suit the African customer. Take, for instance, Airtel Money, Tanzania’s Tap Tap NFC Merchant Payment service. The service was launched in Tanzania in 2015 and was Africa’s first closed-loop payments service. It is, essentially, a one-stop shop that leverages NFC technology to simplify mobile money merchant payments.

 And now, the term “merchant” is further narrowed down to small-and-medium players (local grocery sellers), on-the-go entities (taxi services), roadside vendors and home-delivery specialists who previously didn’t accept digital payments.

Tap Tap equips merchants with an affordable and portable NFC point-of-sale (POS), a mini-calculator sized GSM device, which is linked to a merchant’s Airtel money account. It also provides consumers with an NFC card linked to their Airtel Money account. The merchant selects a payment option and enters the amount in the NFC POS. Meanwhile, the customer simply taps his NFC card on the POS to pay.

Interestingly, Tap Tap is one of the most economical NFC POS and card combinations globally. The affordable, portable and easy-to-use POS primarily ensures that Tap Tap is used by various businesses including large retailers (supermarkets), small and medium sized merchants (local grocery sellers), home delivery businesses (pizza delivery) and on-the-go merchants (taxi drivers). In doing so, Tap Tap digitises micro-payments and brings them into the formal economy.

It also resolves various challenges such as long, drawn-out transaction times (from a minute to a mere ten seconds), previously unaffordable payment methods and arguably the most important issue, small change, as it offers a convenient payment method.

An increasing number of African vendors are using the Tap Tap NFC Merchant Payment service.

Now, let’s move on to open loop NFC payments, which facilitate transactions at all merchants supporting POS’ verified by MasterCard/Visa. An interesting example of this is the EcoCash Express Debit Card or the Tap-and-Go card. It is a MasterCard companion card, which can be used by a whopping 30 million merchants, both within Zimbabwe and globally.

Customers are required to merely tap the card against the MasterCard licensed POS machine, after which the payment is recognised. For transactions valued under $5 and up to a daily limit of $100, a cardholder no longer has to enter a PIN number on a POS terminal. And speaking of transaction values, customers can purchase goods for as little as 10 cents using the card and the Tap and Pay service. Another instance of the convenience I mentioned earlier.

In fact, the Airtel Money Tap Tap and EcoCash Express Debit Card aren’t one-off instances. Other mobile money providers operating in the region have thrown their hats into the ring as well.

Last but certainly not the least, let’s talk about who stands to benefit from using such facilities. In a nutshell, it is a win-win proposition for two factions – mobile money users (to make payments) and merchants (who accept the payments). And now, the term “merchant” is further narrowed down to small-and-medium players (local grocery sellers), on-the-go entities (taxi services), roadside vendors and home-delivery specialists who previously didn’t accept digital payments.

 Now, at this juncture, it becomes prudent to mention that NFC payments aren’t meant to simplify the lives of merchants alone. These payment instruments can in fact be deployed in multiple ways – at vending machines, to pay for transport services and at various events and amusement parks, the list goes on and on.

An interesting use-case in this context is Orange, which intends to deploy NFC-enabled stickers and POS devices for cash-in and cash-out in multiple African countries.

There is little doubt that NFC payments have piqued the interest of the African consumer. Before we get too optimistic however, we need to remember that a convenient payment method can get you only so far. Sooner or later, operators will have to throw in frills such as loyalty programmes and offers to keep the customer hooked. For now, though, let’s wait and watch.

December 8, 2016 0 comment
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Over the past few years, the mobile payments industry has certainly made its presence felt on the global stage. As per data released by Statista, in 2011, the number of global mobile payment customers stood at 160.4 million. A mere four years later (in 2015), this number jumped to 384 million.

However, while this growth is impressive, it varies across regions. In 2015, a majority of these customers hailed from the Asia-Pacific region (141.4 million), as per the firm. Meanwhile, a stark contrast was the Middle East, which had 4.7 million to its credit.

Moving on, let’s zoom closer into the Middle East and North Africa (MENA) region. Sample this-according to a report released by the Arab Financial Services Company, the financial landscape in the region is characterized by variations in financial inclusion. On one hand, over 65 per cent of adults in the GCC region (Bahrain, Kuwait, Oman, Qatar, Saudi Arabia, and the United Arab Emirates) have an account at a financial institution. On the other, however, this figure stands at less than 20 per cent in countries like Egypt, Sudan, Iraq and Yemen. Naturally, as a result, the development and uptake of mobile payment solutions in the region has been patchy at best. In fact, there is a wide gap between the kinds of solutions the customers are demanding as well. In this context, the report states that in the less developed countries, particularly North Africa, mobile money solutions have been the main growth vehicle for financial inclusion. Needless to say, the GCC region has a different story to tell. Here, developing mobile payment solutions such as mobile banking, mobile wallet, etc, is the norm.

Now let’s put the GCC region under the microscope. First off, there is little doubt that the business case for mobile payments in this region is strong, to say the least. How? Well, for starters, the average mobile penetration is very high-190 per cent. No mean number, this!

Needless to say, operators and third party providers didn’t let the grass grow under their feet before jumping onto the mobile payments bandwagon. As a result, the space saw a flurry of activity. Several examples can be cited in this regards but, for the sake of remaining crisp and concise, let’s cite a few.

It all started in 2013. Boloro, in collaboration with Zain, launched the GCC region’s first ever mobile payments service on buses in Kuwait. Customers could securely and conveniently pay their fares by simply tapping their mobile phone when boarding the vehicle. In fact, all the bigwig operators in Kuwait and Qatar, Zain, Ooredoo and Viva currently offer this service.

On the other hand, there are entities which have been a bit slow on the uptake. I allude to banks, which have preferred to adopt a “wait-and-watch” stance with regard to mobile payments. In my opinion, banks ought to flex their muscles on this stage. And why not? These players can easily leverage their already-established relationships with merchants, not to mention the treasure trove of customer data they’re sitting on.

So, what’s stopping them? Well, the biggest barrier is the fact that these entities still consider the mobile handset and all applications concerned as a value added service. As a result, non-banking players have ventured far ahead of them in the mobile payments game. Allow me to add my two cents-it is time that these players straighten up and chalk out a strategy to at least finish neck-to-neck with the competition. The first step? Start considering the mobile channel as an integral part of the business!

Of course, these entities must have a war chest in place before meeting the competition head-on. Enter the prepaid wallet. Now, the advantages of the prepaid wallet have been discussed ad nauseam, which is why I won’t wax eloquent on the same. I would like to point out, though, that the most important reason (arguably) why banks ought to take prepaid wallets seriously is two-fold. First, their merchants are empowered and second, this service reduces the high “card not present” rate during a transaction. A prepaid wallet is typically built around a stored value account. Customers can transfer the money from their bank account or card to the prepaid wallet. Since payments are not made directly through cards, the high “card not present” charges do not apply. As a brief side-note, permit me to point out that the very enthusiastic uptake of smartphones in the region can play a crucial role in the uptake of this service. After all, 68 per cent of all handsets in the region belong to this category! So, why shouldn’t such applications flourish?

Now let’s turn our focus to another interesting trend that is rearing its head up in the region. Enabling seamless payments through contactless cards is the new kid on the block. In fact, a few banks have already launched their offerings in this regard. The revolution was sparked off in 2015 by Boubyan Bank, the first entity to launch Tap & Pay credit cards in Kuwait. Later that year, Riyad Bank and NCB (supported by AFS) followed to introduce Saudi Arabia’s first contactless credit card. Also, with mobile payments foraying into the game, expect the contactless card to be replaced by the mobile handset.

Let’s take a quick look at the secret sauce behind mobile-based contactless payments-namely, the technology. Several can be used for this service, for instance, Near Field Communications (NFC), QR Codes and sound-based technologies. Of these, NFC is emerging as the forerunner in this race. The reason is simple-Host Card Emulation (an NFC variant) lets banks launch contactless payments rapidly without changing the existing SIM card and involving a trusted service manager (TSM). Little wonder, then, that NFC is the technology of choice for banks and financial institutions alike.

Adding another dimension to this, banks may consider investing in developing their own HCE platform, as opposed to opting for OEM pays like Apple Pay and Samsung Pay. Here’s why – a bank-owned HCE platform works on any NFC-enabled device, unlike the Apple Pay and Samsung Pay, which function only on the Apple iPhone 6 and the Samsung S6 devices respectively. Moreover, with their own HCE platform, banks will have complete control over the tokenization platform as well as the token lifecycle. Banks will have the ability to monetize the token platform to enhance tokens for other use cases, like token based ATM cash out, P2P using tokens, etc.

Net, net, it is only a question of time before prepaid wallets and contactless payments are in the spotlight in the GCC region. The revolution is well and truly underway. What remains to be seen is the direction it takes, in terms of uptake, technologies and services. After all, the Middle East market is an inherently contradictory one. A customised stance is thus needed to succeed. Remember, there is no “one size fits all” approach to mobile payments!

June 29, 2016 0 comment
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Good governance is about people: of the people, by the people, for the people. With more people armed with mobile and internet, governance also needs to go digital. While digital governance is topping the agenda of many nations, most governments still have a myopic view of it putting only generic information online. If governments truly want to harness the benefit of digital governance they need to focus on how technology can be used to create citizen-centric experience.

A citizen-centric experience is about simplifying people to government interactions by making it digital. Consider applying for a passport. A truly digital process would’ve used digital tools such as the internet and the mobile for the entire process – right from filling required details, providing verification documents, paying service charges to tracking application status. With mobile and internet making deep in-roads into emerging economies, delivering such seamless digital experience is now imminently possible. However, there are few weak links, such as payments. With majority in emerging markets being unbanked and un-carded, digital payments remains a challenge.

Mobile money, which has rapidly risen as a preferred alternative payments medium in emerging economies is the answer. Governments across the world are leveraging the power of mobile money to digitize Person to Government (P2G) and Government to Person (G2P) payments, advancing digital governance agenda, as well as achieving sustainable development goals.

Figure 1 – Mobile Money enabling mGovernance

Person to Government payments (P2G)

Governments are using information communication technologies to improve the quality and efficiency of public sector service delivery. This includes usage of mobile money for P2G payments. According to the GSMA, in 2014, the ability to make payments to the government via mobile money was live in at least 13 markets across Africa, Asia and Latin America1.

Tax payments

Tax payments can be very taxing! Citizens have to fill up long forms, visit their local revenue authority or bank, and stand in long queues for hours on end to pay their taxes. But not anymore! Governments are now moving toward e-filling and mobile payments. Revenue authorities in countries like Kenya, Tanzania, Mauritius, Guyana, Rwanda, Cameroon, Uganda and Philippines enable individuals and businesses to use mobile money to pay income tax, corporate tax, property tax and VAT. With an end to end digital process in place tax payments get sorted in minutes.

In addition to delivering convenience to citizens, mobile based tax payment is helping governments to curb tax avoidance and boost the amount of tax collected. Tanzania and Mauritius revenue authorities have experienced increased in tax collection due to introduction of mobile based tax payments. Digital tax collectioneliminates the need for maintaining and storing physical documentsand allows government officials to keep and track records electronically.

Figure 2 – Mobile payment's impact on tax collection

Government of Kenya is planning to sell government bonds via mobile. The platform known as M-Akiba will be delivered through all the major mobile money services, offering bonds worth Ksh 5 billion (nearly US$47 million) to over 32 million citizens. Today, 98% of government bonds are purchased by institutional investors and only 2% by individual investors2. By using mobile retail channels, the government hopes to reach more individual investors increasing their participation in government bond issuance. Citizens will not only be able to purchase bond via mobile money, but also receive the principle amount and interest in their mobile money account on maturity of bonds.

Payments for government services

In emerging economies, the private sector is either too weak or there’s a monopoly in the market leading to citizen exploitation. To accelerate economic growth and benefit the entire population, governments have set up public sector entities and institutions to provide basic amenities like electricity, water and sanitation amongst others. Citizens pay a charge to access these services, which in most cases is through cash or cheques. However, paper-based payments come with considerable costs. Besides financial costs related to printing, security, postage and clearing & handling of cash, there’s non-financial costs to consider such as growth of shadow economy as well as various environmental and security risks. The burden of cash usage on society is as significant as 1.5% of the GDP3. Moreover, due to limited collection points, usually there are long queues for payments inconveniencing citizens and creating chaos.

These challenges can be overcome by using digital payments. In many emerging economies, mobile money is finding new use cases everyday: paying bills for utilities; buying tickets for public transportation; paying fees for schools and universities; paying for medical treatments and premiums for insurance. Mobile money brings cost benefits and savings for both citizens and government entities. Citizens save time and cost of travelling to payments points whereas public sector entities are able to reduce costs of paper invoicing besides curbing the menace of shadow transactions as well as reducing carbon footprint by eliminating paper receipts. Some successful examples of G2P payments are:

School fee payments in Côte d’Ivoire: The Ministry of National and Technical Education (MENET), in Côte d’Ivoire, made it mandatory for secondary school students to pay their school registration fees digitally via of one of four accredited mobile money providers. In 2014, 99% of the students paid school fees digitally – 94% of which were mobile money transactions and 6% of which were online payments – proving the success of the MENET’s P2G payment strategy. The digitization of school fee payments provided two major benefits. Firstly, itreduced leakage of funds caused by theft, bribery and security issues.Secondly, digital registration of secondary school students allowed MENET toconsolidate its student database and significantly increasing the quality of its information. The database is now more up-to-date, includes a comprehensive list of 1.5 million secondary school students, and has eliminated duplicate entries 4.

Figure 3 – Customer journey of school fees payment via mobile money

eServices portal in Ghana: The Government of Ghana, in December 2014, launched Ghana Electronic Payment Platform (GEPP) facilitating digital payments for government services on its eServices portal. Citizens could pay online or through their banks or mobile money services like Airtel Money for various government services like passports, business registration, tax administration and police search reports. In order to process the mobile money payment the user must choose the mobile money provider on the eservice portal and fill in the relevant details. The payment is deducted from citizens’ mobile money account and confirmation is sent via SMS.

Figure 4 – Electricity bill payments via mobile money in Cameroon

Government to Person payments (G2P)

Now, let us look at the other side of the story – government cash disbursements. Government gives financial aid to citizens in the form of cash, subsidies, distress payments and salaries. Governments globally are adopting mobile money to make cash disbursements frictionless.

Cash aid and subsidies

The government provides financial aid to the poor directly in the form of cash as well as indirectly through various cash subsidies on items like fuel, cooking gas, water and electricity. Most cash assistance schemes are hindered by long cash disbursement cycles, presence of middle men, large number of unbanked beneficiaries and inability to directly reach the beneficiary. With widespread mobile reach, mobile money is the quickest and the most cost-effective option to disburse cash to beneficiaries.

Cash aid and subsidies

In India, the Government of Madhya Pradesh, with partner Vodafone M-Pesa, disburses financial aid to mothers, who receive the payment directly on their mobile phone. The beneficiary is informed with an SMS mentioning the amount of the subsidy, the withdrawal code & procedure, facilitating cash-out at any Vodafone M-Pesa agent. Direct disbursement to the mothers has resulted in reduction of the money being collected by the fathers and therefore never reaching the intended beneficiary in some cases.

Mobile money based cash disbursement is most useful in emergencies such as earthquake and floods. For example in Pakistan in 2014, the government partnered with mobile operator Mobilink to disburse funds to flood victims. The use of Mobilink’s mobile money service Mobicash ensured that fund disbursement is swift and transparent. Beneficiaries were able to cash-out flood relief funds from designated campsites located across the flood hit areas. The team deployed at the locations used Bio-metric Verification System (BVS) to maintain transparency and ensure that the funds reached the intended person.

Not only government, but NGOs are also partnering with mobile operators for financial aid disbursement. Monetary aid is a better option compared to in-kind aid (such as food bags) as the affected families can use the money as per their choice and individual needs.

Figure 6 – NGOs disbursing cash aid via mobile moneyAirtelPayments

Salary payments

In many developing countries, the government and public sector are the largest employers. Paying salary and pension to serving as well as retired personnel in far flung areas can be very challenging. Irrespective of whether a person is banked or unbanked, permanent or contractual, mobile money provide a robust channel to transfer salaries directly. The solution offers convenience specifically to the old age pensioners, as they can cash-out their salary at nearest mobile money agent and do not need to travel to bank or government offices to fetch salary.

Mobile money salary payments eliminate the role of the middlemen reducing corruption. A good example is the Afghan National Police which uses Roshan’s M-Paisa to pay staff located in remote areas ensuring full and timely payment of salaries. The previous cash based salary system was marred by corruption with senior officials pocketing salary disbursements with such impunity that many junior policemen were not even aware of their real salary. With M-Paisa these policemen received their salary in full and on time leading to surprises all around. In fact, in some cases, the hike was as much as 30%, preventing defections of policemen to the Taliban who were paying higher salaries5. The use of M-Paisa helped to uncover ghost police officers, constituting 10% of the workforce, whose salaries were pocketed by others. In Democratic republic of Congo more than 66,000 civil servants, including the military, the police force, and pensioners receive payments via Airtel Money6.

The road ahead

There are several successful examples of G2P or P2G digital payment transactions, some of which I have mentioned above. However, another truth is that most governments have just focused on digitizing only one or two initiative. The true vision of digital governance can only be realized if there is a comprehensive strategy to digitize every use case scenario where the people and the government transact – whether it is a G2P or a P2G payment. The importance of user experience cannot be understated. Instead of providing a different user interface for every service, there should be a single portal/app for handling all government transactions. Whether it is paying electricity bill, purchasing train ticket, paying tax or receiving subsidy – every payment should be on a single portal, providing a seamless user experience, leading to higher adoption of digital transactions. Governments should also collaborate with all the digital payment players in the market without any bias to ensure that the digital payment initiative has a wider reach.

1 http://www.gsma.com/mobilefordevelopment/wp-content/uploads/2015/10/2015_GSMA_Paying-school-fees-with-mobile-money-in-Cote-dIvoire.pdf



4 http://www.gsma.com/mobilefordevelopment/wp-content/uploads/2015/10/2015_GSMA_Paying-school-fees-with-mobile-money-in-Cote-dIvoire.pdf

5 http://foreignpolicy.com/2015/08/12/afghanistan-calling/


About the author – Mohit Bhargava has over eight years of work experience in product marketing and research in the telecom domain. At Mahindra Comviva, he is serving as Manager in product marketing for the mobile financial solutions portfolio. His areas of function primarily include evangelizing Mahindra Comviva’s mobile financial products and their impact on transforming the financial landscape globally.

April 26, 2016 0 comment
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The Mobile World Congress (MWC), GSMA’s marquee annual event, was bigger and better than last year, with a record number of 101,000 attendees from 204 countries. The theme “Mobile is everything”, was quite comprehensive in covering every major trend emerging in the mobility landscape, right from 5G to virtual reality. Like last year, ‘Payments’ continued to trend at the event, with bigwigs like MasterCard, Visa and PayPal showcasing leading innovations like Selfie Pay and Connected Car Payments. While there was a lot of action around payments, I have handpicked some trends emerging from MWC that are likely to have far-reaching effects.

Ecosystem is paramount.

Today, there’s consensus in the mobile financial industry that an open ecosystem is key to a successful mobile financial service. Key players including banks, mobile operators, tech companies and payment processors, in both the developed and emerging markets, are focusing on creating intra-industry and cross-industry partnerships in order to accelerate the pace of service innovation and meet changing customer expectations. This is quite evident from the slew of partnership announcements at the MWC. MasterCard announced a number of partnerships, which included Orange Romania for MasterPass, WISeKey for wearables, CU Wallet for customized digital wallets, and Children’s Miracle Network Hospitals for online micro-donation platform. Similarly, Visa is collaborating with Honda and ParkWhiz for car-based commerce. Online payments giant, PayPal has joined hands with Vodafone Wallet in Europe and with M-Pesa Kenya for international remittance via Xoom. In addition, Mahindra Comviva, a global mobile financial solutions provider partnered with Wincor Nixdorf, a European provider of IT solutions for retail banks. This partnership will enable consumers using the former’s mobiquity® Wallet solution to withdraw cash and top up their mobile wallets at the ATM by simply scanning or presenting a QR code or through their NFC enabled mobile device. This solution is a good example of how electronic and cash payment transactions can combine perfectly with each other and extend the benefits of HCE beyond the retail POS.

We also saw digital identity take centre stage with ‘Mobile Connect’. User authentication via Mobile Connect for HCE deployments highlights its potential of becoming one of the factors of authentication for mobile payments and commerce. The simplicity of establishing the user’s identity through the MNOs with standardized APIs will open up options for financial institutions and lead to a seamless user experience.

From ‘Internet of Things’ to ‘Internet of Payments’

The Internet of Things is catching momentum and payments are becoming important part of it. In a few years, machines will analyze our needs and preferences and make automatic purchases on the basis of our requirements.  In the future, we will see intelligent fridges order and pay for weekly supplies and groceries and cars that direct us to the nearest fuel station when they detect that the fuel tank is empty.  This is going to be a reality much sooner than you think with VISA demonstrating its “connected car experience” at the MWC. Visa, in partnership with Honda is making car-based commerce transactions a reality. Honda cars, fitted with chips talk to gas pumps and parking meters. Cars automatically detect the need to refuel, calculate cost and pay automatically, without the driver having to leave the car. Similarly, in the parking, the car will automatically detect the parking time and enable consumer to pay the exact amount via mobile phone.

The changing face of MWC

MWC used to be a MNO-centric event, especially in the context of trends. However, in the last couple of years, we have witnessed a change with MWC expanding itself to a mobility centric event. This is quite evident from this year’s keynote address, which drew participation from the likes of Royal Caribbean Cruises, Ford Motor Company, Starcom Mediavest, Turtle entertainment and Facebook.

In a way, this is a reflection on how the mobile financial solutions industry will evolve from merely being confined to banks and MNOs to a wider spectrum of industries, including auto manufacturers, retailers, social media majors, etc.

There is little doubt that MWC 2016 witnessed tremendous on-ground action. Expect 2017 to be equally busy. Stay tuned!

March 29, 2016 0 comment
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Mobile payment is going through a fundamental shift driven by the evolution in social, mobile, cloud and communications. These changes are only going to intensify in the future forcing fundamental change in business processes and in turn reshaping the industry.

In most of these cases, the change is being driven by the customer. The customer today, having experienced the always-on, always-available, contextually rich, feature sets of the mobile, wants to extend the same experience to the other facets of their life. Businesses must take cognizance of this and create highly contextual solutions that take care of the customer at the moment of their need.

Payment is one area which provides the context as well as the opportunity for mobile to make inroads. We are at the inflection point today where the various actors in the payment landscape like merchants, consumers, industry associations, regulatory bodies have finally come around to the reality of mobile payments. Technologies like BLE, NFC & QR have finally matured to the extent where they can provide the backdrop to fast and seamless transactions experience needed across industries.

The level of contextualization and customization which was not possible ten years ago has now become a reality across industries as diverse as banking, retail and hospitality. Here are some of the usage cases of how mobile is transforming customer experience across these industries.

In order to compete, banks have to provide highly personalized as well as contextual services, leveraging mobile as well as data analytics. Today, banks are competing with various third parties like OEM’s, MNO’s for a slice of the customer pie. In this context, they need to put into place a mobile-first strategy or risk losing their business to new players. Also, the size of data generated by mobile based banking transactions is too valuable to be left on the table. A mobile wallet is an essential element in banks mobile first strategy helping them to provide a seamless, omnichannel banking experience to their customers.

At the other end of the scale is personalization of offers and services leveraging technologies that provide contextuality like beacons and BLE.  Customer experience management has become an important part of the customer’s service journey right from the moment they walk in through the front door to the moment they walk out of the back door. For example, BLE technologies can detect High Net Worth (HNI) customers as they walk in through the door, fetching the customer’s data from the CRM and sending it to the relationship manager’s hand held device, and thus, creating more opportunities for providing customized services.

Mobile based technologies like BLE, NFC, QR codes are redefining payments behavior. In order to be truly effective, mobile based payment technologies must not only offer the ease and accessibility of a physical wallet, but must also offer loyalty points to facilitate higher customer acceptance rates. Combining proximity payments with a loyalty management will create the right ecosystem that will drive customer retention, repeat business and referrals. For example, BLE recognizes a customer as he walks into a retail outlet and the check-in details are recorded in the CRM at the backend. The beacon follows the customer in the store. Once it detects that the customer is standing next to the clothes section, it sends discount coupons that are redeemable at mobile checkout. As an added incentive, the customer is also given a coupon which is saved in the wallet for the next time he visits the outlet.

Retail outlets can also use NFC Mobile payments for queue busting which is especially relevant for low-value, high-volume micropayments transactions less than $1 in value.

Current cash based micro-transactions have two problems –

  • Merchants experience the “change problem” – not enough free change for processing small transactions that are generally below $1 value.
  • Customers would rather put off purchases than carry change

NFC mobile based payment digitizes the entire purchase procedure making it easier for the merchant as well as the buyer. Besides smoothening payments in micro-transactions, solutions like these have the potential to spur purchases, leading to benefits all around.

Proximity Payments using QR code digitizes the customer’s purchase journey right from billing to payment, creating a seamless in-App payments experience. For initiating the billing transaction, the merchant scans the purchased goods to get the bill amount. In the next step, the merchant enters the bill amount in the app to generate the QR code, which contains the billing as well as the merchant information. To initiate payment, the customer scans the QR code with his smart-phone and enters the pin in her wallet app after verifying the bill. The transaction is completed once the customer receives the transaction confirmation in his app.

With technologies like NFC, BLE, QR code moving towards the maturity phase, following years of scrutiny, the next few years is expected to witness higher uptake, with businesses striving to differentiate themselves in hypercompetitive markets. In the end, it is all about improving customer engagement, leveraging technologies that deliver contextually rich engagement experiences, because the more the businesses engage with their customers the more things become clearer and the more it is easy for them.

February 22, 2016 0 comment
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2015 is drawing to a close and, in so far, payments banks seem to be the flavour of the year. Well, for the mobile financial services space at least!

Just a quick recap-a few months ago, the Reserve Bank of India (RBI) granted in-principle approval to 11 private parties for establishing payments banks. The new licenses include many established mobile operators, technology firms and financial services companies. But, wait, why is this development a big deal? After all, this isn’t the first time an initiative has been taken to promote financial inclusion. So, what is the fuss all about? As of today, the country has a dime a dozen banks scattered across every nook and cranny. So why are payments banks garnering such an enthusiastic response? Before we deep-dive into the subject, on a side-note, this blog isn’t aimed at positioning payment banks as a panacea for the payments space. Well, not just yet, anyway.

Now, let’s address the fundamental question-what is a payments bank and how does it differ from existing banks? A payments bank is a differentiated bank that will undertake only certain restricted banking functions that the Banking Regulation Act of 1949 permits. These activities include acceptance of deposits, payments and remittance services, internet banking and function as business correspondent of other banks. Initially, they are allowed to collect deposits up to Rs 100,000 per individual.

Wait, that’s not all-they can facilitate money transfers and sell other banking products including loan products, insurance and mutual funds. Besides, they can issue ATM/debit cards. They cannot set up subsidiaries to undertake non-banking financial services activities. More importantly, they are not allowed to undertake lending activities at all.

The RBI has defined the objectives of establishing payments banks as follows; to further financial inclusion by providing small savings accounts and payments or remittance services to migrant labour workforce, low income households, small businesses, other unorganised sector entities and other users, by enabling high volume-low value transactions in deposits and payments and/or remittance services in a secured technology-driven environment.

Straightforward enough, I would think. Now, let’s ask the most basic question-what are the opportunities for payment banks in the country?

To sum it up in a single statement-to disrupt the payments space. No, really. Of course, these entities also have a three-fold opportunity facing them. First, a staggering 47 per cent of the country’s population is unbanked (as per the World Bank Group’s findex report). So, essentially, payment banks are expected to help drive financial inclusion by banking the unbanked in a cost-effective manner. More on that later. Next, reducing dependency on cash is another important objective. Did you know that India spends Rs 21,000 crore annually on operations costs alone? (Source: Cost of Cash’ Institute for Business in the Global Context)Finally, as per news reports, the country has 20 crore dormant bank accounts. Payment banks will reduce dormancy by providing financial services which are easily accessible, convenient to use and can be used regularly. Well, we hope so, at least!

Of course, before deep-diving into this sea of opportunity, payment banks ought to remember that they should ideally consider (and function) themselves as “fintech” (financial-technology) entities. In other words, using technology to boost financial services across all customer segments. These companies aren’t merely providers of financial services but technology enablers as well. These entities shouldn’t consider themselves as financial companies that merely leverage technology as an additional tool.

Now, here’s where it gets interesting-payments banks stand apart from regular banks, not just owing to the interesting assortment of companies which obtained the license. The industry is waiting with baited breath to see what kind of business model these entities adopt.

Permit me to offer my humble opinion-we believe (and this isn’t being driven by the fact that we’re a technology company) that such entities are likely (and ought to) adopt a four-pronged approach, centred on the target segment, the operating model, the strategic focus and the revenue model.

Let’s get the fundamentals out of the way once and for all. The strategic focus of these entities ought (and are likely) to be leveraging technology and mobility for cost-effective, convenient and real-time delivery of financial services. Logically, since most of the licensees are companies who depend on technology for their bread and butter and boast of a wide distribution network, it won’t be a stretch to assume they would use technology as the key enabler for all financial transactions. In a nutshell, these entities are expected to bring convergence between technology and financial services and leverage new age access channels such as mobility to overcome infrastructure and adoption challenges faced by conventional banks.

Now that that’s out of the way, let’s proceed. These entities are likely to focus on two customer segments, interestingly, at opposite ends of the spectrum. I am referring to the banked and the under-banked and the millennial customers, obviously. Unlike conventional banks, payment banks, with their cost effective and wide distribution network, will reach the un-and under-banked customer base, by permitting them to perform low-value transactions and voila! bring them into the financial mainstream. In addition to serving the bottom-of-the-pyramid customer base, payments banks have the opportunity to ensure convenience for the millennials, i.e. the banked and the carded customer by allowing them to use the latest and cutting-edge mobility technologies to make seamless transactions anywhere, anytime. For instance, in the near future, we can expect customers paying at a PoS terminal via NFC or receiving a micro-targeted promotion via BLE or even scanning a QR code on an electricity bill to pay it! The advent of these technologies will redefine the way millennials carry out various transactions.

As a logical extension, these entities are expected to promote a cashless society. As you may already know, cash is still the king in India. This is despite the steady rise of plastic money (i.e. debit and credit cards) in the country. In this kind of scenario, by collecting small sums of money from the under-and-unbanked, payment banks will promote the use of debit cards and internet banking among depositors. This, (hopefully) will help consumers migrate to a cashless economy. Also, on a side-note, this may have an additional benefit-restricting the black money in circulation. Of course, that is another story, altogether.

The base for all of this (i.e. the operating model) will be a focus on delivering simple but contextual services ranging from remittance, utility and merchant payments to savings and insurance. This will be boosted by the creation of a robust distribution network to deliver last-mile services. Coming to that bit, just imagine the number of touch-points-the new set of payments banks may have an all-India presence through franchise models. The licensees would obviously leverage their distribution network and club it with the power of mobility to reach out to a broader audience which (with all due respect), conventional banks haven’t been able to do so far in a satisfactory manner.

In fact, the humble Mom-and-Pop stores can provide the franchise and can be the fixed point service outlets. Let’s not forget, amongst the motley crew of licensees are included bigwigs like Bharti Airtel and Vodafone, both with a pan-India network. And there you have it-this fact alone exponentially contributes to their potential to be formidable players in financial inclusion and remittance service.

Now, let’s talk about how these entities will make big bucks-essentially, the fee earned from transactions will be the primary source of revenue. Moving on, access is a primary talking point as well-the advent of payments banks will essentially mean that accessing an account could be similar to visiting the post office(On an interesting side-note, India Post was amongst the lucky few to obtain a licence. Looks like its efforts to enter the banking business finally paid off!) or the neighbourhood kirana-cum-mobile recharge shop — and cheaper, no-frills services. And, please, I cannot emphasise this strongly enough-mobility will be the crucial component for agents to offer services to consumers as well as to connect to the back-end of the banking system.

But, wait, while these plans are very ambitious, the availability (or non-availability) of a suitable ecosystem will be a key factor. Payments banks will have to set up a big ecosystem in order to flourish.  The success of these entities is directly proportional to the acceptance network. To have an expansive partner ecosystem, it is vital to have a flexible platform to integrate with multiple billers and merchants easily.

Like any fledgling enterprise, payment banks have to contend with quite a few issues, before taking off in a significant way. The biggest challenge (in my opinion) would be attempting to wean the Indian customer off cash. So, these entities ought to be ready to invest time and energy for this monumental task.

Of course, the idea isn’t to sound discouraging. Far from it, the concept of payment banks has gained ground abroad, it’s just that a few more creases need to be ironed out before it takes off in this country. Having said that, I’m pretty confident that its journey will be a memorable one and personally, I, for one, will be closely monitoring the situation!



December 3, 2015 0 comment
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There are two impulses in a human mind – one which says ‘DO’ and the other that says ‘DO NOT’. The mind weighs the good and the bad and uses an inbuilt scoring model which factors in one’s risk appetite to finally make a decision. Everything we do or do not gives rise to a parallel universe. When we do something that changes the way of life, we have caused a disruption. Not only is the immediate impact profound but it also gets attributed as a state in chaos theory giving birth to a chain of events that creates a new history. Spare a minute to think about what the world would be like if we hadn’t invented fire, wheels or for that matter a mobile phone.

When Graham Bell invented the telephone (s)he most certainly had not envisioned the universe as it is today, thanks to the mobile phone. That’s saying something given the visionary (s)he was. The mobile has compressed the camera, GPS, diary, CDs, CD players and many more such objects all into one compact form that fits in our pocket.

If I were to choose what are the most powerful tools that a mobile offers then I would have to say location, omnipresent internet followed by a camera. Mobile has changed the way we find places to go to, be it a restaurant or our favorite store and the way we navigate, to such an extent that now I just can’t get lost even when I try. Similarly, having a camera on your person has revolutionized life as we knew it. When I was a kid, my mom used to write letters to tell my grandparents when I took my first step, said my first words and describe every single milestone. Now I take a video of my little angel and WhatsApp it to my 70 year old parents. That’s how much life has changed in the last 15 years. RIP the payphone, the walkman, the bank branch. The bank branch?

While in college, I had to open an account in the bank branch at my campus so that I could keep all my cash there. I used to get a pay order every time I went home during semester breaks for my expenses… Yes I know I am ancient (sigh). Once back I would have to fill up a form, stand in queue to deposit the DD in my account and when I wanted to get money out … well fill up a form and stand in queue again. Further, I had something called a passbook which maintained a record of the exact amount in my account so I had to ensure it is kept up to date too. What it took to do that … voila … stand in queue again. This process of filling up a form and standing in queue used to repeat itself many times over since given my limited resources in terms of moolah, I wanted to ensure that the balance in my leather wallet didn’t spark a spending spree. So, what better than keep it all in the bank where it is safe? If my money ran out, dad had to wire money from my hometown and it took almost a week to reach me. The train journey to college took lesser time than that.

Well, all of us quadragenarians would remember many such nostalgic moments. However, the good old days are gone. The good new days are here.

The mobile has changed life for good for every possible rung of the pyramid. We have looked here at disruptions that the mobile triggered across the globe in the recent years.

Beyond banking the unbanked

The emerging economies have a lot to offer if one starts researching “mobile first” and “mobile only” initiatives that have been successful. mPesa is most probably the most famous example. With the limited financial infrastructure available in the country, Safaricom offered a person means to transfer money through his mobile phone. The offering was invaluable because it allowed transactions 24×7 and the recipient received the money instantly, something which the banks couldn’t offer at the time. However, all of us have read about the success of mPesa and analysis of why it succeeded. So I won’t harp on that. What I would like to draw your attention to would be the impact that this service has had beyond banking the unbanked.

I refer to a study published by the IRIS Centre, University of Maryland and funded by the Bill & Melinda Gates Foundation in July 2011 called ‘Water Delivery through Payment Platform – M-PESA Pushes the Rural Frontier’[1]. The IRIS centre conducted a study from April to June of 2010 in Katitika, Kenya. Katitika is one of many small villages in the Eastern Province of Kenya, almost four hours drive from Nairobi. The region is prone to poor rainfall and faced severe water shortage following the two year long draught ending in 2009. The water project, run by Grundfos Lifelink was the first of 40 such water projects in Kenya that provide clean, hygienic water in rural areas.

The project nicknamed maji ya compiuta or “Computer Walet” was launched in 2009 as a collaboration between mPesa and Grundfos. It allows villagers to put money in their water cards through an mPesa account. The owner of the account and the water card need not be the same thus allowing anyone to send what is termed “water money” through their mPesa account. Given the lack of electricity in the village in 2010, rare few had a mobile phone. However, the few that did recharged the water cards for the others in the village. Some of the benefits that the study outlines are as follows:

  1. Reduction in corruption: In many villages where cash was used instead of water cards, the water supervisors would charge a premium rate from villagers. Thus, mobile money made clean water affordable for a larger number of people and individuals could buy more water.
  2. Banking water money: Since the water money cannot be withdrawn or cashed out, loading the money into the cards implied that the money had to be used for buying clean water. This ensured that the villagers did not spend the cash that was meant for buying water on other expenses.
  3. Reduction in water borne disease: Given the increased access to safe and clean drinking water resulted in lower rates of water borne diseases.

This is just one example of how mobile money has changed life across Kenya. Beyond such social projects, mobile money often extends itself into the paradigm of micro financing allowing the poor to earn interest on their deposits or get loans when needed.

The mobile POS

Sometimes we narrow our definition of users to mean consumers only. We completely forget that there are many others such as merchants, the operations team running the system or the revenue assurance team trying to make money. When we remember these forgotten users, we find many unmet needs which are a breeding ground for disruption. In the payments world, the acquiring business had for years lived a mundane life with no one focusing on how they could turn things over their head till square came up with the mobile POS.

What the mobile POS offered was just two simple things

  1. Convert your mobile to a payment acceptance terminal
  2. Take your payment register along with you wherever your business goes

It’s not that the POS industry did not think of mobility. They did create a POS terminal that works on mobile data and can be carried around. What linking of a smart device like the mobile with the dongle did was that it created a one stop shop for the merchant whereby (s)he could accept payment and access various value added services all in one smart phone application. Let’s look at some of the examples of how mobile POS has made life easier for the user.

In multiple countries including Hong Kong and India, insurance service providers now allows instant issuance of insurance at the doorstep. The insurance agent is equipped with a tablet and a mobile POS dongle. Once the various options are presented and the customer selects the insurance (s)he would like to buy, the agent uses an application to fill up the customer details and takes pictures of all the documents required for processing the insurance. The customer’s presents his card and on successful payment, the insurance policy is activated in real time. A process which earlier used to take up anywhere between 5-8 working days now takes 10-15 minutes to complete. Further, by integrating with sales tools like salesforce.com, the application can provide real time data to the agent on his target, actual sales, %age of target achieved all in real time too. It also allows the agent to view all his transactions on a rich interface with support for visual tools such as graphs.

In another case, for an eCommerce vendor, the delivery partner is able to chalk out an optimum route for delivery and can navigate to the destination all through his mobile POS app which is integrated with the order management backend. It allows real time payments to be made to the merchant account as well as update the delivery status instantaneously.

While each of these could exist in isolation as separate applications on the mobile phone, the integrated mobile POS app creates an unparallel value proposition for the merchant and that is the power of mobile.

Remote Deposit Capture

Remote deposit capture or RDC was first introduced in 2003. While many countries have enabled interbank settlement of checks through RDC, a few have embraced it as a way for consumers to deposit their checks through their mobile banking application. Over time the number of checks that are submitted have reduced. However by leveraging the mobile camera, banks have made it truly convenient for consumers to get funds instantaneously by depositing a check in real time.

Biometrics and financial services

Since Apple Pay, biometric based authentication and authorization is gaining wide acceptance. There are many initiatives we see today which look to ride on biometrics for authenticating the user and in some cases for authorizing transactions. Not only has Apple Pay triggered inclusion of biometric sensors and software in other mobile phones, but it has also triggered a change is strategy where more and more financial institutions are considering biometric as a reliable means to authenticate the user.

There are multiple ways in which financial service providers are looking to leverage biometrics. From facial recognition software for mobile phones, retina scanning, voice biometric to linking point of sale terminals to biometric readers, we will definitely see higher adoption in the coming years.

Contextual Interactions

Every customer is unique. Gone are the days where customers used to belong to segments. For any product offering today, the segment size is one. The parameters to segment have gone beyond demography by multitudes – location, basket of goods, RFM analysis, social profile, channel analytics, websites visited, yada yada yada. Data scientists are the flavor of the day as businesses are trying to translate the complex human decision making to an algorithm than can tell them what to sell to whom and when. Mobile has allowed businesses to create a customized experience for each customer.

PayPal has leveraged BLE to provide such an experience for their merchants as well as customers. When a PayPal customer walks into a partner merchant store, the beacon detects the location and automatically checks the customer into the store. Once checked in, PayPal allows the customer to make a hands free payment. They do this by pushing the customer profile which includes a picture on the POS for the merchant to map a bill to the customer. That’s it. The customer just picks up what (s)he wants and walks away, the merchant doesn’t need to swipe a card and spends the minutes saved on serving another customer.

In Conclusion

What I have covered above is just a few cases of how the mobile phone has changed the way people interact with financial service providers and how they consume financial services. There are many more such innovations which are in the works right now.

I started this article by looking at a personal experience from my past and I will end with predicting a possible (not probable) experience that I foresee in my future.

My daughter who goes to college in another country wants to go for an expedition with friends. I’m driving my car when she makes a call asking for money. I answer using my car control. My mobile OS which is monitoring the call detects a keyword – send money – and prompts ‘Srinivas, would you like to send money to Sravya?’ I say ‘Yes’ and it redirects me to my banking app where the payee details are already pre-populated to the caller’s identity i.e. my daughter’s account details and the amount as requested by her during the call. The application requests authorization, I speak my password which the bank validates along with a voice biometric authentication and transfers the money to my daughter in real time. And all this while along with the voice commands, I am busy cautioning my daughter on how she should carry warm clothes and ensure that she calls me every day to let me know where she is and that she should carry a first aid kit just in case.

We are building our future today.

October 8, 2015 0 comment
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