But before we go to Lauren’s write-up, you might be interested in the GSMA’s take on Mobile Money. They’ve produced a short animation which shows their vision for a world where mobile and money are integrated. For folks new to the concept, it’s worth a look. You can see it here.
Also you might be interested in their Mobile Money Summit in Rio - 24-27 May.
So without further ado, over to you Lauren…
I have always been interested in how mobile phones can replace the multitude of items that seem to swamp my handbag. I’ve seen the humble mobile phone evolve from simply making calls and sending SMS to become my mobile internet device, digital camera and MP3 player. Now it seems destined to take over the role of my purse too. There are some fantastic things going on in the mPayments space with a variety of business models; whether it is paying for items via airtime bills, PayPal type initiatives or taking money directly from my bank account … personally I am all for it.
The uptake of Oyster cards in the UK has shown that we are safe with the concept of Near Field Communications (NFC) and there are some exciting developments in this space. I think that this could be a good place for mobile phones to start: taking incremental steps towards the ultimate aim of high value purchases or providing an alternative to our banks. The success of the Oyster card provides a valuable case study for mobile phone operators and handset manufacturers, small purchases for e.g. travel is definitely a great way for us to get used to buying goods with our mobiles. Android has just announced that its multiple NFC-enabled phones will arrive in later 2010 and Apple just piping Google to the post with its latest patent around event tickets. So it looks like the two big guns have drawn and I would expect others handset manufactures to follow suit soon.
Last Monday, Mobile Monday London hosted its event delving into the world of mPayments: the myths and realities. This is by no means a new concept and one that we have been speaking about with much bated breath for some time now. However, instead of a flourishing industry and blossoming prospects we had expected, mPayments seems to still be battling to come to fruition.
The BBC’s personal finance reporter, Kevin Peachy, reported last week that it may be the mobile phone that could ‘signal the future’ for mPayments. In support of this, Juniper Research last week predicted that nearly half of all mobile phone users worldwide will be making mobile payments by 2014, a bold statement indeed and one that mirrors similar predictions in the past.
But why has the technology not taken off yet? Could it be slow operator uptake or a lack of consumer demand … has the recent banking debacle shaken us up to the point of no trust for new banking technologies? There were so many questions to ask and #MoMoLo brought together the experts to discuss and debate as to where we are now, why we are there and what’s next.
The first to take the stage was Neil Daly from our fabulous hosts, the GSMA. Mobile banking in the developing markets has always been heralded as a key place for the development and adoption of mPayments. There is a huge customer education challenge in this area as users do not see the benefit of mPayments. Neil stated the key drivers to getting mPayments off the ground are scale, sophistication and speed. Neil made the point that there is money to be made from mPayments and went on to describe the below five major initiatives:
- Mobile money for the unbanked (MMU) - 78 live deployments and 85 planned globally by 2012, the MMU will have made mobile money services available to 20 million new unbanked customers and boasts 19 operators deployments, with more to be announced soon
- Mobile money transfer (MMT) - global remittance flows are very significant to MMT, especially in non development markets; remittance typically costs 10-24% of remittance amount. The most popular way to transfer money currently is using a coke bottle with the money wrapped around, which highlights the need for more regulation
- Pay-buy-mobile (BBM) - The GSMA has seen a huge increase in number of operators interested in NFC, with 53 MNOs participating in the BBM project and trials in 11 countries from Australia to the US, generating interesting data to help operators develop
The case study – M-PESA
Next to the stage was Paul Makin, of Consult Hyperion, who is spearheading the M-PESA initiative with Vodafone. M-PESA is a money transfer service in Kenya and works with agents like MNO Safaricom in the region to set up shops to provide the service locally.
Key M-PESA stats include:
- Around 10m customers … 40% of Kenyan adults and 57% of Safaricom customer base
- USD 300m per month of P2P transfers
- USD 650m per month in cash deposits and withdrawals
- USD 7m per month in revenue
- 27 companies currently use it for wage payments
What lessons can we learn in the UK?
- Lesson one – get it out there – find a transport mechanism and let it evolve as you go
- Lesson two – find a corporate interface – salaries, social payments, payments, collections etc
- Lesson three – build good bridges - ATMs, post office, corner shops
- Lesson four – use good security that is SIM based
- Lesson five: Beware of the tariff – tariff structures encourage behaviours and bad tariff limits how you can evolve your business …
The Panel Session – David Birch (Consult Hyperion), Chris Thomason (Seren), Ben Whitaker (Masabi), John Lunn (PayPal) and Andrew Henderson (UK Mobile contactless forum)
- Michael Hobbs – does the panel think that in 3-4 years from now mobile operators will continue to feature in mPayments and if so how much?
- Ben – if you want to launch the product today the operator can take too long, but they have the clout to reach the customers. Perhaps I would see them take a more of a marketing channel
- Andrew – I think that some become bit pipes and the UK MNO market will shrink. I can see them working in the transport market, selling tickets. I think that we will be seeing more in mPayments from MNOs as they look to differentiate themselves
- John – we need to have the same payment system for all mPayments and although the mobile phone is great device for NFC but we can use anything we take with us
- Chris – with mobile banking either the banks will become telecoms companies or the operators become the banks
- Andrew Hardy – what do you envisage the key regulatory obstacles globally?
- Andrew – there is a gray area across EU and UK, we would like to see closer cooperation with the regulators to allow the market to flourish
- David – we learnt a key lesson from the O2 Barclays and TFL trial, make sure customers know who to call … O2, Barclays or TFL?
- John – at PayPal our idea was to let everyone in and then get out the bad guys afterwards. No one knows where the crime will come from and rather then waste time in an over engineered security system, better to create a good user experience
- Mark Davis – Virtual currency and convertible cash, do you think we will see mobile payments like this?
- Chris – there is no reason why we can’t change our currency
- Ben – mobile very accessible and as such anyone can be merchant
- Chris – is PayPal not virtual currency?
- John – PayPal can use any currency
- John – there are a lot of clever criminals out there so need to be cautious and maintain an interface with the real world
- Chris Dadd, RBS (O2 Money) – interesting talking about the operators vs. banks debate ... we have seen the failed m-pay and Payforit initiatives, now operators are looking at single click for direct payments from their airtime bill. Bit isn’t this like PayPal’s one click offering?
- Ben – commission costs were far too high and operators need to be more comparable to credit cards
- John – we are working with mobile phone companies to help them allow their customers to pay for things via their bill and PayPal. There are some EU limitations and costing issues, we need to be competitive with credit card rates, which are currently very low
- David Stone –do you think people will eventually start paying for higher value products through mPayments?
- Chris – down to the power of brands
- Andrew – there is a real fear that consumers will suffer from bill shock
- John – cloud payments will jump to the same as online, micro-payments will start at the lower end as everyone scared of bill shock. It is down to the retailer to find a way for you to buy on your mobile phone
Thank you to our sponsors this month, GSMA and a special thank you to Galit Zadok for putting the programme together this month.