Vinod Sharma's Blog

Abstract – This article is triggered by real life incidents combined with a high-level overview of mobile financial services and mobile payments. The mobile technologies covered herein are neither new nor a revolutionary innovation; but have been there on this planet for decades though not all of us have been aware or maybe the way I have experienced them was far different from everyone else. Mobile payments using NFC, USSD, Mobile App or even SMS have been in existence for a long time but banks and retailers have been hesitant to fully and willingly participate due to fear of low adoption rate, however, the lack of participating banks and retailers is the precise reason for the low adoption rate.

Mobile Payments are an easy and simple concept but sometimes they get oversimplified along with the same reasons for payments under mobile or simplified version as mobile payments about which every single company on this earth is talking about these days and it is true every single company is. The assumption made here is that the reader is well versed in mobile payments through the mobile wallet or mobile money which is a solution that lets people conduct banking transactions with ease, directly from their mobile device in a secure and convenient manner. Having full understanding of the business case and technologies we can now get ideas on how to merge these to gain some cost reduction, increase in speed and effectiveness.

In case you need detailed information or further deliberation on any part, please feel free to get in touch with me directly. A myth is normally described as a traditional or legendary story so is Mobile Payments, usually concerning some being (Mobile Handset or Technology) or a hero (Mobile) or event (Payment Made), with or without a determinable basis of fact or a natural explanation, especially one that is concerned with deities or demigods and explains some practice, rite, or phenomenon of nature.

Introduction – There is no second or subsequent thought that Mobile payments are on the rise. NFC (near-field communication) that allows two devices equipped with an NFC chip placed within a few centi-meters of each other to exchange data. With today’s technology, we have come a lot further. MasterCard, ApplePay, AndroidPay, Europay, and Visa, leaders of the growing trend of mobile payment, have been pushing to create a standard for the modern method of commerce, so that mobile payments can be easily accessible on a global level. There are major contributors to reduce time to pay for the services/goods and give feeling like touch and run.

If we had a Ministry of Innovation for regulation and control on a global level, they would have made todays work and innovation impossible or may have stopped it long back. Apple (as per news 10 Million handsets were sold in first 3 days of launch) launched Apple Pay (NFC Solution) from a technology perspective was neither a new offering nor a game changer, which is now followed by almost every big player in the industry. MasterCard even claims that, under the banners of convenience and security, their technology will create a world in which we will one day never even think to withdraw money from an ATM or stand in line to buy a train ticket. Instead we’ll just tap a button. Without a doubt, that launch was to set a trend for NBFTC (Non Banking Financial & Technology companies) on how to enter into payments and did its job well, so-called banking domain and eat the share.

When Apple decided to jump on board (Sept-2014), the game changed because all of a sudden they were presented with a guaranteed massive user base for this type of technology and service. Unlike most of the MNOs, which keep on focusing and growing the mobile network in a positive way to penetrate the isolated areas, millions of people are now able to connect via a mobile phone. As a result, mobile payments have become a viable alternative to traditional payment methods such as paper, plastic, online or even bank accounts payments.

Main Story  – Rapid advancements in mobile technology are changing the way we live; from the way we connect with others to the way we manage our finances. It’s time to rethink mobile payments by putting some of its common myths to rest. One can help grow their business while offering their customers an alternative way of paying their bills while still maintaining a high amount of security. Yesterday I was standing at a KFC counter for my Sunday evening meal and after I made my mind I was given a 9 US dollar bill to settle in advance before I collect my stuff (This must be an usual method I guess around the globe). I started searching for cash in pocket and realized I don’t have my wallet and now about to excuse myself all of sudden a sweet voice brought me back to reality asking how I wish to pay and I was given options as, Card Payment (Debit, or Credit), Mobile Payment (either using my Mobile Wallet (NFC, Mobile App or simple USSD) or my Mobile Banking account).

To make me crazy enough I was told whichever method I want I can use on separate counter even via free phone call to my family/friend (their location can be around the globe) to ask them to pay for my meal. Finally I paid via my mobile money account using my mobile app on my Apple phone; this whole episode told me very clearly there is no dull day in the payments business these days provided the buyer is willing to pay. The unglamorous world of clearing and settlement is a recipient of generous attention due to continuous launches of visible overlay propositions, often by non-banks. The so-called innovators and many players are constantly anxious about protecting their hard earned franchises, thereby confirming emergence of the ‘new normal’. I believe in embedding these core elements in the proposition, operating and delivery models will enable players to ‘play to win’ in these turbulent times.

Technological innovations have made certain aspects of our daily lives that much easier. The advent of mobile money has awarded those who were previously unable to conduct monetary transactions an easy and affordable alternative to traditional bank accounts. Mobile Payment services may or may not link to your mobile wallet or directly to your bank account. Important questions being;

1. How to position Mobile Payments Portfolio to my consumers?
2. What my consumer wants?
3. How my consumer wants it?
4. How much and when my consumer needs?

Traditional payments services providers, including banks as well as the well established big names like Mastercard, VISA etc have to wake-up, smell the coffee and innovate otherwise MNOs will “move their cheese”. Imagine what will happen when social media makes vibes into the payment space. A very interesting fact in the mobile financial industry is we usually receive funds once or twice a month as part of salary or fee but spending is done at least thrice a day, sometimes over 5 times.

This method of spending is known as micro-payment/micro-spending. Putting in numbers, this can go into billions of dollars; an easy example: if we start charging 1 cent per transaction as commission for micro payments through NFC (the stored value card technology) for food, drinks, snacks, petrol, tolls, souvenirs or any similar purchase each one of us spend minimum $5 a day (assumed at 40% of world population) then the total commission earnings will be to the tune of $4.3 billion per month. This market has clearly not been explored that well and this also goes straight into Mobile Money Market as potential leakage plug.

The main drivers behind the success of mobile money are the explosive growth in the number of mobile devices and the fall in the cost of computing power, which have lowered the barriers to new entrants in this field. Mobile money (m-money) is quite versatile and can support a variety of services, in particular, person to person (P2P) money transfers, which are of significant value for emerging economies.

The other key driver for this is the inaccessibility of banking services to the general populace mainly due to poor infrastructure and lack of trust in local banks by country fellowmen and companies. Payments have a share to move beyond transaction capture to enable a sale (trigger, originate) by aligning to the new ‘consumption context’ of payment services. Partnerships are an effective way to enable this. e.g. Apple Pay is a ‘device franchise’. Utilize collaborative models, where available.

It integrated servicing to provide differentiated and cost effective servicing in real time responses to presence, activity and transaction(s) leading to satisfaction of wants/personalisation. In Mobile Payments flexible and dynamic integration capabilities to enable real time, interoperable messaging; acts like a bridge to deliver tomorrow, while enabling ‘insulated incremental transformation’ at the back end. In the new ‘sharing economy’, ownership is not a differentiator. ‘Build vs Buy’ of yesteryears should synthesize / weave into a ‘Do vs Source’ agenda. Most fulfillment activities, sourced on a variable pricing model are the necessity.

Key Advantages – To All

• Expand financial sector reach by leveraging on a Mobile medium.
• Ease of use for financial services via various interfaces like IVR, USSD, SMS and Smart Apps.
• Expand set of services to larger sector of society.
• Solution Providers (Service Provider)
• Acquire large number of customers for their solution or services.

Telecom Operators

• Drive retention, and increase ARPU to the mobile
• Higher revenue through increased Data, USSD and SMS usage

Utility Organizations

• Prompt payment of bills enabling better cash flow

Subscriber / Customers

• Basic banking facility made available
• Advantage to transact on the move.

Conclusion: What are the implications of Mobile based Payments and Solutions? Is it going to change the world, be a significant “win”, be a nice hack. Proximity based , Mobile App, SMS or USSD , Cloud or hosted mobile payments can support globally and will give financial institutions and partners greater choice in offering consumers secure ways to pay with smartphones. Time has now come for banks and other entities with an interest in financial service provision, to step up as one team, exploit technology and leverage on existing MNO infrastructure to acquire customers, enrich use cases, lower costs and increase revenue especially in markets where regulators (such as reserve banks) play a dominant role. Support for ‘Regulatory Compliance’ is taken as a given.

Abstract – This article is focused on high level discussion and showing what is happening in payment industry and contribution / future impact by 4 well known camps Apple, Android, Microsoft & Samsung and many many other players as now “Pay” word is very favourite word for any company to come up with payment solution so to my best of understanding and knowledge today’s time payment industry can be called a united colour of payments. Idea of this short write up to know thought process, mind set and views of different people around the globe with different cultures, different mindset, different industry, different skills, different languages, different roles, different levels of job, different classes and all sort of differences but what is common and which is the common payment method.

We all know very well that Banks in countries like Indonesia, India, China, and on African Continent don’t seem overly concerned with banking the unbanked. If they were, we’d likely be seeing more initiatives to pull in the majority demographic as customers. However, these consumers aren’t folks who will be transacting as big or as often as their more affluent middle-class counterparts. As such, profit margins reaped from this group won’t be too exciting. This article can help but only on high-level understanding. Readers who are interested to know some more details on each one of them are suggested to read them separately and get complete insight. Experts in any form of payments like mobile, Internet, paper or card should not get disappoint after reading this as said it not meant for detailed or deeper understanding.

This article explores the different mode of Mobile Payments , different types of payment colours i.e. currencies, different big brothers ApplePay, Samsung, Microsoft, Google, Facebook (I guess Its ok to call them big brothers) and many more and where we are actually and where we wanna be. Advantages of using some of it & exiting news in mobile payment space also put emphasis to the most important key point as Mobile Payments Revolution. The virtual currency aims to combine the advantages of direct cash transactions with the power of digital technology. Mobile Payments myriad ways mobile payments are which are already being used.

From shopping on phones to ditching change at the parking meter, consumers are embracing mobile payments for an ever larger number of daily tasks. There is obviously room to grow, and we’re nowhere near banishing credit cards or cash just yet, but it’s clear that paying with a mobile device is gaining traction hence creating aroma for united colour of payments. In case needs detailed information or deliberation on any part please feels free get in touch directly as to me Mobile Financial Services is (I am using “IS” not “ARE” as I feel its ONE) my passion and my thought process.

Introduction – There are various colours of mobile payments across the world, which are in use today along with all methods. Colours in terms of currencies where person sitting in US making payment for goods and services for some in India or in Africa where US dollar painted with white and black ink making payment for its pear currency in green or blue colour. “Speed to market is The King” for who consumer or service providers? Are we heading towards Cashless Payment i.e a new Society which is CASHLESS as the Future Next. if we had any global ministry of innovation for regulation and control then for sure till date cash will be only the single king but since its not and mobile payments has proven it self as economic freedom. In the current payment race/war where every one is running to get their share of this hot cake. We are now getting new arrival Android Pay announced by Google at its I/O conference.

Android pay would be available through set of APIs that will allow developers to add an Android Pay button to their app and banks to enable payments in their applications on Android devices with KitKat 4.4 and above. Contactless/NFC payments, Mobile/Digital Wallet payments, Mobile Payments in Restaurants, Retail shops etc are showing increasing Trends / Statistics only. Just imagine how powerful this central payment hub would be for consumers as the payment cake size continues to be increasing and upgrading with new ecosystem, applications and devices coming to market. Banks and Card companies are working restlessly in U.S.A (U.S.A a typical market where Credit card debt is still incredibly common— with 39% of Americans reporting unpaid credit card balances, it’s not far behind mortgages as a leading contributor to American consumer debt. While those balances are much lower than those for student loans, the high interest rates and revolving nature of credit card debt can make it a serious threat to consumers’ financial health).

To get merchant conversion for their acceptance religion from older magnetic stripe payment terminals to support NFC payments from mobile phones or smart cards and to EMV compliment cards but a complete transition will take years, pay attention to “S” at the end of word years in last statement. If you’re among the 80% of Americans with debt, the best thing you can do is focus on managing your debt and credit well. Taking out loans or using credit cards can be a great financial strategy, but it’s important to go after the balances with a plan. Regularly review your credit score so you understand how your debt affects your credit standing, and set realistic goals for paying your debt down, while saving up for your future. The main drivers behind the success of mobile money are the explosive growth in the number of mobile devices and the fall in the cost of computing power, which have lowered the barriers to new entrants in this field. Mobile money (m-money) is quite versatile and can support a variety of services, in particular, person to person (P2P) money transfers, which are of significant value for emerging economies.

The other key driver for this is the inaccessibility of banking services to the general populace mainly due to poor infrastructure and lack of trust in local banks by country fellowmen and companies. Another very interesting colour of mobile payment is International money transfer through mobile or favourably called as cross border remittances in MNO domain where Mobile money remittances has proved and claimed that in Sub-Saharan Africa cross border remittances are projected to reach US$33 billion in 2015 as the services are growing above 6% in more than three countries with increasing mobile connectivity, according to WorldRemit, a United Kingdom-based online service company that lets people send money to friends and family in other countries.

Main Story  – Last week I received an email asking and writing 7 continents payment style and their united or uniqueness as after all there is something in common and which is without a doubt Mobile Payments and Mobile Financial Services. The secure authentication and payment validation technology underlying Mobile Payments are now catching up and getting attention for security what technology your phone is using to ensure to transmit secure information used to electronically sign transactions. All subscriber using phones to make payments no matter what type of handset they have or which network operator they belong to. If they don’t need to modify your phone or load any special application to make payment in secured manner would be ideal and best method or solution then. A successful mobile payment should have below basic support pointers.

• Enjoy lower tariffs with flexibility to send, spend and receive money across all networks(Cross borders as well)
• Able to transact faster, easily and conveniently with any phone, at anytime, anywhere across globe.
• All transactions done should be in secured & safe manner with preventive measures to stop abuse, fraud and AML
• Auto verification for identity and location for cash-in or cash-out  and payments
• Every transaction generates transaction receipt /ID each time. Using exciting new technology which brings several transacting channels together
• Able to transact with or without bank account with mobile phone as bank account, ID, Payment instrument ect.
• Transaction language should be as per subscriber preferred language and currency.

Apple Pay’s launched some additional context about the state of mobile payments in general, which includes much more than just Apple Pay now after 12 months if we see where it is answer is still in very small balloon . The hectic pace of change in payment systems. All of this is because of the fact that this physical/digital world is converging. Online, mobile, virtual wallets and smart watches, among others – means that all businesses need to remain alert to the latest trends and developments. They and their customers will almost certainly start paying for goods and services in new ways in the future. A month after Apple Pay launched, MasterCard was quick to remind analysts in the company’s third-quarter earnings call that Apple Pay wasn’t the only player innovating the mobile payments space.

All these new ways will continue to change and proliferate as time goes on. Some provider of payment solutions for the financial industry, retailers, hospitality, and e-commerce. Android Pay, ApplePay, Samsung’s, Google, Facebook and Microsoft Pay services these are from big players but here are thousands of regional trusted small brand and MFS providers who are also coming into play to claim there share of hot cake pie, and all the banks are launching their own version, then there is MasterPass and Visa Checkout. There are some proposed definitions from industry associations (e.g. GSMA and ‎Mobey Forum) and the European Union but there is no agreement on a common definition.

Technology changes very quickly and service provider habit of now now to the market and give new ways and means to consumer quickly but on the other hand consumers style and adoption to technology move at a slower pace compare to what service provider wants. It takes a lot to create a mindset shift. Consumers may not also be ready to switch over to one payment method option simply because the trust cant be build over night in same example Apple took decades to gain that kind of trust. Leaving all other instruments of payment aside and consumer will move to just Mobile Payments will cost too much time, efforts, hard work , money and sweats from all services providers and assumption is there is no security issues around (Which is practically impossible we all know as new born baby can start dance & run on day one).

The research firm reckons the Middle East and Africa region is the biggest market for mobile money services. In Africa in particular there are large numbers of people who have no access to traditional banking services, and the mobile payments market is growing fast along mobile phone adoption. But the report said it expects increased traction for mobile money services also in the APAC and North American regions within the next five years. Financial inclusion and the concept of the unbanked has become a buzzword when it comes to mobile payments innovations. Who are the unbanked, who are the mobile money companies reaching, and where are there still gaps? And why? To some Apple critic’s points, getting consumers to change means giving a reason to stop what they are doing today and to start something new.

More than one-third of the people surveyed said that they didn’t try Apple Pay because they didn’t have a reason to change from their current payment method, and one-fifth said that they preferred an alternative method of payment. Personally I have experience working with PayPal, Stripe, Square, Google Wallet. Each has own pros & cons. I think Apple Pay will get attention in Asia. Well, it’s Apple… Everyone is crazy about iPhones here. Now iPhone users (and this number is always growing) will have an option to use their device as a digital wallet. Interesting solution is provided by Samsung in S6, but I cant comment on it’s success. I have seen cloud service for same service type, same functionality , same configuration of hardware and same support level (At-least on paper) and every other same offering but cost difference with 20 times or more so we know it very well what joy we can expect in a one dollar apple and in a 20 dollar apple that also matters.

Now after all these studies my questions to me for Which I am still looking for responses.

• All Mobile Payment Service Providers along with some Social Media Service Providers are just focusing on disrupting the market? or any action to create such market
• What all initiatives are going on by Mobile Payment Service Providers (MPSP) to create such needs where consumer feel for Mobile Payment Systems / Services
• Whom we are acquiring consumers or merchants
• And there are many many more questions are jumping ….. looking for some responses to share later on
• As said by my friend — ‘I think your questions have merits. Someone called the mobile payment industry, “a solution looking for problem” ‘. So if that is true hope we find our problem soon for the solution we have created before hand
• Are creating need now after got solution at hand

Hash Tagas : #payments, #mobilepayments, #mobilemoney, #money, #mobile

 Conclusions: What are the implications of this war? Is it going to change the world (unlikely), be a significant “win”, be a nice hack, or simply serve as a road sign indicating that this path is “UNKNOWN”. Which system is useful and needed for the business considering the market you operate and synchronised with your strategies and goals. While mobile payment announcements from various smartphone makers are growing in frequency, still too much unknown & doubtful thoughts that such services will drive much interest in buying the smartphones that support it. In Countries that prefer cash as their main form of payments, it might be more difficult for mobile payment to set ground.

However, this differs per country and per part of the world. In most European countries, for example, people have adopted debit and credit card as their primary form of payment. Opposing to cash, this is an intangible form of payment, just as mobile payment. The step between paying by card and mobile payment is smaller than between cash and mobile. Therefore, in Europe, consumers are adopting many forms of mobile payment. When we look at Merchant Processing Fee which becomes the biggest issue we face. If we use some International Payment Merchants as an example, the fee for transaction is 2.9% + $0.30 per transaction(Many markets). If consider a standard physical POS retail, it can fall to as low as 1.3% in Singapore or even lower if you are an electronics store with large transactional volume. With razor thin margins, the MPF weakens the innovation factor. This MPF is on top of the other transaction costs. Mobile payments will get better once the MPF becomes more competitive.

My understanding out of everything going on around the world on mobile payments front I must say we should avoid a creative mess, stop innovating and start improving. As test, measure success and repeat that what works for me very well (Off course Innovating process does not stop completely). Developing something new on top of other “things” is not always the answer; sometimes un-developing something existing to uncover the hidden gems already there is useful. Can I say if you like Un-Develop to Innovate?

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