International International Practices on Practices on

Mobile Mobile Payments 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 InitiativesIndustry Initiatives

Mobey Forum MET Forum NFC Forum PayCircle IrDA

Mobey Forum

Preferred Payment Architecture (2003)

Remote PaymentsServer based Wallet

Local PaymentsBank 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) - ItalyBank 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 CentricE-Money Institute

Bank CentricMVNO

Third Party Driven

PayBox

PayPal Mobile

Asia-PacificMost advanced M-Commerce market in the

world (Test bed for majority of m-Commerce & m-Payments/

Trials)

JapanJapan 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 KoreaSouth Korea Early initiatives by the carriers and banks fell Early initiatives by the carriers and banks fell

apart due to mutual distrust.apart due to mutual distrust. Payment gateway service providers became Payment gateway service providers became

prevalent.prevalent. Move towards Contact less technology in Move towards Contact less technology in

2007.2007.SKT - Visa, KT Freetel – Mastercard.SKT - Visa, KT Freetel – Mastercard.Solutions were designed to migrate from USIM to NFC when it Solutions were designed to migrate from USIM to NFC when it is widely available in 2008.is widely available in 2008.

m-Payments penetrated almost all sectorsm-Payments penetrated almost all sectors(Transportation, Retail, Hospitality, Finance and Government)(Transportation, Retail, Hospitality, Finance and Government)

Asia-Pacific Hongkong & SingaporeHongkong & Singapore

Smartcards with Sony’s Contactless FeliCa Smartcards with Sony’s Contactless FeliCa chipchip

TaiwanTaiwanSmartcards : VMA, PaypassSmartcards : VMA, Paypass

China China (Biggest in subscriber base)

China Union MobilePayChina Union MobilePay

IndiaIndiaPaymate, mCheck, Obopay, atomPaymate, 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 AmericaLatin 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 Mobile Payments in Developing WorldDeveloping World

(Philippines)(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 - NumbersSMART MONEY - Numbers

Retailer PartnersRetailer Partners - 700,000 - 700,000 Transactions volume Transactions volume - US$100 million per - US$100 million per

month.month. International remittanceInternational remittance - US$50 million - US$50 million

per month.per month. Added cash float in BDO - US$10 million.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 ProjectJoint 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).

KenyaThe 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 ModelAfghanistan Roshan (mobile operator) M-bankingBrazil Caixa Economica Federal (bank) Card-based

Banco Bradesco (bank) Card-basedChile BancoEstado (bank) Card-basedColombia Banco Caja Social (bank) Card-basedDR Congo Celpay (bank) M-bankingIndia SKS Microfinance (MFI) M-banking

State Bank of India (bank) M-bankingKenya Safaricom (mobile operator) M-banking

Equity Bank (bank) M-bankingMalawi Opportunity International (bank) Card-based

First Merchant Bank (bank) Card-basedMexico Banamex (bank) Card-based

Source - CGAP

Financial Inclusion Projects Contd.

Country Provider ModelMongolia XacBank (bank) M-bankingPakistan Tameer Bank (bank) M-bankingPeru Banco de Crédito (bank) Card-basedPhilippines SMART (mobile operator) M-banking

GXI (mobile operator) M-bankingRussia Tavrichesky Bank (bank) M-BankingSenegal Ferlo (third-party) Card-basedSouth Africa MTN Banking (bank-MNO JV) M-banking

WIZZIT (third-party) M-bankingTanzania Vodacom (mobile operator) M-bankingUganda 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 THANKS