Posts filed under 'mobile devices'
Access to affordable financial services is critical to our life and our work. Yet, this accessibility is far from universal. Mobile banking can change that. Today there are nearly 5 billion people using mobile phones in the world, but only about 1.6 billion bank accounts, and according to World Bank estimates there are over 2.7 billion adults in the world that can benefit from the dramatic changes mobile banking can bring to their lives.
Together with the World Economic Forum (WEF), at part of IdeasLab, Obopay has published a video and an accompanying paper to discuss the opportunity for Universal Mobile Money and how best to address the challenges of making it a reality through an Open Collaborative Model. You can view the video and paper at the links below:
Universal Mobile Money Video:
http://www.weforum.org/content/mobile-financial-services-all
Universal Mobile Money Paper:
http://slidesha.re/o50nSB
July 28th, 2011
Kenya – the Silicon Valley of Mobile Banking and Payments
Kenya is at the threshold of fast-paced growth next year, according to the World Bank. This year Kenya repeatedly demonstrated leadership in Mobile Money and this latest announcement from Essar’s YU and Equity Bank reaffirms Kenya’s status as the “Silicon Valley” of mobile banking and payments.
Over 70% of all households in Kenya use mobile money. Each mobile network operator offers a mobile money service. Safaricom and mPesa are the best known, but there are others including YU Cash by Obopay and it is becoming a very competitive market which is pushing providers to bring mobile money services to the next level in order to meet demand and compete for customers. Yesterday, YU and its innovation partner, Equity Bank, upped the ante by announcing new functionality made possible by offering mobile money customers the ability to access their service directly from a full service Equity Bank account. This is a concept that we at Obopay call a “mapped bank account”. It provides the customer with the choice of a full service bank account, complete with mobile money services, with the ability to transact directly from that account, rather than through a separate mobile account. .
How does Mobile Money work in Kenya?
Mobile Money is transforming Kenya. 3 years ago it was a typical cash centric emerging market whereby most consumer transactions were cash based. Then almost overnight things changed when Safaricom offered its customer’s a “mobile wallet” to store money, send money, and pay for things directly from the phone. Other mobile operators have now followed suit and provided similar capability, and it has become a must have service.
Here is how it works – users sign up at a retail location where they previously went to purchase mobile phones or prepaid airtime minutes. Once enrolled, they can load money directly on their phone by giving participating agents/retailer cash over the counter. If they need to withdraw money, they can go to any authorized agent/retailer and get cash out of their mobile phone account. The first thing people in Kenya did was use the service to send money to family members – lots of people work in the cities but have family members in rural areas. Since there are retailers supporting this everywhere – it was the fastest, safest, and most reliable way to send money overnight. It started with money transfer but now people use their mobile money to buy prepaid minutes, pay bills, buy online, and buy at stores, as a way to save money and enhance their personal security by removing the need to carry cash.
Statistics from Central Bank of Kenya indicate that remittance flows in September, 2010, increased by 12.6 per cent to $ 58.6 million, from $ 52 million in August 2010 and were 17.1 percent above the cumulative 12 months average of $ 50 million a month.
What is a mapped bank account?
Before today, most Kenya users of mobile money were limited to using money in the mobile accounts. If they had bank accounts it wasn’t easy to use the money they already had in the bank. Also, if they wanted to “upgrade” and have more services from a bank, which many of them do, that wasn’t easy.
Some providers allowed electronic transfer between bank accounts and mobile accounts – but that could take an extra step, take hours or days, and could involve extra fees. The term we use at Obopay for this type of money movement is a “linked bank account” or a “linked card”. This is very useful since users may want to have my different accounts “linked” so I can move money between them.
At Obopay, we think “linked accounts” are necessary – but insufficient for many users. Users want the option to have full service banking and to transact directly off of their preferred account – and we deliver it via a “mapped bank accounts”.
A mapped account is a traditional bank account “mapped” to my mobile. The account has all the features the bank wants to offer AND allows the user to receive, send, or pay directly from that bank account. In addition to allowing the user to also have direct access to traditional bank accounts from their mobile. It also allows instant money movement between the traditional bank account and the mobile account. So if a user wants to use both – then they have lots of options in how they manage and spend money.
Obopay, the global leader in mobile payments, is an innovator in both mobile and mapped bank accounts. It is especially important in markets like Kenya where people often don’t live near banks. Now, with Mapped Bank accounts they can have all the services they need or want from a bank via a mobile phone.
Mobile accounts have brought limited banking to large underserved communities, mapped bank accounts in combination with mobile accounts will add full service banking to these same large underserved communities.
Obopay could not have accomplished this without great partners like Equity Bank and YU. We are proud to work with them to bring the full power of mobile and banking in an inclusive way.
Links to Press Articles
http://www.capitalfm.co.ke/business/Kenyabusiness/Banks-plan-to-tap-mobile-money-5135.html
http://www.businessdailyafrica.com/Corporate%20News/Equity%20links%20up%20with%20Essar%20for%20diaspora%20cash%20transfer/-/539550/1065390/-/sw7h4t/-/
December 3rd, 2010
Last week I was at the Gates Foundation’s Global Savings Forum. I participated on a panel which included Bill Gates and covered “New Partnerships for Technology-Enabled Financial Inclusion”. The interest from Bill and Melinda Gates was personal – they had witnessed how people living on $2 a day or less around the world need an easy, safe and affordable place to save and build financial security for their future. Bill and Melinda knew that to make global financial inclusion a reality, they would need many organizations working together from both public and private sectors – therefore the Global Savings Forum was established.
Ignacio Mas, Deputy Director of the Financial Services for the Poor at the Gates Foundation, moderated the panel. Panelist included Bill Gates and luminaries from different types of organizations; Ignacio challenged us to speak frankly about partnerships needed to reach and serve the poor. Not a surprise that 3 of the 7 panelists – Michael Joseph (Safaricom CEO), Dr. James Mwangi (CEO Equity Bank), and myself - are directly involved with mobile payments in Kenya. Kenya is the Silicon Valley of Mobile Money – where 14 Million of the 39 Million Kenyans have mobile money and use it in their daily lives.
Bill set the tone by making it clear that “technology should be able to help the poor participate in the greater economy”. Michael Joseph emphasized the importance of the mobile carrier – who has distribution that is key to reach, and customer trust that is key to adoption. Dr. Mwangi believes mobile is changing banking in a big way and the partnerships between banks and mobile carriers bring scale and cost efficiency. Interestingly Equity Bank has partnerships with at least three mobile carriers in Kenya – including Safaricom(mPesa) and YU (YUCash by Obopay).
Equity and Safaricom talked about their partnership around a co-branded savings product in Kenya. “Strategically working with Safaricom was a no brainer. This is one of the best decisions Equity Bank made!”, Dr. Mwangi told the group. Michael Josephs agreed. Yet it was clear that the two of them had to be heavily involved in forging the terms of the agreement over many many coffee meetings.
I advocated for an open collaborative model, and emphasized that scale will come from a rich ecosystem of partners. A question from the audience was – “who should get it started then?” My answer was that there is no right answer except whoever starts it needs to be bold and be a market maker. Then build an ecosystem around what they are doing. Safaricom did that in Kenya.
In general, we find that our partners have been successful because they recognize the importance of being an early movers and taking the market making role. More and more they understand early that it is an ecosystem they are building and move quickly to recruit local partners who share their desire to scale.
We see this happening everywhere we work in the world. We are partnering with mobile handset manufacturers, non-bank financial providers, and retailers. It is a whole new ecosystem unfolding around mobile money. This ecosystem creates greater reach, a fuller range of offerings, and encourages innovation in the mobile money space.
Certainly, there is a tremendous need for these solutions. Globally 5 billion people have phones, but only 1.5 billion have good access to financial services. Those people still depend on cash, a costly alternative where studies have shown that as much as 20% of the cash is lost or stolen. This impacts families, small businesses, surrounding communities, and hampers economic development. It was clear from this meeting that Bill, and especially Melinda, have a real commitment to create technology-enabled savings for those who need it most. And that commitment will certainly accelerate financial inclusion around the world. Bringing together key players from all over the world is certainly a great beginning. It was clear that the Gates will keep a focus on the very bottom of the pyramid – on those with the greatest need. As you know from these posts, it’s a passion of mine and one of the clear goals for Obopay. I was honored to be part of their first Global Savings Forum.
November 23rd, 2010
Obopay’s CEO and Founder, Carol Realini is featured participant at the Global Saving Forum which is taking place today under the sponsorship of the Bill and Melinda Gates Foundation. You can view Carol’s presentation from the event and a white paper that Obopay is publishing in conjunction with the event at the links below:
Global Savings Forum Obopay White paper:
http://slidesha.re/d81QMA
Carol Realini’s Presentation from the Global Savings Forum:
http://slidesha.re/8ZZ68h
November 17th, 2010
This week I have been invited to share my views on how to expand global financial inclusion in a Global Savings Summit www.gatesfoundation.org/financialservicesforthepoor/Pages/global-savings-forum-2010.aspx which is being sponsored by the Gates Foundation. Bill Gates will be participating, listening and probing, to see how his organization can accelerate the efforts to create global financial inclusion. In this blog post I have summarized the points I intend to make at the Summit. In subsequent posts I will tell you how these ideas were received and, later, go into each point in more detail.
As you know, our quest at Obopay is to use the ubiquity of mobile phones to deliver financial services to those who have traditionally been underserved. We do this in partnership with mobile carrier, banks, mobile phone providers, and retailers. Interestingly, our partnership with each of these players has given us a unique insight which is that Collaboration is critical. An open, trusted, scalable and interoperable model is essential to maximize reach and deliver the broadest range of financial service offerings. Also that UDI and disbursements will ensure key cost elements are reduced and drive larger adoption – accelerating the “network effect” for those with the greatest need.
I have always believed that an Open Collaborative Model will achieve the benefit of more financial offerings and more choice when branchless banking scales. It is certainly where I have seen the most success:
- Interoperable multiple mobile banking/payment providers. It is essential to have multiple providers which include both bank and non-bank participants. If they interoperate (allow payments between their respective participants) this will drive greater adoption and usage, much like carrier-based text messaging (SMS) enjoyed when it became interoperable. It is essential that these players recognize the tangible benefits that accrue to the market as a whole, while benefiting each of them individually.
- Broadbased Agent Networks with connections to traditional banking and payment infrastructure. Agent networks need to reach people where they live and work and connect to the traditional banking and payment infrastructure. Financial solutions are not silos. Much like the internet, the value increases with the number of participants and contributors. Agent networks are critical to reach the underserved; traditional connections are key to the participation of the traditionally served community.
- Open Access. It is important to offer choice and encourage innovation in financial services. An open “marketplace” or “appstore” for Mobile Financial Services that gives the users choice. All people deserve access to quality and choice in their financial services. Open approaches will encourage innovation.
- Merchant acceptance interoperability. Building enough places to pay is essential for the growth of mobile financial services. Small and micro business adoption is essential to usefulness. Those businesses benefit more if they are able to serve more of their customers – therefore merchant acceptance of multiple mobile bank solutions will increase value to the SME and value for users.
Such a model empowers life and work by making financial services more accessible and affordable while providing a full range of offerings that are user focused even in the most challenging market scenarios. Users can start with simpler, immediate needs and graduate to savings, micro loans and micro-insurance products.
Once a network is established (critical mass of agents, merchants, consumers, financial offerings), the Open Collaborative Model will encourage highest value, more choice, more innovation and more utility.
There is great interest from the private sector in investment for mobile financial services. Yet these investments, absent an open collaborative approach will achieve only a fraction of their potential. In a world where half the adult population lacks affordable and convenient access to simple banking, we owe it to the underserved to move quickly to this model. What is at stake is inclusive growth and empowerment of the poor.
I look forward to exploring these ideas with you in the days and weeks ahead, and I welcome your comments and thoughts in the comments section below.
November 17th, 2010
Seems like more US mobile payments announcements are happening – Do you agree and what does this mean?
I agree. All year the number of mobile payment announcements has been on the increase. Last week was an especially hot week for rumors. It is increasingly confusing – what is happening, what does it all mean? Therefore I am writing a series of blogs to explain the market in a way that non-mobile payment specialists can understand. That way as you read news and other commentary it will provide a framework for what is going on. In some parts of the world mobile payments have already gone mainstream, but the US is behind. I expect in the next few years that will all change.
But to specifically answer your question about what it means – it means that mobile payments are happening in the US and it will be big.
What is Apple up to? Are they interested in competing with Visa or Paypal?
This will be a long answer but worth it…so bear with me while I talk about Apple.
Apple is a clear market maker in “Open Mobile” (call it what you want – mobile 2.0, social mobile, convergence of internet and mobile – I call it Open Mobile). They took on that role with the success of the iPhone and App Store. Others had to follow – Android, Windows, Blackberry etc. Apple led the way and showed everyone else how it is done.
Apple for a while has been rumored to be interested in and working on mobile payments. This is very big – especially given the strength of Apple’s great innovation track record. So when they talk about getting into mobile payments – that is big news because they could have that same kind of influence they had with Smart Phones – change the game and then everyone else has to catch up.
Really, Apple is already doing mobile payments and has been since they launched the iPhone. Their solution was built on an existing payment relationship – iTunes. Most of their iTunes users long ago set up an iTunes account to download music on the web. As part of this account, they probably linked a payment card (credit or debit) and may have loaded value from an iTunes card they bought at a store. Since they have so many users and music downloads – the volume is very high and the users trust this as a reliable, easy, fast way to pay for music, games, and other digital content. It is very big (160M users have cards on file, volumes are massive) and it is done globally. An iTunes account is used for music on an iPhone or an iPad. But in addition, Apple has begun to open up its payment platform and make is accessible to others as iTunes users have begun to use it for purchasing applications from the app store. Again – it’s easy, users do it all the time.
What else might Apple do?
They are a great innovation company – and mobile payments are all about innovation. Really hard to predict exactly what they will do but there has been two separate waves of rumors – one is that they are going to launch something around proximity payments via NFC, the other rumor is that they may make a bigger play in digital content payments by doing something with mobile carrier billing payments.
Can you say more about Apple and NFC?
NFC is where the consumer can now “wave or touch” their phone in a real world situation to make a payment. This means there will be a special chip in your phone and that chip will be able to talk to something else – a merchant terminal (where you swipe you card today) might be modified, or some other new kind of machine or display will allow you to do transact by waving or “touching” your phone. Another phase used for this is contactless payments – called this since these systems usually work when you are close but the devices don’t actually have to touch. It is better than Bump or Bluetooth for some applications because it can be faster, more reliable, and more secure. That being said – it requires a lot of physical infrastructure for it to be useful in enough places for anyone to care. And you have to have a new phone that has the right hardware and software.
When Apple puts the NFC chip in their phone and starts to build their own applications or encourages others to build applications – then things could happen quickly. Just like the iPhone broke down the mobile carrier’s “walled garden”, this move could open up payments and they could help create new business models for in store payments. They could also couple this with location based ads and other applications. Apple drove the development of new business models with the music and smart phones – depending on what they do they could change the rules by which different players interact to do payment and commerce. So they have the potential to move the NFC world forward significantly by developing a new tapestry of the hardware, software and business models to move it forward.
This is what is needed since NFC technology has been around a long time but mostly in pilot because nothing has ignited the market. And since the infrastructure will cost Billions – someone really needs to get things moving to make it happen. (Obopay works all over the world and in only a few countries do we see scaled NFC applications. Most places in the world it is all about remote payments.). Apple moving into this space should ignite the market – and get lots of folks moving faster. But as it moves faster it will be much bigger than just Apple.
So is mobile payment in the US all about Proximity Payments and NFC?
Here are things to remember about NFC:
- Apple is not the only company that can ignite the market. There is a rumored that three of the four major Mobile Carrier will form a new company to work together on making this happen here. This announcement and their combined investment can get things moving – but only Apple, with the success of the iPhone and now the iPad is the leading Open Mobile innovator. So Apple’s moves will have a particularly powerful impact. Some players won’t take a Mobile Carrier JV as seriously because those company structures are more complex and have failed in other places in the world. I personally take both things seriously and think they both have lots of potential. Of course they are other large players, like Google or large merchants, that can make a move and have a big impact also.
- NFC takes time – it is a massive physical infrastructure upgrade and will require a new ecosystem for payments to be defined and successfully rolled out. Japan – where it launched many years ago (date?), is just beginning to see adoption. There it was used primarily for convenience stores and trains – where time is of the important and you have smaller value payments. So it will be big and it will take time. In the US we have some of the physical hardware already – because we already have many merchant terminals accepting NFC cards. That being said there is still work to make sure the business relationships and payment infrastructure to leverage the card based solutions in mobile.
- Since Open Mobile is changing everything, NFC may not be used as much as some predictions by market analysts. Some things that are proximity may move to remote. Just like the internet moved lots of in store shopping to web shopping. When we have all kinds of payments and applications on our phones – some of the things we buy standing at a Register or a shopping line, may move to remote. Definitely when you buy remotely but maybe even in a store – we may not have to go through the today checkout process in the future. Sounds futuristic but we have all the building blocks today to make lots of changes in commerce.
- The same technology can and will be used for non-payment activity also. An example is mobile boarding passes. Some airlines allow you to download your electronic boarding pass and then you take a mobile bar code displayed on the screen to check in or when you board. This could also be done with NFC solution. In Japan you can use NFC to walk up to a poster and hold your phone and you can get more detailed product information.
So Proximity and NFC will be a part of mobile payments, but this will take time. In the meantime there are many other categories of mobile payments; remote purchase of digital content, buying from App stores, buying on the internet, buying from a mobile application, paying bills, texting a donation, paying a small business remotely and person to person transfers. All of these will be big and those will most likely be mainstream long before the physical infrastructure for NFC is fully built out in the US.
What about the latest rumors?
Last week Boku was rumored to be in conversation with Apple and Google. Speculation is that there is a potential acquisition by one of them that will happen soon. Boku is not the only company in their business, there are others - Zong and Bill to Mobile to name two others. These companies specialize in allowing users to use their mobile phone number to purchase digital content on the web using their phone number and their phone bill. It is a simple check out, simpler than putting card information into the website, and then the user gets the item immediately. The user pays later when the charge shows up on their phone bill. Now that people are buying digital content directly from their phone – the potential is the same is to do it all directly from the phone.
So would Apple or Google buy one of these companies? Not sure. So what do these companies do?
- They really aren’t exactly payment companies. They are gateways to mobile carrier billing for now. But this is important since people want to purchase digital content and this is a really easy way to do it. The mobile carriers get additional value added service revenue whether they are involved in digital content distribution or not. It also is great because these distribution and payment systems can be international. A buyer can be in one country and the digital content creator can be in another. It can cross boundaries. It does require lots of relationships behind the scene – but once they are established, it all works. The fee paid the mobile carrier varies depending on where you are in the world – but in our country it is probably as high as 35%. Also the content provide payment is delayed – again differs depending on where in the world. But it can be 45 – 120 days before the content provider gets the money. Still it is a benefit for them since it increases volume significantly.
- This mobile payment application is helping create consumer behavior around using phones and phone numbers to buy things. This can be built on by other solution providers – since consumers understand how to do it and that it works – it builds trust and understanding. Since this method doesn’t work for everything – like buying more expensive items or physical goods- providers that support that will have less training and evangelizing to do. In fact, consumers will start asking for this.
- These solutions aren’t really that innovative in that they have been available in the market for some time. They are just new to us and are gaining popularity. In Korea, it was started by the mobile carriers developing systems to do this but they were spun out and formed independent companies. When I visited Korea in 2008 the two companies that did this told me that 90% of all digital content on the web is purchased. Their economics are more favorable to the content providers and I think that is partially why it has become so dominate.
A few weeks ago AT&T announced that it will enable Boku, Zong and BilltoMobile begin interfacing directly with the AT&T billing system. Previously their integration with AT&T were through premium SMS systems which were less reliable. This is an opening up of carrier billing which will help these solutions grow.. Apple and Google partnering with these companies would increase their role in mobile payments for digital content. Apple or Google could also replicate what those companies do, but it takes time to build the mobile carrier relationships around the world. Because of the economics of carrier billing, this solution won’t really work for non-digital content purchases or digital content purchases that is very margin sensitive.
What are the take away’s
What Apple does is important but we will have to wait beyond the rumors to see what happens. I will say that there are many large opportunities for mobile payments and it is not just about digital content or proximity payments. There is significant opportunities in remote shopping, small and medium business, and money transfer. Just a few numbers for you to keep in mind.
- Over $75 Billion in money exchanged between families in the US alone will quickly go mobile
- 70 trillion transactions per year that are cash and check today will quickly go mobile
- 80 percent of sellers of goods and services are underserved today without access to digital payment acceptance (credit/debit card and electronic check acceptance). Huge opportunity for mobile payments
These areas are all where P2P payments come into play and will prove to be a large market opportunity too. In markets where P2P is fully implemented it represents over 50% of the mobile payment transactions. Users want P2P for money transfer, casual payments, payments to individual merchants, cross border remittances and check replacement. This is a big opportunity and right in Obopay’s sweet spot.
Back to Apple – they are clearly already big in mobile payments with iTunes and the App Store. They are going to do more – most likely a bigger play in online payments and in store payments, and they are not the only big player that is actively looking at this space. I expect Apple’s focus will be as it always has been – on innovation and delighting the Apple customer. What they do, will make others move faster. That is their role in Open Mobile.
Two more blogs in the works; one on the rumored AT&T, Verizon, and T-Mobile JV, the other on segmenting the mobile payment space by types of users and uses.
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November 9th, 2010
This week we announced new functionality for our Mobile Money for Banks offering. The announcement broadens the scope of mobile transaction capabilities for banks and their customers. The new capabilities are based on the feedback and requests that we have received from the most active mobile money users of our service, and from the bank partners that we have been working with. We have continued to get great feedback on the new capabilities since they have become generally available, and we welcome your feedback regarding what you would like to see from our service and how you would like to use it.
The new capability for Mobile Money for Banks include first-of-its-kind instant mobile transfer capabilities between accounts at different banks, get paid tools including text-to-donate and text-to-pay and features that make it easier for small businesses or even individuals to accept electronic payments.
The new functions empower users with the ability to transfer money between banks instantly, and accept card payments and electronic checks. This is especially important for bank customers that represent small businesses or organizations, or who need to get paid as individuals and who have been unable to accept electronic payments due to high fees, start-up costs, or denial of card services by their banks. The number one request we have gotten from users interested in our service has been for solution that enable users to accept card payments for personal and small business payments, followed by the need to get instant access to the money the are sent. This is what our new capabilities address. There are currently 24 million individuals just like the users who have asked us for this functionality who need to get paid for goods and services, but who have not been able to accept electronic payments according to the Philadelphia Federal Reserve. While less than 30% of all small businesses accept any form of electronic payment, the new functionalities of Mobile Money for Banks allow any small business or individual to get paid electronically via theirs and their clients mobile phones. This latest addition to our Mobile Money for Banks offering allows the banks that service these users to work with Obopay to bring this capability to market quickly and easily.
Read the full release here.
September 29th, 2010
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