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FEATURE M-PAYMENTS
their ATM networks, or selling the networks that, in the payment space, credit cards are
to third parties who charge substantial sums unknown to the vast majority of the world’s
Targeting the unbanked
for each withdrawal or transaction. population. Payment cards in general are
Once they’ve got rid of cash, their next unknown. They are all largely cash-based M-Pesa was launched by Kenyan operator
overhead is the creation, distribution and economies. And the banking systems aren’t Safaricom and Vodafone in February this year.
management of the cards. And if they can sophisticated. Mobile payments will be funda- Targeted at the nation’s unbanked population,
somehow put all the information they have mental to most people in Africa, for example. who either lack physical access to a bank or who
on the cards that they issue onto some part If electronic payment is going to be done at have insufficient income to open an account,
of a mobile phone or SIM card, then they’re all in Africa, it will be through the mobile the service enables transactions over mobile
cutting a big chunk out of their cost. Further- phone because the [banking] infrastructure phones.
more, credit card companies are interested in just isn’t there.” Users register at an M-Pesa agent by giving
growing their share of the small transaction Alan Goode agrees. “In the developing their mobile number and they are given an ac-
market, to which many people think m-pay- world it’s a totally different ball game. There count they can deposit cash with a local agent,
ment is most suited. is market that the operators can go out and send money to other users—whatever network
Today’s dream of the m-payment future grab. Look at Vodafone and M-Pesa (see box) the recipient is on—by SMS, withdraw cash from
remains fairly grand. Parties from both sides They are able to use that in the developing an agent or recharge their prepaid accounts or
still believe that mobile phones will become world in partnership with someone like Citi- those of other Safaricom customers.
central to payment in one way or another. bank to offer banking services and payment The service evolved from a pilot in 2005
One of the most popular scenarios involves services where there are not these services run by Vodafone and the UK’s Department for
Near Field Communications (NFC). NFC cards at the moment.” International Development.
such as the Oyster used on London’s transport Simplicity is key when launching these The maximum transferable sum is $500 and
network are becoming increasingly popular services in developing markets, not least be- in August this year, the service was extended to
in transit applications. The thinking runs that cause many of the handsets being used have allow Vodafone’s UK subscribers to send money
if NFC capabilities were built into handsets, limited capabilities. This, says Jote Bassi, back to Kenya. Vodafone expects the service to
those handsets could be used for contactless, marketing director at SMS services outfit roll out globally.
point of sale purchases. Anam, is why SMS—the mobile workhorse—is
Alan Goode suggests that operators could the ideal payment application.
rent space on the SIM or handset to a financial Anam has developed a service that it rec- which can be done securely, and that phone
organisation which would then use it for its ommends operators target at the world’s vast has a contactless reader, then the consumer
NFC payment application. But it is not clear migrant workforce. Users register their bank can come up to that phone and treat it like
that the financial institutions would want details with Anam and receive a PIN code in a mobile ATM. The merchant can also act as
to strike deals with every operator in every return. A simple text message relays to the a top up station using the same technology.
market. they could, after all, simply strike service the amount of money the user wants Cash in and cash out. Those are the sorts of
one-time deals with the handset vendors. to transfer and the person to whom they want things we’re working on at the moment.”
With NFC, the problem of operator revenue to transfer it (who also has to be registered). U-paid’s Terry Trench backs simplicity as
stream remains. “The operators can’t gain in Given that many migrant workers want to send a starting point for m-payments, although
this scenario,” says Simon Cavill. “I haven’t money to unbanked relatives, the service can in his world view the key function to enable
seen a single business case that works.” transfer the funds to prepaid charge cards that is to let consumers use their phone to spend
In any case, the widespread deployment of can be used in certain retailers, or the funds directly from their Visa card.
NFC on mobile phones remains, by consensus, can be directed to a trusted party who does This month U-paid launched an SMS
several years away. Not least because opera- have a bank account. Operators, says Bassi, prepaid top-up service in Serbia that allows
tors and banks are not seeking one another will likely charge a premium on the message prepaid customers—80 per cent of the Ser-
out with any real energy, because they can- to win their share of the revenue. bian market—to increase their balance with
not seem to agree on the conditions of their This service has yet to be deployed so proof a single text message that initiates a charge
relationships. “In terms of who gets what of concept has yet to arrive. But it does high- onto their Visa card. It could just as easily be
when it comes to revenues,” says Goode, “It’s light the need for simplicity and the fact that, a bank account, says Trench, but Visa—which
still very much up for grabs. That, at the mo- as Simon Cavill says, “most people don’t want has 80 per cent of the Serbian credit card
ment, is a definite constraint on the widescale a bank, they want a payment method.” market—is a partner in the scheme.
adoption of any mobile payment scheme.” NFC, says Cavill, will find successful imple- Trench himself describes the service as
The grand vision, in the West, remains ex- mentations in these markets too. “What we’re “boring”—it’s just a top-up application after
actly that. In the m-payment sector in these seeing is that there is a huge play to be made all. But he is enthusiastic nonetheless, because
markets, “the mobile phone is subservient,” from merchants to have NFC terminals. Let’s he believes the service is setting a precedent.
says Simon Cavill. suppose I want to transfer money to someone In one or two years, ‘off-operator billing’ could
“In the rest of the world,” he says, “the in rural Africa. The only infrastructure there be used for more than just top-up. Mobile
mobile phone is the dominant device and it may be the guy who owns the local shop. If content, or utility bills (he hopes to persuade
has a key part to play.” the person in the shop has a mobile phone and Serbian utility firms to participate) could
He continues: “You have to remember that phone is linked into a payment switch, become part of the service. »
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