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SectionAbstract1
[Mobile Money: M- wallet]
This report comprises of preliminary survey on mobile money and its applicability to Sri Lankan market.This includes;
Current implementations of mobile money services by other MNOs and relevant ground informationCompetitor plans and evaluationGlobal deployment examplesMarket analysis (SWOT and PEST Analysis)Sample implementation plan (3 phase (risk management) strategy)Work break down structure
It is required to thoroughly analyse risk management as in most of the cases mobile money has not turned out to be much profitable. But the current position where Mobitel stands witnesses immense possibility in success in Mobile money.
[MOBILE MONEY] PAGE 1
SectionBackground2
[Mobile Money]Opportunity
Description:
Mobile money is a well-spread concept where many MNOs have deployed M-money facilities to various levels throughout the world. In each of these cases the targeted customer segment, offered services along with marketing strategies differ very significantly depending on various reasons such as socio-economic, geographical and etc.
In most of the cases mobile money has not become very profitable as expected due to lack of focus, innovation, regulatory aspects and flexibility of the service. Hence it is very much important to identify the market segment, economic-cultural background of the targeted customers and introducing “the” life changing experience.
Current Situation
Description:
No M-money service provided by MNOs. Commercial Banks support e-money services to some extent. (Ex: Commercial Bank; The account holder can
pay his/her mobile bills directly through bank account with no physical transactions. The regulator/ Central bank has some regulations for mobile companies to start M-money services without any
partnership with a registered financial institute.
“Under the guidelines for the telecommunications company–led scheme, a telecommunications company can provide e-money services—specifically, an e-wallet that must be mirrored by funds in a custodian account, held by and earning interest for a mobile operator at a licensed commercial bank. The Central Bank of Sri Lanka must approve the mobile company as a licensed service provider (under the guidelines for service providers of payment cards), and the custodian bank must agree to perform a set of duties for account operations including audits, reporting, and formulating know-your-customer and customer-due-diligence procedures. Licensed service providers (mobile operators) can appoint merchants to perform authorized functions such as cash-in/cash-out.”Source: Central Bank of Sri Lanka 2011a, 2011b.
The Revenue and Usage of traditional services are declining. Hence, SMS based communication platform would be ideal for a mobile money service
BUSINESS CASE – [MOBILE MONEY] PAGE 2
SectionCompetitor Analysis 3
Dialog eZ Pay (2009)
Dialog Telecom had started an e-money service in 2009 in partnership with NDB Bank for three years contract period where Seylan Bank also joined as an issuing agent.
Key Highlights: Dialog eZ Pay
Predominantly young, male white collar workers;79% maleMore than 40% 25 yrs or younger / more than 70% 35 yrs or younger46% college graduates70% single
Popular eZ Pay services
Figure 1: Dialog eZ pay services in Sri Lanka
BUSINESS CASE – [MOBILE MONEY] PAGE 3
Post Analysis to eZ Pay
Although the estimated breakeven was 0.1M subscribers Dialog could only acquire only 3300 subscribers. Minimal Marketing
- Survey results: 55% - did not want the service; 23%- unaware of the service; 5% - security reasons Collaboration with NDB Bank
- NDB bank: 4% customer base- Upper and middle class
88% m-money user equipment had GPRS/ Internet accessibility
Description: The Reasons for eZ Pay failure
Dialog launched the eZ pay service back in 2009 where none of other MNOs were busy with network deployments. Although Dialog had competitive advantage they could not guide their way to success due to various reasons.
o Economic Crisiso Lack of Competitiono Need of aggressive 3G/2G Coverageo Sales focus and price waro No dedicated service for low income subso Marketing insignificance
BUSINESS CASE – [MOBILE MONEY] PAGE 4
SectionGlobal Deployments4
Description:
Throughout the world Mobile-money deployments have been introduced. In most of the markets including Sri Lanka exchange of “air time” money could be seen but real mobile money services are yet to be introduced.
M-PESA: Safaricom-Kenya
M-Pesa is one of the most successful mobile money services having more than 10M subscribers. A subscriber can own a M-Pesa account when he/she purchases a connection from safaricom. Hence, safaricom could provide differentiated services involving with external transactions (consumer products/ online purchases/Bill payment).
It should be noted even that Kenya has a lower GDP per capita compared to Sri Lanka, the salary scales, consumer products, air time prices are similar in both countries.
GDP per capita – Kenya: PPP: $1,725Sri Lanka: PPP: $5000
Reasons for success
Difficulty in reach of commercial banks or financial institutes<5% own a Bank accountATM/ remote access is minimum
Geographically dispersed families“Send money home”
Flexible serviceSavings from kesh 1, interest Linked bank account: M-Keso
Safaricom is the main incumbent MNO82% market share
Convenience in reach of Safaricom M-Pesa agentsCash depositCash withdrawal
Low incomeManage on daily basisSavings accountBanking without reaching the bank: M-Keso
Concerns
Although M-Pesa has over 12M subscriber base, penetration is below 10% Holding time of M-Pesa money is low : 70% of cash comes into M-Pea account leaves before any money put into
it. Cash is still the king SMS-digital receipt; lack of trust (perceived security) Low air time exchanges Value of transactions is lowBUSINESS CASE – [MOBILE MONEY] PAGE 5
Figure 2: Safaricom – Mpesa tariff plans
MPESA Tariff schedule1 kesh = 1.55 LKR
BUSINESS CASE – [MOBILE MONEY] PAGE 6
O2 mobile Wallet
Developed market;Transfer money, pay for goods
Features Smart phone app Partnership with financial institute“O2 is not currently an authorised e-money issuer or payment services provider. Its partnership
with IDT allows the company to offer its e-money wallet in the UK” Accounts can be accessed through internet, agents (epay) Discounts: mobile wallet NFC enabled payments
O2 Focus
Market leadership: currently Orange (T-mobile) is the market leader with 38.5% market share; O2 having 30% and Vodafone with 24.5% market shareHence: intense competition through VAS and other innovative services
Increased data usage: via web interfaceBehavioural patterns
User convenience: smart phonesSecurity
G Cash: Philippine
G-Cash in Philippine is also another recognized mobile money service
FeaturesInternational Remittances: with western unionGcash-card (debit/credit) Internet based services
Section
BUSINESS CASE – [MOBILE MONEY] PAGE 7
Market Analysis5SWOT & PEST Analysis
Strengths
The national mobile services providerRelationship with governmentPrevious experiences: upaharaSubsidiary of SLT: Bill payments (Water/ Electricity/ Fixed Line (SLT))
Significance in Market Share25% market shareEstablished customer base: upahara
Island wide coverage Innovation Mobile penetration : 82%
Weaknesses
Declining ARPUHigh CapEx and OpExFluctuation in Network quality (KPI)Initial investment
For agentsSIM registrationMarketing
Opportunities
Competitive advantage (Social)Powerful, Dedicated Marketing campaignBrand recognition: m wallet
Trend for cashless payment (Social/ Technological)ATM popularityLoyalty cards: Keels
Partnerships with government organizations (Political)Samurdhi/Water board/CEB/SLT
Partnerships with State owned banks (Political)Over 60% of population business with State owned banks (People’s Bank/ BOC/ NSB)Premium payment facilities (loan/ leasing)Salary
Low earning subscriber market Economic)State banksSend money home
SMS based income (Technological)Web applications (Technological)
Figure 3: Sri Lankan Banking Sector, market share, 2006
Opportunities identified by IFS Survey
BUSINESS CASE – [MOBILE MONEY] PAGE 8
Remarks
Bill payments agreements with CEB, water board, (currently Cargill’s handles 0.2%)Post office (65.5M yearly), Retailer system: more time consumingDelayed feedback channel
Ease of cash withdrawal facility
Samurdhi movement (linked with e-samurdhi program)/ taxGovernment bulk deposit in mobitel account/ Government agents’ money walletMicro savings accountConvenient withdrawal facility from agentsProcessing Fee, from whom to be acquired Government or user
NFC Feasibility vs P2P transfer for railway/ long distance bus servicesIf p2p implemented for public transport: security/ reliability/ privacyNFC card linked with mobile wallet
Large Retail sector: M wallet deposit at collection pointsDiscounts: Retailer/consumer product manufacturer/MobitelNFC enabled card
M wallet based debit card/ NFC enabled
Figure 4: IFS survey on mobile money business segments
Threats
Regulator/ Central Bank regulationsLimited service
SecurityRetail outlet payment
Cargils/ keels :bill paymentLoyalty card payments
Initial investmentAgentsSIM registration
Unpredictable ROILengthy breakeven point
BUSINESS CASE – [MOBILE MONEY] PAGE 9
SectionImplementation Plan6
Phase 01: “ Save Money, .. ”
Phase 01: Implementation
Separate m-wallet account (initial investment: infrastructure/ SIM upgrade/ Marketing)
01) Cash Withdrawala. From agents
i. Reload Centresii. Mobitel branches (for bulky withdrawals)
02) Deposita. To mobile wallet
i. Directly by agentii. Cards
b. To bank account ( Partnership with two major state banks)03) Buy Air Time
a. Incurring no cost 04) Online purchase
a. Developed m-ticketing systemi. For railway, land air line
b. Identified online stores05) Bill Payment
a. Power/ water ( only domestic)06) Money Transfer
a. Among Friendsb. For Taxi Payments (Security)
Phase 02
Key Highlights
Samurdhi (linked with e-samurdhi program)BUSINESS CASE – [MOBILE MONEY] PAGE 10
Phase 01“ Save money, in m-wallet”
Phone Based Web Based
Feature Phone: m wallet menu Smart Phone App
http://122.248.242.3/FrontPageSamurdhi/ developed Mobitel store
Enhanced online shopping experienceSmart phone apps/ widgets
01) Cash Withdrawala. Increased Cap (for loyalty customers)b. From Banksc. Micro Credit
02) Deposita. To Bank accounts
i. Identified private commercial banks and financial institutesb. Donations
i. Seasonalii. Charity
03) Online Purchasea. Online sellers ( Local)b. Mobitel Storec. Major Brandsd. Transportation e. Fuel
04) Bill Paymenta. Fixed Telephone (SLT, Broadband)b. Pay in Advance ( Automatic deposit and alert system)c. Leasing and other premium payments
Phase 03: NFC Enabling
Introduction of NFC enabled card: the main problem with current debit/ credit card system is if stolen it can be used to withdraw any amount of money by unauthorized parties from all major shops. If the owner is unknown that the card is missed and does not inform the bank the situation might become worse.
Hence, mobile wallet linked NFC enabled card also supported by SMS verification (may be enhanced by PIN verification) might be the best possible solution in future for cashless payment. With the popularity
BUSINESS CASE – [MOBILE MONEY] PAGE 11
Phase 03“one account”
Phone Based Web Based
Feature Phone: m wallet menu Smart Phone App
NFC Enabled Card
of the m wallet system the price cap would be also increased and it might be possible to introduce m-wallet credit card system.
01) Cash Withdrawala. ATM based
i. Ex: Globe GCash: https://www.gcashonline.net/gcashcard/v3/ 02) Deposit
a. ATMb. International Remittance
i. http://westernunionmobile.com/globegcash.aspx 03) Online Payment
a. Loyalty credit cardb. International payment ( linked with financial partners)
04) NFC enabled paymenta. Public transportationb. Fuel and other consumer goods ( Ex: Nexus cards)
BUSINESS CASE – [MOBILE MONEY] PAGE 12
SectionSchematic Design8
Figure 5: proposed M-wallet eco system
BUSINESS CASE – [MOBILE MONEY] PAGE 13
SectionReference9
Study on Sri Lankan Mobile Money Industry:http://www.inteleconresearch.com/pages/documents/MobileMoneyReport-SriLanka_003.pdf
Globe (GCASH): Philippine
https://www.gcashonline.net/gcashcard/v3/
http://westernunionmobile.com/globegcash.aspx
Safaricom (MPESSA): Kenya
http://safaricom.co.ke/
O2: UKhttp://www.guardian.co.uk/money/2012/apr/26/o2-wallet-contactless-payments
http://www.ubergizmo.com/2012/04/o2-launches-o2-wallet-in-u-k/
Samurdhi Movement
http://www.esamurdhi.gov.lk/inp/web/guest/home?sid=0.5382982285227627
Keels & Cargillshttp://www.mynexuscard.com/
http://www.cargillsceylon.com/MediaCentre/News.aspx?newsId=0227
E banking serviceshttp://www.combank.net/newweb/personal/services
Dialog eZ Payhttp://www.dialog.lk/personal/mobile/features-and-vas/mobile-commerce/ezpay/
BUSINESS CASE – [MOBILE MONEY] PAGE 14