Thursday, March 08, 2007

GCash in other Markets?

I have absolute respect for the results that have been achieved by dedicated people in the Philippines to deploy excellent solutions. In many ways the solutions deployed by Smart Communications (Smartmoney) and Globe (GCash) have set benchmarks for other organisations to follow. Recently, GCash started a concerted drive to bring GCash in the same or similar format to other markets. I believe that the implications and challenges associated with this should be highlighted.

GCash is a Structured SMS, predominantly closed payment solution, focused on a large under, or un-banked population in the Philipines. It provides for the creation of an electronic wallet that some-one can access with their cellphone by sending "code-words" in open SMS commands. The solutions security is based on a "M-PIN" (that is often stored on the cellphone in the open), limits in terms of transactions and the local Philippine Identity document. The operation in the Philippines is connected via participating banks in many other countries. These banks provide a mechanism for people in these countries to send money to electronic wallets in the Philippines. It must be noted that these banks do not operate e-wallets, nor are the G-cash functionality available in these countries.

The problem with proposals to deploy GCash in other countries (as it was done in the Philippines) are the following, and prospective clients/partners, should consider these carefully prior to engaging with Globe:

Regulatory complexities
The GCash deployment as is currently deployed operates under a special Central Bank dispensation (resolution 116 of 2005). Although the Central Bank of the Philippines should be applauded in giving the regulatory backing for a very good solution, this is not a given in other countries. As a matter of fact, it is most likely that this dispensation would not be given in many countries as the situation is totally different from one country to another. In regulating banking type solutions, a Central Bank should consider specific market realities, the potential risk, impact on other players etc. To assume that, because the Central Bank of the Philippines have allowed a GCash solution, other Central Banks would do the same, is a big folly. One should also take cognisance of the role, strength and maturity of banks in other markets and their right to objecting in other markets.

The role of banks (and Credit Card Associations)
The relative strengths and ability to innovate of banks in relation to mobile operators differ significantly from one country to another. The Philippine market with two very strong and innovative mobile operators is not a blueprint for every market. As a matter of fact, this is probably quite unique. It is our experience that one should consider a total eco-system of payments when deploying mobile banking. Banks in general will not allow a Mobile Operator to deploy a GCash type solution without a strong (and often effective) reaction. Participation by banks to send money to GCash in the Philippines should however be supported and banks should consider participating and assisting GCash in this way. (This should not be confused with deploying a GCash type solution in country)

Support considerations

It has been shown over and over again that remote support of technology solutions is something totally different to operating a solution in country. The fact that GCash is being operated successfully in the Philippines does not mean that it can be replicated into another country. As a matter of fact this is highly unlikely. The skills required to support and maintain multiple different technology solutions, in different time-zones with different languages, require a totally different organisation, set-up, managed and organised in a totally different way. We at Fundamo for instance, have well defined support roles, service levels measurements and escalation mechanisms in place. The version management of our software is carefully documented and controlled so as to ensure that we know exactly which version of which module is in production with which client. Evaluating operational excellence does not say anything about ability to provide technical support.

Security dispensations
It is unlikely that the security dispensation deployed at GCash will be acceptable to other markets (and specifically to mature banks). The fact that the M-PIN remains resident on the phone after the SMS has been sent, that the M-PIN is often in the clear will not be acceptable to many banks. Security management that is heavily dependant on the availability of a general Identity Document can also not be deployed in many countries where this is not the case.

Consumer behaviour
Philipino’s are famous for their SMS ability. Manila is often referred to as the SMS-capital of the world. The willingness and ease with which Philipino’s adopted a keyword paradigm based on open SMS’s for mobile payments will not necessarily be replicated in other markets. It is our experience that (especially when payments and money are involved) that consumers requires usability one level up from SMS’s. Prompt’s like “Are you sure”, more intuitive inputs and online support (like “invalid account number”) are critical to ensure adequate adoption. Porting a solution that works in the Philippines “as-is” without due consideration of consumer behaviour cannot be recommended.

Even if a client is interested in deploying a GCash like solution (e-Wallet, with an exemption from the Central Bank), a solution provider should be used with a track record in deploying solutions in different countries and time-zones. We at Fundamo have relevant expertise, an understanding of different behaviour in many countries and the ability to deploy legal solutions given different central bank dispensations. It is important to deploy mobile banking solutions with a proper understanding of local realities as well as what is possible with technology.


Anonymous said...

Got nice one there. Actually it should be GCASH as one word without a dash. That is a common error which I am guilty with.... :)

Anonymous said...

Yes, its the fault of G-PASS! Thats sound GCASH.

Hannes@Home said...

Thanks, I will fix the article. Also thank you for reading my blog... and commenting

Anonymous said...

Just to let you know that banking transactions that use the GCash platform now use the downloadable STK menu-based system (not the previous SMS system) and the M-PIN is no longer stored on the phone and is masked similar to ATM transactions. Check out our videos (including the latest Text-A-Payment video) to see how this works at

You might also be suprised to learn that MAXIS, the largest mobile phone operator in Malaysia, has already linked with Globe to offer international remittances directly between MAXIS subscribers using the MAXIS mobile wallet and Globe GCASH users in the Philippines. Several countries, including Indonesia, are now looking at offering similar services.

Hannes@Home said...

John, this blog was written about a year ago. At that stage, I believe my assertion about the M-PIN in the clear was correct. I must congratulate you for deploying a SIM based solutions as this is without doubt the most secure mobile payment method. Also see my blog-entry on this:

Regarding Maxis - I am not surpised. As a matter of fact I know about it... and GCASH must be congratulated.

Would love to meet you John. Would you be at 3gsm in Barcelona?

Anonymous said...

Sorry I was not able to make it to the GSM meeting in Spain but I do hope we can meet one of these days since I think we share a lot in common. Keep up the good work in documenting and pushing the industry further on mobile phone banking and mobile payment solutions!