International Practices

on
Mobile Payments
SCOPE
Evolution of Mobile Payments.
Status Report.
Future Direction.


Mobile Payments- Currently Prevalent
M-Commerce:
Mobile phones linked to credit/debit cards can be used to
make payments typically for transportation, vending machines
etc.
E-Money:
Cash loaded in the mobile phones at service provider outlets.
Consumers use this virtual cash as real value for all types of
transactions.
Banking Channel:
Mobile phone used for accessing the bank accounts. All
payments are routed through the bank.

Mobile Payments: Different Perspectives
Developed World
Complimentary to the traditional payment systems.
Flexibility, Ubiquity and Convenience.
Enabler for wide range of M-Commerce Services.
m-ticketing, m-retail, m-banking etc.
Suitability for any payment amount levels.
Payment systems linked to individual Bank Accounts.
Markets reflect technology orientation.
Driven by the industry.


Mobile Payments: Different Perspectives
Developing World
Lack of alternative solutions.
Accessibility and affordability.
Limited micro payments.
Concept of E-Money is very popular.
Micro-Financing.
Driven by MNOs.







Industry Initiatives
Mobey Forum
MET Forum
NFC Forum
PayCircle
IrDA
Mobey Forum
Preferred Payment Architecture (2003)
Remote Payments
Server based Wallet
Local Payments
Bank issued EMV card
Requires dual chip phones


EUROPE
EC draft blueprint (2003).
SimPay service (2005).
Pan-European Universal Mobile Payment System
(UMPS).
Applicable to Any Payment Scenario
Suitability to any payment amount level
Availability for every mobile phone user
Employment of existing standards
EC Sponsored many developmental projects.

SEMOPS
A Pan-European effort for cross-border secure mobile
payment service funded by eTEN Program.
Cooperation of Banks and MNOs essential.
Built on real-time credit push concept.
Users (customers or merchants) interact only with with
its trusted bank or MNO.
Banks and MNOs interact through the Data center.

SEMOPS Transaction Flow
SEMOPS
Commercially launched in Hungary
Pilots have been completed in Greece and Italy.
Commercial rollout in Greece and Italy planned
in 2009.


EUROPE
PayBox (2004) - Austria
Operator Driven (Mobilkom) and e-money based.

PosteMobile (2007) - Italy
Bank as Mobile Virtual Network Operator (MVNO)
Projected as early example of second-generation remote
payments, coupling payments with mobile digital signature
infrastructure to support new, advanced mobile services.
Paste Mobile
EUROPE
PayPal Mobile (2006) - UK


Telco Centric
E-Money Institute
Bank Centric
MVNO
Third Party Driven
PayBox PayPal Mobile
Asia-Pacific
Most advanced M-Commerce market in the world
(Test bed for majority of m-Commerce & m-Payments/ Trials)

Japan
Mainly proximity payments
NTT DoCoMo M-Wallet (FeliCa chip) - 20 million subscribers
KDD M-Wallet - 5 million subscribers
Two Years ahead of the rest of the world in contact less adoption.
m-Payments penetrated almost all sectors.
(Transportation, Retail, Hospitality, Finance and Government)



Asia-Pacific
South Korea
Early initiatives by the carriers and banks fell apart due
to mutual distrust.
Payment gateway service providers became prevalent.
Move towards Contact less technology in 2007.
SKT - Visa, KT Freetel Mastercard.
Solutions were designed to migrate from USIM to NFC when it is widely
available in 2008.
m-Payments penetrated almost all sectors
(Transportation, Retail, Hospitality, Finance and Government)


Asia-Pacific
Hongkong & Singapore
Smartcards with Sonys Contactless FeliCa chip
Taiwan
Smartcards : VMA, Paypass
China (Biggest in subscriber base)
China Union MobilePay
India
Paymate, mCheck, Obopay, atom
USA
Mobile Payments were slow to take off because of
availability of other alternatives.
PayPal Mobile (2006).
M-Banking.
Moving towards NFC based contact less Mobile
Payments (m-ticketing, m-retail).
Stands Third (after Japan and South Korea) in adopting
contact less technology.
Latin America
M-Banking (Brazil, Argentina)


NFC enabled Mobile Payments
Forecast for Next 12-24 Months (NFC Forum)

Population
ASIA 67%
EMEA 57%
AMERICAS 54%



Mobile Payments in Developing World
(Philippines)
Smart Money (2001)
SMART Communications & Branco De Oro (BDO).
Cash-In and Cash-Out at SMART and BDO offices
and at a range of accredited retailers.
Maximum limit of P50,000 (US$950) maintained.

G-Cash (2004)
Globe Telecom.
Cash-In and Cash-Out at G-Cash partner merchants.
SMART MONEY
Cash deposits and withdrawals.
Transfer of credit to prepaid accounts (SMART Load).
Transfer of cash to and from users.
Transfer of airtime credit to and from another user.
(SMART Pasa Load)
Cashless purchase at wide range of shops where retailers have
SMART Money account.
Direct credit from employer payroll.
Bill payment.
Inward international remittance from overseas (SMART
Padala).
Cashless purchases at at wide range of shops with MasterCard
debit card.

SMART MONEY - Numbers
Retailer Partners - 700,000
Transactions volume - US$100 million per month.
International remittance - US$50 million per month.
Added cash float in BDO - US$10 million.
Mobile Payments in Developing World
M-PESA - Kenya (2007)

WIZZIT - South Africa (2006)

Celpay - Zambia (2004)
- DR Congo




Mobile Payments in Micro-Finance
CARD NGO Project (February 2005)
Based on G-Cash Platform.
Cash-in and Cash-out at authorized G-Cash retailers.
G-Cash retailers authorized for disbursement of loans and
collecting re-payments.

BENEFITS
Improved efficiency by reducing field collection effort and costs.
Reduction in risk faced by the officials carrying cash.
Savings to the borrower who has to travel far to make payments
over-the-counter in some cases on weekly basis.



Mobile Payments in Micro-Finance
RBAP TAP Project
Joint venture of RBAP-MABS and Globe Telecom.
Based on G-Cash Platform.
Rural Green Bank of Caraga (April 2005).
Training provided to 87 rural banks (October 2005).

Kenya
The Success of M-PESA in handling bulk disbursements
of payments from organizations to employees led to the
trails for disbursement and repayments of micro loans.






Examples of Financial Inclusion Projects
Country Provider Model
Afghanistan Roshan (mobile operator) M-banking
Brazil Caixa Economica Federal (bank) Card-based
Banco Bradesco (bank) Card-based
Chile BancoEstado (bank) Card-based
Colombia Banco Caja Social (bank) Card-based
DR Congo Celpay (bank) M-banking
India SKS Microfinance (MFI) M-banking
State Bank of India (bank) M-banking
Kenya Safaricom (mobile operator) M-banking
Equity Bank (bank) M-banking
Malawi Opportunity International (bank) Card-based
First Merchant Bank (bank) Card-based
Mexico Banamex (bank) Card-based

Source - CGAP

Financial Inclusion Projects Contd.
Country Provider Model
Mongolia XacBank (bank) M-banking
Pakistan Tameer Bank (bank) M-banking
Peru Banco de Crdito (bank) Card-based
Philippines SMART (mobile operator) M-banking
GXI (mobile operator) M-banking
Russia Tavrichesky Bank (bank) M-Banking
Senegal Ferlo (third-party) Card-based
South Africa MTN Banking (bank-MNO JV) M-banking
WIZZIT (third-party) M-banking
Tanzania Vodacom (mobile operator) M-banking
Uganda Uganda Microfinance Ltd. (MFI) Card-based

Source - CGAP
Conclusions

Perception of Mobile Payments is different in different
parts of the world.

The Developed world is moving towards NFC enabled
contact less Mobile Payments, with industry consortia
(GSMA, Mobey Forum) advocating replacement of
SIM with multi application UICC to support NFC.

Cross-border payment services like SEMOPS continue
to prevail as remote payment services.

Conclusions

E-Money will continue to be the driver for Mobile
Payments in under developed nations.

Mobile Payment solutions for Financial Inclusion needs
to be affordable and operationally simple to have
maximum acceptance form the communities.

With its mixed population, India requires different
mobile payment solutions to different communities.

The role of MNO is critical in implementing Financial
Inclusion through mobile payments.


THANKS