2. eBIZ.mobility
Agenda
• Primer on Mobile Financial Services
• Examples and Case Studies
– Mobile Money Ecosystems
– International Remittance
– Internet Commerce
– Gambling
– Mobile Banking
• Success Factors and Challenges
• Limiting Risk While Increasing Reward
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3. eBIZ.mobility
Mobile Financial Services
• P2P Transfers
• Mobile Wallets- Stored value / Prepaid cards
• Payment Ecosystems
• Bill Payment
• Mobile Purchasing NFC and Remote
• Salary Disbursement
• Remittances- cash and airtime
• Mobile Banking (banked, unbanked)
It is not just about Premium SMS anymore!
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5. eBIZ.mobility
High Volume Revenue Share Opportunity
• Over 4 billion handsets worldwide, growing to 5.8 billion by 2013 (growth
residing mostly in the emerging markets)
• Mobile Wallet (Domestic)- $4.8B in direct revenues and $2.9B indirect
revenues for telcos in emerging markets (GSMA)
• 85% of world population is unbanked (Gartner)
• International Money Transfer (remittances)- $420B/yr - $600B including black
market (World Bank)
• Fees 2%-15% depending on sending/receiving country (World Bank)
• Mobile Financial Services will yield $7.9 billion in revenues for MNOs by 2012
(GSMA)
• International Airtime Transfer- 5% of Top-Up revenue, $8B transferred
• Alternative payments 7% of online commerce world growing to 15%
• 457M Mobile Banking Users by 2015 (Payments CM Research – Advanced Payments Report 2009)
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6. eBIZ.mobility
Global Advanced Payment Forecasts- Relative Volumes
Source: PaymentsCM Research – Advanced Payments Report 2009
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7. eBIZ.mobility
Mobile Money- Now is The Time
Ecosystems are Forming
Why has it taken so long?
- Somebody had to take the first step- and it is a BIG one
- Asia- Transportation Authorities mass NFC infrastructure spurred MNOs
- Philippines- prepaid top-ups led to Mobile Payments, remittances, p2p
- Africa- MNO deployments led to Mobile Wallet, remittances, p2p, top-ups
What is different now? Baseline Infrastructure is in Place
- Successful deployments give basic learning curve on commercial models
- NFC deployments are starting in Europe
- 90% unbanked rates prevent PayPal from satisfying web payment needs of many
markets
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8. eBIZ.mobility
Mobile Wallet
• A virtual wallet for subscriber
• May link to:
• Cash- Stored Value
• Credit cards Loyalty Card
• Prepaid cards
• Gift and loyalty cards
• Identity cards
Credit Card /
• Bank account Debit Card
• May be based in:
• Server
Identity Card
• Handset App
Cash
• Contactless (NFC) Card Check Book Prepaid Airtime
Voucher
Wallet shown courtesy of Trivnet Ltd.
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9. eBIZ.mobility
Case Study- Mobile Money Ecosystems In Service
• M-Pesa Kenya (Vodafone)- 70% of users were previously
banked- this is a disruptive offering, 2 Million transactions/day
(May 2009), 10% of Kenya’s GDP flowed thru in 2009
• Zain- Zap Holdings Subsidiary- 16.5M active customers-
introducing new people to financial services
• SMART Money Philippines- 125,000 cash-in agents, can
support airtime sales of $0.06
• G-Cash Philippines- 18,000 cash-out points
• Oi Paggo Brazil- 250K Users, 70K merchants
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10. eBIZ.mobility
Case Study- International Remittances
• Average domestic cash deposit $20
• Average mobile remittance transfer $200
• International money transmittance currently costs $5–$87 for a
remittance amount of USD$500 - World Bank
• Mobile is more convenient and lower cost
• Mobile Remittance Corridors are Already in Commercial Service
where mobile wallet ecosystems exist:
– Kenya
– Philippines (An estimated 10 million Filipino migrant and contract workers
remit $17 billion annually via traditional methods)
– Poland & Eastern Europe
– Mexico
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12. eBIZ.mobility
Web Commerce Today- Limited by Credit Cards
United States Rest of World
40% of U.S. and 90% of Rest of World Internet Users Do Not Have a
Credit Card (Yankee Group)
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13. eBIZ.mobility
Case Study- Web Payment for Digital Content
• Facebook, MySpace, Bebo Applications
– Mafia Wars
– My Empire
– Guitar Hero
– Spare Change
• App Stores
– iTunes
– Ovi
• i-mode Japan
• Micropayments
– Boku
– Zynga
– Ping.ping
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14. eBIZ.mobility
Case Study- Mobile Payment for Online Gambling
• Mobile payment offers a quick and easy-to-use payment solution for
casino players to instantly deposit funds to their balance on-the-move
• Launched mobile payment method Aug 2008 in a regulated market- UK
• Started with licensed online/mobile casino Wild Jack Casino: Web:
http://www.wildjackcasino.com WAP: http://mobile.wildjackcasino.com
• Initial transaction amount set to £10
• Due to success in Nov 2008 increased transaction amount to £15
• In 2009 increased transaction amount to £30
• Expanded service to All Slots Casino (fully licensed) Web:
www.allslotscasino.com WAP: http://m.allslotscasino.com
• 70% of all payment attempts are carried out by players who subscribed
to a different mobile network operator
• Since the mobile payment system was launched, the operators
experienced zero disputes or claims by players
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15. eBIZ.mobility
Case Study- Mobile Banking
• Convenience application for the developed world
• 2009 survey conducted by Palmer Research*
• 2/3 of offline consumers contact their financial institution once a week
or more through traditional bank channels.
• 1/2 use the bank call centre or interactive voice response (IV)
• Each call centre transaction costing an average of US$3.75
• Each IVR transaction costing an average of US$1.25
• Mobile banking estimated US$0.08 per transaction
• Strong operational incentive for Banks to push the mobile channel.
*http://www.onwindows.com/Articles/Mobile-banking-moving-beyond-the-branch/4951/Default.aspx
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16. eBIZ.mobility
Goal- Payment Standard Alongside Visa/MC
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17. eBIZ.mobility
MNOs Have Strong Assets for Mobile Money Services
• Branding
• SIM Card
• Distribution Network
• VAS Marketing
• Billing Relationships
• Customer care infrastructure
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18. eBIZ.mobility
Collaboration is Key to Success- “Fuel the Wallet”
Ubiquity
• Wide Merchant Network
• Wide Agent Network
• Consistent User Experience
Regulation
• AML/CFT- Anti-Money Laundering/Combating Funding of Terrorism
• Know Your Customer- KYC
• eMoney rules
Overcoming Challenges and Making Money
• Partner with a MFS Hub Provider and Financial Institution
• Deploy open technology platforms and interfaces
• Partner with Merchant Acquirers
• Follow successful 90/10 rev share models to attract merchants!
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19. eBIZ.mobility
Mobile Money Limits Risk and Liability
• Wallet provides “Chinese Wall” - No direct relationship between
operator and merchant- operator can monetize consumer’s cash &
payments without direct exposure
• Non-Reputable User Authentication- Operators currently have 2 factor
and even 3 factor user authentication systems available which make
transactions legally non-reputable
• Consumer Trust- Consumers use the trust relationship with their
Operators who maintain their private financial information as their
“online identity keepers”
• Reduces Theft- Cash collection by businesses and consumers in
remote regions are more secure if done electronically
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20. eBIZ.mobility
The Right Hub Facilitates Success
Open Web-
Advertising & Age Subscriber Interaction
Restrictions
Payment JAVA apps Web
for i-gaming
Mobile Operator
Payment Interfaces
Real-Time Clearing
Immediate availability of funds
Guarantee Finality of Transaction B2B Client Support
Real-time Identity Management
$
Merchant/Agent Authentication
Transaction Verification Content / Service Provider
Bank Payment Authorization Delivery Platform
Settlement & Reporting
Administration &
24/7 Operations
Reporting & BI
Food Mart
Point of Sale
Payment Cash-Out
Wholesale Clearing P2P Top-Up Public
& Settlement Payments & Remittance Transit
Transfers
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