Mobile Payment ServicesMobile Payment ServicesJune 2009

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Mobile payment prerequisitep y p q

Amid the excitement and hype surrounding the emergence of yp g gmobile Payments, to achieve critical mass, launching a mobile payment service in countries with

pre dominant prepaid customers would reduce issues of customer acceptance and experience.p p

A large population base, geographically dispersed and lack of infrastructure would make mobile payment services appealinginfrastructure would make mobile payment services appealing as it will lower transaction cost.

A b ith lti l b k t d thA consumer base with multiple bank accounts and the inconvenience of visiting a bank branch and paying bills.

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3 main issues with mobile payments 3 main issues with mobile payments

1. Who owns the customer? Telco or Bank?

p yp y

2. Can it work on all handsets?

3. Is SMS secured?

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3 major reasons why mobile payment is not working j y p y g

1. Who owns the customer? Is it the Bank or the Telco?

• The potentially lucrative business of mobile payments is waiting for banks and telecom operators to agree on each one's role and possible revenue flow in the future. Technology for paying with mobile phones by just flashing them near reading equipment in stores or in public transport is ready, and consumers have appreciated the ease of its use in trials y, pparound the world. .

• The never ending struggle to determine who owns the consumers g ggwallet will go on till one party ends being a service provider (a utility provider per se) and another party being the custodian of the consumers wallet in which the natural choice is the bank.consumers wallet in which the natural choice is the bank.

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3 major reasons why mobile payment is not workingj y p y g

2. Is there a ubiquitous payment solution for existing as well as future handsets? The ideal situation for all financialas future handsets? The ideal situation for all financial institutions is to have a mobile banking / payment services that can cover all handsets, includes roaming and at the lowest

ibl t S l tt t h b d t t dpossible cost. Several attempts have been made to try and provide such a solution; • WAP or 3G mobile payment services which unfortunately are handset• WAP or 3G mobile payment services which unfortunately are handset

dependent. Data charges are also very expensive.

• J2ME applications that can be uploaded into the handset. Unfortunately this brings the issue of software maintenance and updates. What about future handsets?

• A SIM card with digital identity for secure payment services AnA SIM card with digital identity for secure payment services. An innovative idea however consumers might be reluctant to change their SIM as it entails transferring across vital contact and data.

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3 major reasons why mobile payment is not workingj y p y g

3 Is current SMS banking secured? The current answer is NO!3. Is current SMS banking secured? The current answer is NO! • Telco’s can view both MO and MT. Current solution offering does not

provide end to end security for all SMS. It is also not to the telco’s benefit p yto invest significantly into end to end security for SMS as there is no business model to justify this investment.

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Introducing Simprox’s“mPOD”g p

mPOD is a simcard-based service that provides easy migrationmPOD is a simcard-based service that provides easy migration for both retail and corporate accounts to a mobile payment channel. It does not require any registration with the telco’s and

bl b k t h i di id l i d henables banks to own each individual simcard hence controlling the wallet.

ConvenientSend and receive payments anytime you want by using

No change of handset, sim or even network. No 3G or

Easy Adoption

S d

your mobile phone anywhere, anytime

or even network. No 3G or WAP connection needed

Payment messages are encrypted and money deposited directly into

SecuredNo infrastructure or

application cost to the bank

Cheap to deploy

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deposited directly into issuing bank account or consumer

mPOD embedded chip securityp y

C fid ti lit / P iConfidentiality / Privacy• 2 level encryption for OTA transmission providing end to end

data encryption security.y yIdentification & Authentication• mPOD DNA algorithm provides a private digital signature unique

to each individualto each individual• Enable multifactor authentication option for bank and end-user’s,

ensuring high level of authentication assuranceE tiEncryption• Encryption capability non reliant on mobile processor• Scalable to WAP,3G,USSD and NFC• Messages are encrypted with TDES 192-bit encryption• Unique encryption key for every embedded chipset

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Market comparisonp

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Simprox payment system architecture“CAN USE GSM NETWORK ONLY OR BOTH GSM & IP”“CAN USE GSM NETWORK ONLY OR BOTH GSM & IP”

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Potential top 5 mobile payment servicesp p y

Mobile BankingMobile Banking

RemittanceRemittance PrepaidPrepaidTopTop--upup

mm--CommerceCommerce BillBillPaymentPayment

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Target market segmentg g

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Deployment overviewp y

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Summaryy

No cost to the bank• mPOD sim can be issued free based on agreed business model• No application, deployment or customization cost• Revenue share model hence no risk to bank bottom line• Revenue share model hence no risk to bank bottom line• Increase mPOD issuance = increase floats and cheap source of funds

Reduce bank’s cost to serve• Low cost delivery channel without large CAPEX investment• Two way interactive banking without expensive branches

Reduce bank s cost to serve

y g p• Reduce OPEX cost by reducing cash and cheque handling

N t i• Compliments existing ATM and Internet Banking investments• Wide range of new services such as Top-up’s Ticketing etc

New easy to use services

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• Wide range of new services such as Top-up s, Ticketing etc

Summaryy

Alternative Channel for Merchants• Instant Clearance, Payment happens in real-time• There’s no need to mess around with bad cheques• No waiting for bank cheque clearance• No waiting for bank cheque clearance.• Removes all risk of cash-collection handling• Cost savings with low electronic payments rates

• No need to find a CDM/CQM or branch to deposit payments

Convenience for Consumers

• Present mobile bills directly to their mobile for payment.• Direct payment via mobile from anywhere, anytime

G t d S ttl t b B k• Secured as Wallets are owned by issuing bank

A t f ll i d b ti i ti b k

Guaranteed Settlement by Banks

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• Accounts are fully insured by participating bank

Proposed business modelp

Revenue share model to reduce bank’s exposure to OPEX d CAPEXOPEX and CAPEX

No application, deployment or customization cost to the pp p ybank

Cost of mPOD sim is dependent on the number ofCost of mPOD sim is dependent on the number of customer acquired. (Price ranging from USD 15 to 25)

mPOD sim can be offered free based on a pre agreedmPOD sim can be offered free based on a pre agreed customer acquisition plan, go to market strategy and the number of mPOD issued

Simprox will undertake jointly with BAY to acquire merchants

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Thank youThank you…

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