LONDON, UK -- Mobile money transfer is the hottest topic in mobile payments now. Pilot programmes and commercial launches are being announced seemingly on a daily basis. But how do you make MMT work for your organisation? One of the first things you'll need is a mobile wallet…
In the course of researching MMT 08 - the world's first independent MMT conference - Steven Clarke, Event Director and Chief Payments Researcher for the Clarion Events Payments Division spoke to hundreds of MMT innovators, and is pleased to share his research in a series of papers. In this edition, we spoke to the leading mWallet vendors.
What is a mobile wallet, and how many are in use?
Hannes van Rensburg, CEO of Fundamo explains "the term mobile wallet is often misused to mean any store of information allowing financial transactions. This means hundreds of solution providers claim to have a wallet! In my opinion, 'mobile wallet' should also designate an associated value store or bank account. The majority of our subscribers don't have a bank account or credit card. The value store associated with a mobile wallet must conform to banking requirements - it must be auditable, robust, meet different regulatory dispensations, pay interest and manage tiered fees."
There were an estimated 10 million mobile wallets globally at the end of 2007, representing just 0.5% of the 3 billion phones. Sounds like a low number? It's actually great news for mWallet developers, given Edgar, Dunn and Company's prediction that there will be 1.5bn mWallets by 2015, representing an increase to 25% of the total subscriber base
Okay, so who are the mobile wallet vendors and how do they differ?
If you're looking for a mobile wallet, your RFP should go out to companies like Affinity Global Services, Bharti Telesoft, FE-Mobile, Fundamo, Macalla, mChek, Mi-Pay, MoreMagic, mTranZact, Paybox, Redknee, Trivnet and Utiba.
While many vendors started out specialising in partnering with either banks or MNOs, CEO Amit Mattatia's explanation of Trivnet's market coverage is typical: "Our traditional market was primarily MNOs and Telecom Service Providers, however we have implemented multiple banking integrations and are increasingly teaming up with financial institutions." mWallet vendors are also enthusiastically supporting MMT within Microfinance Institutions (MFIs), while Todd Achilles, MD at Affinity Mobile, explained that his business also supports "large retailers that offer loyalty and financial services to their customers," as exemplified by their relationship with RadioShack.
András Vilmos, Director of SEMOPS UAE introduced their service as "grown from a European project with the objective of establishing a European wide real time mobile payment service. Our concept is to set up local services with the involvement of local banks and mobile operators, but as we use the same operating and communication solutions everywhere these local systems can be interconnected, and can become interoperable."
Andrea Stone, Head of Marketing Communications, Bharti Telesoft added "we are an early innovator, having entered the market in 2006 with our mobiquity platform. Our solution engenders the creation of a viable ecosystem uniting operators, finance institutions and merchants, enabling integration of in-house and 3rd party applications."
Chief Executive Justin Ho explained that "Utiba has had a pioneering role in mCommerce deployments and Pilots around the world. We implemented GCash for Globe Philippines which was a pioneering mWallet service and which won the GSMA award for Best Mobile Messaging service in 2004. Our Maxis (m-Money) to Globe (G-Cash) remittance initiative is the first mWallet to mWallet international remittance service initiative of its kind anywhere in the world."
Niall O'Cleirigh, CEO of Macalla spoke of how their "customers range from startups with innovative new business models to large established Banking and Mobile Operator Customers such as Bank of Ireland, Vodafone and O2. We offer customers the choice of hosted or local deployment and all Macalla solutions are provided from one platform, allowing us to deploy multiple services seamlessly."
Heidrun Kirsch from paybox explained that they have "10 new projects in parallel with 20 solutions deployed globally (Europe, Asia, MENA, Africa, North America). As our references for m-payment standards in Austria and Germany as well as the ecosystem around MoneyBox Africa in Nigeria prove, paybox customers can create mobile communities in both developed and emerging markets."
Girisch Nair, Group Chief Executive of mTranZact explained how their "technology fundamentally links a mobile phone number to a consumer's bank account. From a financial regulatory perspective, we require that the custodian of funds is always a regulated financial institution. For consumers that may not have an existing banking relationship, mTranZact enables the issuance of a payment card that is automatically linked to the consumer's mobile phone number."
How do you balance robust KYC and fraud mitigation with a simple, efficient user interface?
"We employ a significant amount of user testing and practical experience from our own operations to balance what may be seen as competing elements to deliver an optimal solution for each market," explains Affinity's Achilles.
Justin Ho from Utiba added "One of the innovative ways in which we handle this is in being able to give different levels of 'Rights'. For example, level 1, for customers who have provided a bare minimum level of KYC, allowing 10 transactions, restricted to a maximum value of USD 10 per month. At level 2, for customers who have provided a better level of KYC but use a NOT very secure interface like USSD / Plaintext SMS, you might restrict transactions to a maximum value of 100 USD per month and 50 per month. Then at level 3 for customers who have provided a better level of KYC and have upgraded to a very secure interface like STK, the transaction limit could be greater than 100USD with an unlimited number of transactions. By allowing various levels of 'Rights' we are able to induce trials, and give an efficient user interface. Once the customer is 'hooked' to the service, we encourage him/her to upgrade to higher levels of 'rights'."
"We have taken the approach to provide real-time transaction level based screening as a more comprehensive and richer approach toward balancing the risk versus experience issue" concluded Norman Frankel of Mi-Pay.
How to integrate your mobile wallet with banks
Phil Sorrell, Director of FE-Mobile explained that "FE-Mobile's m-commerce platform interfaces directly into the heart of the core system of the financial institution. There are no intermediate tiers involved and the SecureLink™ Java software (both handset client and server-side) provides full end-to-end encryption. To protect users from phishing, identity theft and other attacks, SecureLink employs bi-directional end-point authentication and users are authenticated via two-factors, the PIN and the handset."
Amit Mattatia, Trivnet's President & CEO added "integration with banks and in fact, any external system depends on maintaining a rich and sophisticated set of APIs, allowing painless integration to financial institutions, telecom and distributors and merchants. Trivnet has rich experience in integrating with banks and banking gateways, while meeting their required security policies. We support various banking protocols such as ISO 8583."
Another key consideration in selecting your mobile wallet partner is which channels they support and whether it's client or server side
"The Redknee service to date supports both SMS and USSD access channels. These channels have the distinct advantage of being standards specified and therefore supported by almost every Mobile handset on the planet. The Server based approach means that there are no handset client distribution issues to be resolved," comments Ian Hendry, Product Manager, Mobile Money Services. "Redknee also supports a handset client solution to improve usability and provide additional security mechanisms such as PKI certificates enabling mobile digital signature and encryption of the financial transactions. In environments where this additional layer of security is required, the service is provisioned to the end user after performing a SIM swap."
Fundamo's van Rensburg, explained that the SIM card "provides the most secure cryptography to host an application. Millions of SIM cards across 15 countries have Fundamo logic on the SIM card. Fundamo also has clients on just about any channel you can think of: Java, Browser, GPRS, HTML, WAP, USSD, Structured SMS and even IVR."
ASP or license?
"The Redknee solution can be provided on-site as either a traditional software license model with annual support costs or we can provide a pay-as-you-grow (or revenue sharing) model. The advantage of the revenue sharing model is that the upfront costs for the operator are reduced and therefore more of the available capital can be invested in the Marketing and rolling the service." Hendry continues, "Redknee can also provide the solution as a managed service, similar to the onsite revenue sharing model. A sign-up fee will be levied to cover the hardware and initial set-up activities on the hosted platform, and a fee per transaction carried will be charged thereafter."
Mi-Pay's Frankel believes ASP is the way to go. "We primarily operate on an ASP basis. The current market business case with low volumes, market testing, trials etc and lack of proven take up models do not really warrant a licence based approach in our opinion."
Beyond Mobile Money Transfer - bill payment and top-up
Trivnet's Mattatia spoke about how their mWallet "taps into the fast growing bill payment market and is turning telecommunication distribution networks into powerful enablers of mobile commerce in both developed and developing countries."
Redknee's Hendry explained that "the Redknee Mobile Money infrastructure allows for roaming recharge, remote top-up, mobile money transfer, foreign currency exchange, with flexible support for payment clearing and settlements across different regulatory and payment systems."
Conclusions
There's a lot of due diligence to be done to select your MMT technology partners and a variety of options either on the market. We haven't even had time to talk about the option of building your own mobile wallet, the approach favoured by Vodafone with M-PESA. A great place to begin your selection process would be at the MMT 08 Expo, where the leading vendors will demonstrate their solutions and where you'll be able to hear how to make sure your mobile wallet is part of a successful MMT programme. Good luck!
Companies featuring in this article include: Affinity Global Services, Bharti Telesoft, Edgar, Dunn & Company, FE-Mobile, Fundamo, Macalla, mChek, Mi-Pay, mTranZact, Paybox, Redknee, SEMOPS UAE, Trivnet and Utiba.
Part 1 of "Mobile Money Transfer Explained" examined "the role of the global hubs".
Part 3 of "Mobile Money Transfer Explained" will focus on "cash in, cash out - the practicalities of developing your agency network". Visit www.mobile-money-transfer.com and register to the MMT Newsletter to ensure you receive Part 3.
MMT 08 Conference & Expo: Don't miss the "User and Analyst Verdicts on MMT technologies" and the "MMT technologies shoot out" at MMT 08 on November 10 and 11 at the Crowne Plaza Dubai. Here you will meet the leading mWallet vendors and other MMT technology providers, including SEMOPS UAE, Affinity Global Services, atom Technologies, Macalla, mChek, mTranZact, Mi-Pay, paybox, MoneyBox, Rechargeplus and Utiba.
Visit www.mobile-money-transfer.com for more details.
Steven Clarke, Event Director, Clarion Events Email: steven.clarke@clarionevents.com
For all press enquiries and more information please contact:
Harpreet Sohanpal, Marketing Manager, MMT 08, Clarion EventsEmail: harpreet.sohanpal@clarionevents.com
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