tag:blogger.com,1999:blog-381365342024-03-09T18:46:11.486-08:00Mobile BankingI am fascinated by the massive growth in mobile phone penetration globally. This must be one of the biggest social changes that humans were ever submitted to. I am sure that this social phenomena, will eventually impact the way that we trade and pay as well. This is what I am writing about. See disclaimer at the bottom of blog.Hannes@Homehttp://www.blogger.com/profile/05855107176790028364noreply@blogger.comBlogger538125tag:blogger.com,1999:blog-38136534.post-57726920876734545872014-01-14T22:11:00.001-08:002014-01-15T23:55:43.401-08:00The end of a Chapter<div dir="ltr" style="text-align: left;" trbidi="on">
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At the end of January I will sit at my desk at Fundamo/Visa in Cape Town for the last time. I have decided that it is the right time for me to start a new chapter in my life. One of the most important things in life, I believe, is to get your timing right. And now is the right time for me to leave, for me, for my family... but also for the company that I founded and that I care for so much.<br />
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Fundamo has now been incorporated into Visa, creating world-class capabilities to provide products and services to the under-served in emerging markets. The strategy going forward is clear, supported by the top executives in Visa. I leave Cape Town in the hands of an extremely capable management team, consisting of some of the most accomplished people in the industry. Their focus now is to deliver on the promise of a universal mobile payment eco-system for emerging markets in conjunction with and that will benefit all players.<br />
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I will remain passionate about the industry and bringing financial services to hundreds of millions of people that deserve better. It is impossible for me to not be after everything that I have seen and experienced. During the thirteen years with Fundamo, I have worked with hundreds of companies (both big and small), bringing innovative solutions to some of the most challenging markets. I have traveled to more than fifty countries and have met the most amazing people from very diverse cultures. I have had stimulating discussions with the most brilliant people on the planet, but have also been humbled by interactions with the poor and the under-served.<br />
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I will never forget having had the privilege of attending great events in the history of mobile (in Cannes, Barcelona, Davos, Cairo, Macau and many more), but I will also remember the amazing moments behind closed doors when we cracked complex problems, demonstrated a new feature to a client or negotiated key contracts. I have always thrived in teams and have fond memories working with others (from my investors to my clients and also my adversaries), but by far the most important: my colleagues from the early start on the sixth floor in Sanlam, through the many stages of growth and absolutely including the last phase in Visa.<br />
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I plan to take some time out to just reflect on life. I want to sleep more and travel less for a few months. During that time I am going to try and write more, learn a new language and re-learn to develop code. I want to re-connect with my family and re-discover the wine industry and cuisine of the Western Cape. I would love to stay in touch with all my friends and will try and attend a few conferences. I trust that God will lead me to my next challenge and I am looking forward to it.</div>
Hannes@Homehttp://www.blogger.com/profile/05855107176790028364noreply@blogger.com8tag:blogger.com,1999:blog-38136534.post-30136369879058966312013-10-22T11:42:00.001-07:002013-10-22T11:42:55.874-07:00Complex eco-systems only works in equilibrium. An argument for using Chaos Theory in Mobile Payments.<div dir="ltr" style="text-align: left;" trbidi="on">
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<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiZAFqTb5k8VAqBqksUAWSVblnzBg35gjaZmSyv32G7RlPHWwfeoK7KpqoXeWV_acYQ7ZSdZPH4jTMkEKIoSBVhTq22ESLe11YYBzMxW-BSbNdQWTYLwbEeBjPPxDcFKAACf1NF/s1600/Kellogg_BrainCoralXmas.jpg" imageanchor="1" style="clear: left; float: left; margin-bottom: 1em; margin-right: 1em;"><img border="0" height="251" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiZAFqTb5k8VAqBqksUAWSVblnzBg35gjaZmSyv32G7RlPHWwfeoK7KpqoXeWV_acYQ7ZSdZPH4jTMkEKIoSBVhTq22ESLe11YYBzMxW-BSbNdQWTYLwbEeBjPPxDcFKAACf1NF/s320/Kellogg_BrainCoralXmas.jpg" width="320" /></a>Equilibrium is a beautiful state for any eco-system to be in. In this state, all participants are participating and growing at the same rate. In a state of non-equilibrium, the dynamics are moving and some participants may eventually either die or be diminished to something much smaller. Equilibrium in small eco-systems with little participants can be achieved more easily, for instance by making small changes in some of the rules or contributions. The behaviour is also, most often, predictable. In eco-systems with many components and many possible combinations, it is often not easy to find a state of equilibrium. The behaviour is also often not predictable. Making a small change some-where can potentially lead to changes that was not easy to predict. (This observation is the basis of Chaos Theory).</div>
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The questions to be asked is, is mobile money eco-systems complex eco-systems (are there many participants - sometimes with unpredictable behaviour) and would we prefer mobile money eco-systems to be in a state of equilibrium. It is my view that the answer to both is yes. Unfortunately the complexity of the mobile money eco-systems (many participants, some behaving in unpredictable ways) makes it very difficult to ensure equilibrium. This in my mind is one of the biggest challenges in getting mobile money deployments to scale. Maybe we should apply some of the findings of Chaos Theory to mobile money?</div>
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Hannes@Homehttp://www.blogger.com/profile/05855107176790028364noreply@blogger.com2tag:blogger.com,1999:blog-38136534.post-80162052079669114742013-10-22T11:27:00.000-07:002013-10-22T11:27:00.295-07:00Mobile Money being used in retail applications.<div dir="ltr" style="text-align: left;" trbidi="on">
<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiniltOzuoZsxMZ7N0zIXV2S4cqABlsQOT13JE06rhoTydeh7iUxnBU5FOdYFAQm45XZpYTpb0JL2M02gbmLIpTXXscqA3UsgXhiEqnZ9HGQ9-cS4RhE4AvKCCeYSF_C_1ix7x1/s1600/network.png" imageanchor="1" style="clear: left; float: left; margin-bottom: 1em; margin-right: 1em;"><img border="0" height="224" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiniltOzuoZsxMZ7N0zIXV2S4cqABlsQOT13JE06rhoTydeh7iUxnBU5FOdYFAQm45XZpYTpb0JL2M02gbmLIpTXXscqA3UsgXhiEqnZ9HGQ9-cS4RhE4AvKCCeYSF_C_1ix7x1/s320/network.png" width="320" /></a>The spectacular growth of mobile wallets in emerging markets have been because of a big need in these markets. How to pay for things remotely (like airtime or bills), how to get money over a distance (like in remittances or person to person payments) and other challenges. As the penetration grew, more and more applications of the digital payment platforms were being developed - some of them very innovative.<br />
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Lately, there has been a drive to find solutions for using mobile to pay in a retail environment. These types of payments are mostly done in cash (and sometimes using traditional card solutions). While the existing solutions work well, they are still open to fraud and theft. Utilising the existence of many mobile money wallets in retail environments seems to be a logical next step. Many solutions have been deployed in this domain. Some have shown acceptable traction, but we are still waiting to see the big breakthrough. The challenge is to design a solution that is easy to operate, safe and fast. This is not so easy in a world where (almost) no phones have any NFC capabilities.<br />
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Some of the interesting or more relevant solutions that I am aware of are the following:<br />
Orange Money have partnered with Total in a number of countries to offer retail payment solutions in Total outlets. (Read <a href="http://ipcarrier.blogspot.com/2013/08/orange-partners-with-total-for-africa.html#!/2013/08/orange-partners-with-total-for-africa.html">here</a>). It is not clear how different this is to the existing Person to Person functionality. The most widely published example is the Lipa na mPesa service rolled out in Kenya. This service is build on some technology innovation, but it is the well-developed fee-structures and commercial framework that really makes this very real in Kenya. (Read <a href="http://www.safaricom.co.ke/personal/m-pesa/m-pesa-services-tariffs/lipa-na-m-pesa/lipa-na-m-pesa-customer-faqs">here</a>). An interesting innovation is the Imara card in Uganda (Read <a href="http://www.observer.ug/index.php?option=com_content&view=article&id=26185">here</a>), that can be linked to any of the mobile money schemes in the country. By swiping the Imara card, the customer is asked to authorize the transaction on their phone after which the payment is debited to the mobile wallet.<br />
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All of these initiatives are very interesting and most have a good chance to grow to critical mass, but the future sustainability is not clear.</div>
Hannes@Homehttp://www.blogger.com/profile/05855107176790028364noreply@blogger.com2tag:blogger.com,1999:blog-38136534.post-80405202937824801872013-08-22T09:08:00.003-07:002013-08-22T09:08:46.304-07:00Empowering women with Mobile Money. Enough research to support further investments.<div dir="ltr" style="text-align: left;" trbidi="on">
<a href="http://photo.blogpressapp.com/show_photo.php?p=13/05/24/2017.jpg"><img align="left" border="0" height="158" src="http://photo.blogpressapp.com/photos/13/05/24/s_2017.jpg" style="margin: 5px;" width="281" /></a>This was a blog that I was planning to write for a long time, but every time that I started, I realized that I cannot do justice to this in a simple blog and then stopped. Tonight, I decided to post my incomplete blog-post anyhow. I have come to grips with the fact that one can only scratch the surface of this important topic. While mobile money have made big leaps and bounds in many markets, bringing this service to women has lagged because of specific constraints (like women not always owning phones or lack of education).<br />
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The industry have made big gains getting to understand the need and the benefits to women through the work of the GSMA mWomen Programme with support from Visa. <a href="http://www.mobilepaymentstoday.com/article/205073/Commentary-Empowering-women-one-mobile-phone-at-a-time">Research reports</a> covering these aspects have been released conducted in five key countries Indonesia, Kenya, Pakistan, Papua New Guinea and Tanzania. It is worthwhile to have a look at some of the clips posted where women talk these studies (Video for <a href="http://www.youtube.com/watch?v=igvGUUx1y_Q&feature=youtu.be">Indonesia</a>, <a href="http://www.youtube.com/watch?v=6CHOcXfQ6iE&feature=youtu.be">Kenya</a>, <a href="http://www.youtube.com/watch?v=CcJh0xj974M&feature=youtu.be">Pakistan</a> and <a href="http://www.youtube.com/watch?v=wu8cg7YqZFI&feature=youtu.be">PNG</a>). USAid also performed a study looking at the access that women have to mobile technology in Afghanistan. (Read<a href="http://www.usaid.gov/sites/default/files/documents/1871/survey_afghan_women_mobile.pdf"> here</a>). This report is particularly interesting to read. It does not refer to mobile money, but talks about many other aspects ranging from being informed and connected to security and health care benefits.<br />
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With Mobile technology women are empowered to entry into the financial mainstream much more easier. They now get access to life-enhancing services such as savings, payments, health-care, education, and entrepreneurship. However, the research show that the gender gap in mobile phone ownership and usage still reduce the access that women have in many countries to these benefits. In order to achieve the full potential of the role mobile technology can play in women’s empowerment globally, it is critical that service providers understand what women need and design products that effectively reach this audience.<br />
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Some of the <a href="http://www.mobilepaymentstoday.com/article/208191/Commentary-Empowering-women-with-mobile-money-the-Kenya-report">specific findings in Kenya</a> (one of the more mature markets) are that younger women generally valued the ability to use mobile money to send money to their mothers more. (They view their mothers more reliable and likely to save for the good of the household than their fathers.) Married women also appreciated that mobile money provided them the facility to save money separately from their husbands. For some users, convenience is a powerful means of improving their security as it reduces the likelihood of being mugged.<br />
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In the case of a <a href="http://www.mobilepaymentstoday.com/article/207881/Commentary-Empowering-women-with-mobile-money-the-Tanzania-report">country like Tanzania</a> for instance women generally feel that using mobile money improved their lives (either in their personal capacity or in cases where they run small businesses) because of its ease and convenience. In a country where almost three quarters of the population relies on agriculture-related activities for income, people often keep crops such as maize as savings. The process of liquidating these assets when there is an immediate financial need has been improved through mobile money capabilities.<br />
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Hannes@Homehttp://www.blogger.com/profile/05855107176790028364noreply@blogger.com1tag:blogger.com,1999:blog-38136534.post-88259539998274435542013-08-08T20:46:00.001-07:002013-08-08T20:46:13.299-07:00Secure element on the phone. The implications of architecture and brand.<div dir="ltr" style="text-align: left;" trbidi="on">
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<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiFSAEarjQcnLjziS_dZ751LZldSYcDEdc4Q72TUCZvxu1Fx0nOh6B2ZlDce7tahWdphyt4TSxz0wSeSZ3mbpQgbgpd-fQjY__FQysb7b48mZc5Hny6Tn2dACpyP-NCXQbPaY9f/s1600/Google-Wallet%25E2%2580%2599s-security.jpg" imageanchor="1" style="clear: left; float: left; margin-bottom: 1em; margin-right: 1em;"><img border="0" height="251" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiFSAEarjQcnLjziS_dZ751LZldSYcDEdc4Q72TUCZvxu1Fx0nOh6B2ZlDce7tahWdphyt4TSxz0wSeSZ3mbpQgbgpd-fQjY__FQysb7b48mZc5Hny6Tn2dACpyP-NCXQbPaY9f/s320/Google-Wallet%25E2%2580%2599s-security.jpg" width="320" /></a>In previous posts, I have discussed the implications of placing the secure element in the phone. (Read <a href="http://mbanking.blogspot.com/2013/03/some-implications-of-placing-secure.html">here</a> and <a href="http://mbanking.blogspot.com/2013/06/secure-element-on-phone-further.html">here</a>).I thought that I have said what needed to be said, but having given it some more thought, there are even more things to be said - hence this post.</div>
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One should actually think of secure elements as brands. In the old world, we typically know that we can trust a payment-instrument because we can see a brand that we associate with trust/security (like Visa). We can also see that this brand is connected or integrated with the payment instrument. It is difficult to remove the brand from the instrument. As payments become virtual, this is getting difficult. Even if you see the brand, how do you know that it is attached to the payment instrument (secure element). It could easily be some-one making themselves look like the secure element.</div>
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Placing the secure element in the phone means that you will have to start trusting the handset-manufacturer's brand for payment. Maybe not a bad thing, you may say, but think of the implications if you would like to claim from Samsung if a fraudulent payment happened. Where would you go, and would they actually want to help you? </div>
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At least by placing the element on the phone, the consumer still have something physical to represent the payment instrument (their phone). Just think of the implications when the secure element sits in the cloud... somewhere. Like some of the following examples (Read <a href="http://www.finextra.com/News/FullStory.aspx?newsitemid=24888">here</a> and <a href="http://www.nfcworld.com/2013/02/27/322783/bankinter-develops-nfc-payments-service-that-eliminates-need-for-secure-elements/">here</a>). But this is probably another post.</div>
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Hannes@Homehttp://www.blogger.com/profile/05855107176790028364noreply@blogger.com2tag:blogger.com,1999:blog-38136534.post-3392709777980510772013-08-06T03:41:00.002-07:002013-08-06T03:41:37.405-07:00Better than cash alliance deserve support<div dir="ltr" style="text-align: left;" trbidi="on">
<a href="http://photo.blogpressapp.com/show_photo.php?p=13/05/24/2015.jpg"><img align="left" border="0" height="158" src="http://photo.blogpressapp.com/photos/13/05/24/s_2015.jpg" style="margin: 5px;" width="281" /></a>The <a href="http://betterthancash.org/">Better than Cash Alliance</a> was founded by a number of Non-Profit Organizations (UNCDF, Ford Foundation, Bill and Melinda Gates Foundation, to name a few) and a few Companies (Visa and Citibank). The objective of the BtCA is to provide expertise to help with the transformation to digital payments. It is the view of the alliance that all will benefit from this transition (governments, the development community and private companies).<br />
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Governments and other parties have been urged to join the alliance. At this stage, the alliance have fourteen members and hope to entice more to join.<br />
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At a breakfast hosted by Bill Gates, the benefits of a cash-less economy was discussed (Read <a href="http://www.businessweek.com/articles/2013-01-23/bill-gates-hates-cash-dot-heres-why">here</a>). There was general agreement that numerous benefits can be achieved, but five specific benefits were highlighted. These were (quoted from the article):<br />
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<li>Transparency: Less corruption and theft when payments can be easily tracked. </li>
<li>Security: The money gets where it’s supposed to go.</li>
<li>Financial inclusion: Electronic payment is a way for unbanked people to establish a record of on-time payment of their bills. </li>
<li>Cost savings: Moving physical cash around is costlier than zipping electrons. </li>
<li>Access to new markets: This benefit is mainly for providers of financial services.</li>
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The ideals of the alliance is well worth supporting. Let us hope that many organizations become members and that this is not just words, but something that can be put into practice.</div>
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Hannes@Homehttp://www.blogger.com/profile/05855107176790028364noreply@blogger.com0tag:blogger.com,1999:blog-38136534.post-8244048295777847672013-07-27T14:46:00.000-07:002013-07-27T14:46:02.654-07:00Government policies that could reduce cash <div dir="ltr" style="text-align: left;" trbidi="on">
<a href="http://photo.blogpressapp.com/show_photo.php?p=13/05/24/2014.jpg"><img align="left" border="0" height="225" src="http://photo.blogpressapp.com/photos/13/05/24/s_2014.jpg" style="margin: 5px;" width="225" /></a>Cash is bad. This is the case for everybody involved with money. Managing cash is complex and expensive for consumers. Retailers have big overheads to secure cash and to reconcile payments with purchases. Governments lose tax because of grey transactions and banks have big overheads in dealing with cash. If this is the case, should governments not do more to make cash transactions less attractive?<br />
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The Central Bank of Nigeria has been extremely active in promulgating rules to reduce cash usage (especially in Lagos). Much can be read about the philosophies ans actions to create a "cashless Lagos". (For instance read this <a href="http://www.thisdaylive.com/articles/cbn-raises-daily-limits-for-cash-withdrawal-deposit/111760/">report</a>). The approach of placing limits on cash-transactions may not have the desired effect as the right eco-system may not exist to support a cash-less economy. Other central banks use the usual levers to try and change cash-transactional behaviour. These banks use interest rates, money supply and penalties to change cash-usage behaviour. This light touch, while probably the text-book approach may not have good traction fast.<br />
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I am a big proponent of taxing bad behaviour. Not only will tax generate revenue, but it will discourage consumers to change their behaviour. One should ask which actions taken by consumers will trigger more cash usage and one should then tax this (withdrawing cash from a bank or ATM, cashing in a check, doing a retail transaction in cash). On the other hand, one should look at behaviour that one would like to encourage and then reduce (or eliminate) tax of these activities (electronic payments, depositing cash into an account etc.). Unfortunately, because the latter is digital, traceable and known, these transactions are often taxed and the former not.<br />
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Hannes@Homehttp://www.blogger.com/profile/05855107176790028364noreply@blogger.com0tag:blogger.com,1999:blog-38136534.post-49187523204589791722013-07-27T14:26:00.002-07:002013-07-27T14:26:53.748-07:00Bitcoin in emerging markets<div dir="ltr" style="text-align: left;" trbidi="on">
<a href="http://photo.blogpressapp.com/show_photo.php?p=13/05/24/2031.jpg"><img align="left" border="0" height="183" src="http://photo.blogpressapp.com/photos/13/05/24/s_2031.jpg" style="margin: 5px;" width="275" /></a>I am far from being an expert in Bitcoin technology. I am also not the guy that is going to shout that this is the new uber-trend. For this I have been too long in payments and I understand the difficulties in getting something to critical mass. However, Bitcoins do have an interesting angle in the sense that it is extremely well-governed, without any-one specifically doing the governing. It is therefor very predictable (and thus stable). It does not take a Governor making a strange rule to change the direction of the currency as is the case in all other currencies.<br />
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In emerging markets where regulations are often the biggest inhibitor to innovation in payments, having a currency that is fully predictable could be a big advantage. No-one can therefor be blamed to reach out to Bitcoins as the possible solution to roll-out digital payment solutions in emerging markets. It were therefor not a surprise when the first Bitcoin-backed mobile payment solution was recently announced in Kenya. (Read <a href="http://www.wired.co.uk/news/archive/2013-07/09/africa-first-bitcoin-wallet">here</a>). Called Kipochi, the wallet is integrated with mPesa, allowing value to be transferred to and from Bitcoins. And this touches on the first of two major problems:<br />
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<li>Bitcoins have been successfully growing in the digital world where many exchanges exist to convert Bitcoins between other currencies and vice versa, but it will prove extremely difficult to build these exchanges in markets where the bulk of currency are still in hard cash. Not only will it be difficult to sign up agents that will be willing to convert cash into Bitcoins, but to do this legally at the same time. By transfering cash into a mobile wallet before it can be transfered to Bitcoin (as is the case with Kipochi) really limits the application.</li>
<li>As is the case with most new things, the ultimate take-up and growth of Bitcoins in emerging markets will be a function of how well it is understood and trusted. While new technology has been embraced in emerging markets (look at mobile phones for instance), I am not so sure if the Bitcoin paradigm (don't trust in dollars - or other government backed currencies, trust the system), will be naturally embraced in emerging markets. It will take a lot of education, I think.</li>
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Solving for the above in an effective way, will allow Bitcoin-backed payment systems to grow in emerging markets.<br />
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Hannes@Homehttp://www.blogger.com/profile/05855107176790028364noreply@blogger.com1tag:blogger.com,1999:blog-38136534.post-33089251789605443542013-07-27T14:08:00.002-07:002013-07-27T14:08:50.439-07:00What can one learn from Qiwi about payments<div dir="ltr" style="text-align: left;" trbidi="on">
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<a href="http://photo.blogpressapp.com/show_photo.php?p=13/05/24/2030.jpg"><img align="left" border="0" height="232" src="http://photo.blogpressapp.com/photos/13/05/24/s_2030.jpg" style="margin: 5px;" width="218" /></a>Qiwi is a very successful, Russian <a href="https://www.qiwi.ru/main.action">payments company</a>. (I am still trying to figure it out why it is called Qiwi and have a logo that make you think it is a New Zealand company). The beauty of the products provided by the company is the scope of the offerings (from virtual to mobile, it even recently start issuing Visa cards). <br />
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But it has not always been so. The consumer-base and transaction volume was initially built on providing payment services through kiosks. My information is that Qiwi currently run more than 200 000 kiosks predominantly in Russia and CIS countries. This is quite a unique situation. One sees kiosks in many places (shopping malls, bank branches and small retailers), but never has it been rolled out to be the back-bone of the growing business. So what is it that one can learn from Qiwi?<br />
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I would say that the following is important learnings:</div>
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<li>Roll out kiosks with a well-thought-out integrated transactional strategy. The services offered and how these are integrated in the back-office is critical to build a sustainable business.</li>
<li>Put a lot of emphasis on branding. It is important that the customer should be able to associate a service that is available at a kiosk with a well-defined brand. The brand-promise should be clear and must be delivered faultlessly.</li>
<li>Build other payment services around and in support of the kiosk. For instance, soon after launching the kiosk service, Qiwi followed this up with the Qiwi wallet that can be loaded at a kiosk, but can be used for payments remotely. This innovation lead to further brand re-enforcement, client-loyalty and an increase in traffic.</li>
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Hannes@Homehttp://www.blogger.com/profile/05855107176790028364noreply@blogger.com0tag:blogger.com,1999:blog-38136534.post-4358736620163265612013-06-04T04:47:00.000-07:002013-06-04T05:04:53.032-07:00Secure element on the phone. Further implications: the end-user perception.<div dir="ltr" style="text-align: left;" trbidi="on">
<a href="http://photo.blogpressapp.com/show_photo.php?p=13/05/24/2018.jpg"><img align="left" border="0" height="225" src="http://photo.blogpressapp.com/photos/13/05/24/s_2018.jpg" style="margin: 5px;" width="225" /></a>I have written about the implications of having the secure element stored in the firmware of the phone in a previous post (Read <a href="http://mbanking.blogspot.com/2013/03/some-implications-of-placing-secure.html">here</a>). In this post I have explored the implications of placing your payment credentials in the phone (rather than in a removable component like the SIM card). All payment devices that I know (ATM's, POS's etc.) do not have the payment credentials stored in the device, but always on a removable smartcard. So I postulated that it will be a step backward if we buck this trend.<br />
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In this post I would like to explore the impact on end-user perception and understanding of how payments work and the risk associated with payments. <br />
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I believe that most people know that a credit card payment without the physical card is not as secure as one when the card is not present. Some of my friends go as far as to never use their card on the Internet because they feel exposed doing a card transaction without the card being present. I believe that this is the case because people know that their payment credentials are stored on their card.<br />
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The most important question to be asked (I think) is where the average consumer would want their payment credentials to be stored. Would they like to have their payments associated with their phone, with their SIM card (or something else, like for instance the sticker that they got from their bank that they stuck on their phone). I don't know the answer to this, but I think that it depends and that it will differ from market to market. It is my guess that customers in the US would be happy if it is on the phone (some may not even know that they have a SIM card in their phone), whereas in other markets (especially developing markets), my guess would be the SIM card.<br />
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It is important to consider this when rolling out phones with secure elements integrated into the phone. </div>
Hannes@Homehttp://www.blogger.com/profile/05855107176790028364noreply@blogger.com0tag:blogger.com,1999:blog-38136534.post-61695706514181552772013-05-25T15:24:00.001-07:002013-06-04T05:06:09.342-07:00Prolifiration of access mechanisms to payment schemes, will dilute security<div dir="ltr" style="text-align: left;" trbidi="on">
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<a href="http://photo.blogpressapp.com/show_photo.php?p=13/05/24/2001.jpg"><img align="left" border="0" height="225" src="http://photo.blogpressapp.com/photos/13/05/24/s_2001.jpg" style="margin: 5px;" width="225" /></a>It amuses me to see how payment schemes use all kinds of ways to reach an already seriously confused consumer. It seems as if it is almost required to show that customers can reach you in every conceivable different way. A company that is taking this to an extreme at the moment is American Express. By making use of their new Sync product (Read more <a href="https://sync.americanexpress.com/">here</a>), one can now connect your valuable American Express card to (wait for it), Facebook, Foursquare and Twitter. Linking your card in this way allows you to buy special offers from these social networks without having to be re-directed to AmEx. This means of course that you trust the security of your twitter account with your purchase activity.<br />
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One could argue that this is not such a big thing as it is only for online offers and fraud opportunities are limited, but this was recently extended to buying gift cards and products from Amazon, Sony, Xbox 360 and Urban Zen by merely sending a tweet. Leslie Berland, SVP digital partnerships claims that they bring true value to customers in a world of social commerce (Read <a href="http://www.thedrum.com/news/2013/02/12/amex-extends-twitter-sync-feature-allowing-account-holders-pay-tweet">here</a>), but I don't agree at all. By allowing access to the payment system in many different ways, with a myriad number of ways to get authenticated, surely one reduces the trust in the payment system. Customers want to be sure that their cards (or other payment tools) are protected by a simple mechanism (like for instance a PIN to be used always when a payment happens). It also seems as if the prolifiration of social media access, connecting in their own way, with their own hash-tags and special codes happens without clear design and architecture. What are the fundamentals (the un-negotiables) of the payment system, or are we at a stage where anything goes?</div>
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It is no wonder that in a recent review of payment tools in the UK, customers believe that cash is the safest way to pay. (Read <a href="http://www.mobilepaymentstoday.com/article/213745/For-payment-security-cash-is-king">here</a>). We are creating a mess of the payment world if we cannot assure customers that their payment cannot be spoofed, attacked or phished. We can only do this if we keep the security simple, predictable and standardized.</div>
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Hannes@Homehttp://www.blogger.com/profile/05855107176790028364noreply@blogger.com1tag:blogger.com,1999:blog-38136534.post-77053421164143431022013-05-25T12:58:00.001-07:002013-06-04T05:05:26.651-07:00Blackberry money ready to launch in Indonesia<div dir="ltr" style="text-align: left;" trbidi="on">
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<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgCd3z56MgpVBlig3jAjczdJmcE5ZUVCNLamPNvpGviykCnhF7OXbgW8-pJtyKOp6ULW6pSX7bpJPigfgHZ8Fy5QIfNZ5THc1ikrTUoUQPTNwv662ej1wLttWFwcLpQCpHcUsT6/s1600/Cellphone+user.gif" imageanchor="1" style="clear: left; float: left; margin-bottom: 1em; margin-right: 1em;"><img border="0" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgCd3z56MgpVBlig3jAjczdJmcE5ZUVCNLamPNvpGviykCnhF7OXbgW8-pJtyKOp6ULW6pSX7bpJPigfgHZ8Fy5QIfNZ5THc1ikrTUoUQPTNwv662ej1wLttWFwcLpQCpHcUsT6/s1600/Cellphone+user.gif" /></a>Blackberry's BBM service is still very popular in many markets. One such market is Indonesia where Blackberry announced the imminent launch of BBM money in partnership with local Permata Bank and using the technology supplied by Monitise (Read <a href="http://www.finextra.com/News/FullStory.aspx?newsitemid=24535">here</a>). According to my understanding the payment service (providing for Person to Person payments and other remote payments) will piggy-back on top of the BBM messaging service. It is likely that subscribers would send a BBM with some information to another subscriber, that will translate into an actual payment.</div>
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Proponents of these type of systems argue that it is easier for a subscriber to learn the payment system as it is based on something that they are already used to. They would not need to download a specific application and can start usinng the system immediately. It is also ideal to build viral characteristics into the system as many people are already using BBM. Similar arguments are being used for the recently launched Google payment solution to be based on gMail. (Read <a href="http://techcrunch.com/2013/05/15/google-folds-wallet-support-into-gmail-so-you-can-send-money-as-attachments/">here</a>)<br />
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The more interesting challenge from my perspective would be to ensure that the registration process is secure, that the source of funds are well worked out (for instance will this service require robust cash-in eco-system, or will it be based on debit cards) and ensuring that subscribers will be confident in using a messaging system to do payments too. There is still a lot of work before these type of payment systems will become mainstream.</div>
Hannes@Homehttp://www.blogger.com/profile/05855107176790028364noreply@blogger.com1tag:blogger.com,1999:blog-38136534.post-7953812973229614462013-04-17T06:51:00.001-07:002013-06-04T05:07:26.925-07:00Open-loop mobile payment systems will lead to scale<div dir="ltr" style="text-align: left;" trbidi="on">
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<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhazqqEJOSK4rpaLqznluRkxonvCua7umBpKVurL6HNBHIa0XtboRA4URcUGLLZRgC0jHG8WYO8bKCwoum1s9QFToOE8gj6F5kPegt_b0wQwpF-uR0N_tXXNLSSiBXtbPWQHREn/s1600/american_express_html.jpg" imageanchor="1" style="clear: left; float: left; margin-bottom: 1em; margin-right: 1em;"><img border="0" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhazqqEJOSK4rpaLqznluRkxonvCua7umBpKVurL6HNBHIa0XtboRA4URcUGLLZRgC0jHG8WYO8bKCwoum1s9QFToOE8gj6F5kPegt_b0wQwpF-uR0N_tXXNLSSiBXtbPWQHREn/s1600/american_express_html.jpg" /></a>It was last year that I read a review on customer satisfaction of US credit card companies. The report by JD Powers and Associates rated American Express highest on customer satisfaction for the sixth year running. (Read <a href="http://www.pymnts.com/news/businesswire-feed/2012/august/23/american-express-ranks-highest-in-customer-satisfaction-for-the-sixth-consecutive-year-20120823005582?utm_source=August+24%252C+2012&amp%3butm_campaign=August+24+NL&amp%3butm_medium=email&amp%3bgoback=%252Egde_3947348_member_151973745">here</a>). As a new employee of Visa, I found this quite interesting and decided to investigate the reasons and the implications. </div>
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In performing the research JD Powers asked card holders to rate their experience for different card companies related to six factors: Customer Interaction, Billing and Payment Process, Credit Card Terms, Rewards Programs, Benefits and Services, and Problem Resolution. Any American Express customer (in rating the above) would effectively rate only one company (American Express) for all of the above six factors. In the case of Visa, many different companies (thousands of banks) are effectively evaluated, as these factors do differ significantly from one Visa bank to another. I then realized that there are significant implications on evaluating open-loop card systems (with four-party models) and comparing them with closed loop offerings (where the card company issue and acquire all cards and transactions).</div>
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In thinking about it, it actually then makes more sense to rather deploy a closed loop solution (like American Express). It seems that this will ensure more control and effectively a better customer experience. So why then have open-loop payment systems at all? What would the need be of something like this (clearly more complex) and more likely to not deliver the same level of customer satisfaction? The reason of course is scale. The more banks and service providers one can connect to each other, the more transactions are you likely to see. This is the attractiveness of the four-party model and open payment systems.</div>
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What does this mean for the future of mobile payments? When it is easier to do closed loop systems and you are more likely to keep customers happy, why even consider open-loop systems? I would like to say that closed loop systems (you can only pay me with X, if I also have X) are the only way that mobile payments are deployed today. Is open loop systems (interoperability) really needed to create true scale? Will we unlock much more potential and volume of transactions when we connect all the closed loop systems to each other? That is the question.</div>
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Hannes@Homehttp://www.blogger.com/profile/05855107176790028364noreply@blogger.com1tag:blogger.com,1999:blog-38136534.post-75499963652559409742013-03-27T08:53:00.002-07:002013-03-27T08:53:53.731-07:00Why banks will have to change to remain relevant<div dir="ltr" style="text-align: left;" trbidi="on">
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<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEg11sN0XxJOwhIgG21xQfwbmRre8jd5FlmbBzaAh8-RK2SNcB9LwAW8GLtdaMDs6WC4zBBYqxBPyJLJUu5BFid1FQ5JJQW-OYmXc1AMxrjPjfk6bA4TjhXIlNVss8cFKUxIeYPC/s1600/banks.jpg" imageanchor="1" style="clear: left; float: left; margin-bottom: 1em; margin-right: 1em;"><img border="0" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEg11sN0XxJOwhIgG21xQfwbmRre8jd5FlmbBzaAh8-RK2SNcB9LwAW8GLtdaMDs6WC4zBBYqxBPyJLJUu5BFid1FQ5JJQW-OYmXc1AMxrjPjfk6bA4TjhXIlNVss8cFKUxIeYPC/s1600/banks.jpg" /></a>This is a blog that I wanted to write some time ago after having read an interview with Don Callahan, Chief Technology and Operations Officer at Citi. (Read <a href="http://www.finextra.com/News/FullStory.aspx?newsitemid=24489">here</a>). In the article he discusses the learning curves that the bank had in working with the Google Wallet team. He highlighted the learnings (difficulties) that the bank had to keep up with the rate of development and innovation from Google. Quite interestingly, he shared his frustration as a client of the bank that he is an executive of. He indicated that he need a more integrated view of his financial position as a client of Citi.</div>
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This was quite insightful to me. While the executives of the bank could actually identify client needs accurately, they seem powerless to change it. (The fact that they had difficulty keeping up with the development of the Google Wallet may give some clues to why). The overhead, cost and sheer effort of keeping everything running as it is in big banks consume so much resource and management time, that it is just not possible to change things. And if it gets changed, it takes a long time. We all know this about banks.</div>
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The problem is that if banks are confronted with an inflection point, where the environment is going to change at a massive rate, or when they are confronted with more nimble competitors, they might not be able to respond. If this is not going to happen in the future, banks have nothing to fear as they would be able to just carry on as they are used to do, but....</div>
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Hannes@Homehttp://www.blogger.com/profile/05855107176790028364noreply@blogger.com0tag:blogger.com,1999:blog-38136534.post-47240727796738887442013-03-26T08:45:00.000-07:002013-03-26T08:45:04.817-07:00Why I love movies - lessons for mobile payments<div dir="ltr" style="text-align: left;" trbidi="on">
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<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhRAGZzfBdEi5naXnbglyElJt2D7mC9Kzp7y0yCsCKr6AVUZd2wvS9lEKeagTp9SIumTdGmZhkQAXrxPz_Sv2E6srErrx1LPkgyBqWFI5wjTxg91ZvkY2N9SHDTzCZmJrZOIV3U/s1600/moneyball.jpg" imageanchor="1" style="clear: left; float: left; margin-bottom: 1em; margin-right: 1em;"><img border="0" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhRAGZzfBdEi5naXnbglyElJt2D7mC9Kzp7y0yCsCKr6AVUZd2wvS9lEKeagTp9SIumTdGmZhkQAXrxPz_Sv2E6srErrx1LPkgyBqWFI5wjTxg91ZvkY2N9SHDTzCZmJrZOIV3U/s1600/moneyball.jpg" /></a>The beauty of movies is that one can reflect on the meaning of life through models and with indirect examples and do this in an entertaining way. Dharmesh Shah recently wrote an brilliant and entertaining blog on the lessons that could be learned from Moneyball. (Read <a href="http://www.linkedin.com/today/post/article/20130115162356-658789-19-brilliant-business-lessons-from-moneyball">here</a>). It is really a worthwhile read.</div>
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Of all the lessons documented, it is probably important to reflect on the last lesson: "It's about changing the game. It's about seeing something that's not quite right in the world, and deciding you want to fix it." It is important to consider that mobile money is changing the game on a global level. While it is interesting to discuss some of the detail or get involved in some of the complex nuances, it is also important to consider that this is something that is "changing the game" in many markets.</div>
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As was the case with Baseball, we will have to consider that we are moving into a world that is different and that we will probably never convert back. The banking and payment industry is changing as cash will start to reduce. The role of banks and where profit can be made is shifting and only those that see this and adapt will keep on winning the World Series. </div>
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Hannes@Homehttp://www.blogger.com/profile/05855107176790028364noreply@blogger.com0tag:blogger.com,1999:blog-38136534.post-45874709577953824942013-03-20T05:38:00.000-07:002013-06-04T05:08:43.699-07:00A financial revolution in Africa.<div dir="ltr" style="text-align: left;" trbidi="on">
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<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEipwgb51aY00kS8dWYMZ9nOD9SOLUUxnTG7vSROz7FTC7ti0lGkGU6s54PVaD1yZxtqTkW7HjxP7K4G8-tCWrFWq3d0LD3utc5MVqmadt9DuOI1f2oA1Gp3gI9lbfAgsdIGwYbJ/s1600/fifa.jpg" imageanchor="1" style="clear: left; float: left; margin-bottom: 1em; margin-right: 1em;"><img border="0" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEipwgb51aY00kS8dWYMZ9nOD9SOLUUxnTG7vSROz7FTC7ti0lGkGU6s54PVaD1yZxtqTkW7HjxP7K4G8-tCWrFWq3d0LD3utc5MVqmadt9DuOI1f2oA1Gp3gI9lbfAgsdIGwYbJ/s1600/fifa.jpg" /></a>The Foreign Policy Centre is a UK-based, independent, progressive foreign affairs think tank. Participants typically are from political parties, private sector and academia. If an organization like this produces a document referring to the "Financial revolution in Africa", one can take it that some kind of revolution is happening. (Read and download <a href="http://fpc.org.uk/publications/mobile-payment-services">here</a>). Or when Killian Clifford write about the "Rising Africa" in his blog (Read <a href="http://www.mobilemoneyconsulting.com/2013/03/15/corporate-payments/rising-africa-the-case-for-consumer-goods-and-mobile-payments">here</a>), then there must be something there. There is very little doubt by people in the industry as well as close observers that something amazing is happening in Africa with financial services, but why and what is next? </div>
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The biggest reason for the spectacular growth in mobile financial services is because there is a need and that it is possible to meet the need with technology that actually work. There is also a spirit of optimism and a willingness to try out things that one do not see as much in other places. The degree of rampant innovation is almost unheard of. Also a new breed of consumers are starting to emerge with an open mindset and with big dreams. These consumers embrace new innovations and what is being made available as far as financial services are concerned, is proof of this trend.</div>
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While Africa consist of more than fifty countries, there is a high degree of regional integration. Because of historical political instabilities many people have been displaced across borders, or have willingly moved. Members of the same families often live in different countries and trade is often conducted across borders. A common currency is being used in some countries in West Africa and many trade blocks are being established in the region. The next wave of financial innovation will cut across borders and will accelerate the revolution. We have seen nothing yet. </div>
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Hannes@Homehttp://www.blogger.com/profile/05855107176790028364noreply@blogger.com0tag:blogger.com,1999:blog-38136534.post-62218454411323899742013-03-06T07:05:00.000-08:002013-06-04T05:09:22.711-07:00Some implications of placing the secure element on the phone<div dir="ltr" style="text-align: left;" trbidi="on">
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<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEi0LdVIBuUpllu9fI11ZyP2hirL53QiBwOu1_HWwx7xr7dexIUfjld3Ttd56WCLr-DuTIiQN9JrVJ5oxVeVopblwtTyAPzwIJZCXbHsgqMgZ9Yjcsz2s9v5kLFT_i3wwDDKrIto/s1600/security.jpg" imageanchor="1" style="clear: left; float: left; margin-bottom: 1em; margin-right: 1em;"><img border="0" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEi0LdVIBuUpllu9fI11ZyP2hirL53QiBwOu1_HWwx7xr7dexIUfjld3Ttd56WCLr-DuTIiQN9JrVJ5oxVeVopblwtTyAPzwIJZCXbHsgqMgZ9Yjcsz2s9v5kLFT_i3wwDDKrIto/s1600/security.jpg" /></a>With more and more phones shipping with NFC radios, the possibility of actually seeing mainstream payments migrating into mobile phone tap-and-go, is getting more real. Of course the possibility of identity theft can't be under-estimated and will make the risk of fraudulent transactions even bigger. The key (of course) is to make sure that the credentials on the phone can not be tampered with. The only way that this can be done securely is to place one (or preferably many - so that one can have some expiry management in place) cryptographic keys in or on the phone. These keys would typically be derived from some secret root key and some characteristic of the phone or the MSISDN. IN this way, it is mathematically possible to prove that the payment transaction originated from the phone and that the card used was the card intended for the transaction.</div>
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The debate raged about where this cryptographic keys should reside (also referred to as the secure element). Some mechanisms were used to place these keys on removable memory devices or stickers, but until recently it was commonly agreed that the best place is actually on the SIM card as this is a very secure repository, it ties the keys to your phone number (the number is tightly integrated with the SIM card) and provides a proven mechanism to distribute the keys, physically.</div>
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Probably because of difficulty getting carriers to play and to increase the relevance for them, mobile phone manufacturers have now unveiled plans to place the secure element in the hardware of the phone. In this way, you would not need carriers to really be involved in the payment eco-system. While initially this seems like a great idea, thinking about it, this can potentially lead to many problems:</div>
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<li> Payment credentials are now tied to your physical phone and not your mobile number. While not so critical any-more, one cannot take out a sim card and transfer the payment credentials to another phone. The wallet would now be attached/tied to the actual phone hardware.</li>
<li>Version and change-management will be extremely hard. As an illustration, when your secure element has been compromised/corrupted, one will have to replace the phone (even though it may still be in perfect working order) and not just the sim card.</li>
<li>One will have to provide secure tools that can be fully trusted to remove a secure element or re-install new ones when a phone changes ownership for instance. Sim cards almost never change ownership, bit phones do. </li>
<li>The process of buying a phone will now have to be controlled from a KYC perspective, as it would become critical to know who owns which secure element. We have this process already in place for sim cards, this will now have to become a double whammy process. Mister client, now that we have done the KYC for your sim card, we will also have to do it for the phone.</li>
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I think that placing the secure element in the phone, rather than in the sim card (where it belong), is a step backward. Stakeholders are messing up things because they are not making compromises to work with each other.</div>
Hannes@Homehttp://www.blogger.com/profile/05855107176790028364noreply@blogger.com0tag:blogger.com,1999:blog-38136534.post-43635785867995521552013-02-15T20:24:00.001-08:002013-02-15T20:24:15.274-08:00The beneficial impact of e-payments on GDP<div dir="ltr" style="text-align: left;" trbidi="on">
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<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEg1tbuY_Ut99OlustAOKm1WmCXyYFQDcfDwFdz84jSbnkVyze-WYx0VM-I6xaespJLqRRAI62ryGAvsTEAkclWn2YDSmam67DE4sOrCW_Kq3fxg1NxrucZSj1JwU-gNXaN1TObO/s1600/index.jpg" imageanchor="1" style="clear: left; float: left; margin-bottom: 1em; margin-right: 1em;"><img border="0" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEg1tbuY_Ut99OlustAOKm1WmCXyYFQDcfDwFdz84jSbnkVyze-WYx0VM-I6xaespJLqRRAI62ryGAvsTEAkclWn2YDSmam67DE4sOrCW_Kq3fxg1NxrucZSj1JwU-gNXaN1TObO/s1600/index.jpg" /></a>It is one of my pet topics. The fact that converting cash into e-payments directly lead to an uplift in the macro economy of a region. I have blogged about this previously (Read <a href="http://mbanking.blogspot.com/2009/07/macro-economic-impacts-of-mobile.html">here</a>), but feel so strongly about it that a recent report (commissioned by Visa) made me think about this again. The main finding of the report was that almost a quarter of the GDP growth in Canada can be directly attributed to growth in e-payments. (Read <a href="http://www.finextra.com/News/Fullstory.aspx?newsitemid=24055">here</a>). </div>
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The assumption of the report is that e-payments lead to an acceleration of payments. Money arrive in wallets faster and can then be spent faster. This acceleration directly increase the total value spent over a given period, which (in turn) leads to higher economic activities.<br />
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Other secondary benefits of a reduction in cash, towards a auditable e-payments are (virtual) elimination of counterfeiting, a reduction in fraudulent transactions, lower operating costs of the overall payment eco-system, more efficient collection of statistics about the payment system and a more efficient collection of tax. All of the above can also contribute to growth in the economy.<br />
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The case for "electronifying" cash payments because of the beneficial impact on macro-economic indicators are staggering. By enabling an environment where cash payments are reduced, governments will benefit all. </div>
Hannes@Homehttp://www.blogger.com/profile/05855107176790028364noreply@blogger.com0tag:blogger.com,1999:blog-38136534.post-63439059476322133262013-02-14T22:12:00.002-08:002013-02-21T23:06:21.279-08:00Corporate mobile payments - another mobile money application?<div dir="ltr" style="text-align: left;" trbidi="on">
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<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhY59H93OKcvvYxRdEOfhp766HrnQct0Rzluw54jAaN4OieHQ6h_caCm7Myap1yhrwu45HBvJZ-U7r40H_WcHQNAVLLXEJQnPt0zPHNp_-sq0PP9uuezdlOgQ9MagIFM8hckIJu/s1600/corporate.jpg" imageanchor="1" style="clear: left; float: left; margin-bottom: 1em; margin-right: 1em;"><img border="0" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhY59H93OKcvvYxRdEOfhp766HrnQct0Rzluw54jAaN4OieHQ6h_caCm7Myap1yhrwu45HBvJZ-U7r40H_WcHQNAVLLXEJQnPt0zPHNp_-sq0PP9uuezdlOgQ9MagIFM8hckIJu/s1600/corporate.jpg" /></a>It is amazing how many different (and innovative) applications appear now that critical mass mobile-money solutions are available in many countries. One could probably write a whole blog about these solutions. An angle that is worth looking at is the use of mobile money in the corporate world. A good friend, Killian Clifford (from Mobile Money Consulting), recently published a white paper on Corporate Mobile Payments (Read <a href="http://www.mobilemoneyconsulting.com/white-papers/corporate-mobile-payments#">here</a>). He looks at the different types of applications (paying suppliers, collecting debtors and others), he describes the eco-system and discusses the different players. It ts definitely worth a read.</div>
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The important take-away is that the availability of digital payments in emerging markets have changed the game. Tasks that in the past (constrained by cash-payments) were expensive, mundane and slow, can now be re-engineered to be efficient and fast. Not only can this lead to cost-savings, but it could allow corporates to re-think how they do business. Mobile payments can change the competitive landscape drastically. It is important that corporates in emerging markets embrace this, hoping that their competitors don't.</div>
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Hannes@Homehttp://www.blogger.com/profile/05855107176790028364noreply@blogger.com0tag:blogger.com,1999:blog-38136534.post-71663878494011803042013-02-08T04:44:00.001-08:002013-02-08T04:44:10.177-08:00New Year resolutions - in February<div dir="ltr" style="text-align: left;" trbidi="on">
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<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEi6auHP4GqhM_9jXqU9oHYfd1OZr56WZqc1GE0NEAxp4ijjhNCL0EaWhV4bBWBQ4fYcASVUkTMxzQOfM9mB8pdAXLHG2-usVIrbwf5-n8azFBY7luTDmiGzfBf0AiebsJhu8KIE/s1600/new+dawn.jpg" imageanchor="1" style="clear: left; float: left; margin-bottom: 1em; margin-right: 1em;"><img border="0" height="213" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEi6auHP4GqhM_9jXqU9oHYfd1OZr56WZqc1GE0NEAxp4ijjhNCL0EaWhV4bBWBQ4fYcASVUkTMxzQOfM9mB8pdAXLHG2-usVIrbwf5-n8azFBY7luTDmiGzfBf0AiebsJhu8KIE/s320/new+dawn.jpg" width="320" /></a></div>
I have way more ideas about blogs than time to write them all. So what happens is that blog ideas go on a list and then (when I have time), I write them. One blog idea that I had, was to reset my expectations on what I can get into my blog this year - a kind of new year resolution.<br />
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My life has taken a new dimension with more responsibilities. With new shareholders, working for a major corporation with a well-known brand, I have been extremely busy and time for blogging became less. Also my infrastructure changed (became more secure), which meant that I now blog with much more difficulty. On the other hand, I see so much more; what is now possible is so much more, and I would love to share more.<br />
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The fact that I post a new year resolution in February, is in some ways an indication of how difficult it became to keep on blogging. But here is my resolution: I will keep on blogging. My aim is to have at least one blog per week. I will try to keep on pushing the boundaries... but I will try and keep it short.</div>
Hannes@Homehttp://www.blogger.com/profile/05855107176790028364noreply@blogger.com2tag:blogger.com,1999:blog-38136534.post-71805960610787973552012-12-14T18:42:00.000-08:002012-12-17T23:36:42.294-08:00NFC taking off will only happen with focused education<div dir="ltr" style="text-align: left;" trbidi="on">
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<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhF9_cUNW8Ap9Og-MnhTbBPXeOePqDZwPzIE2ROc1VcRQ8EGyQBs71Qohbj9Q7WSQKDzbsR76oafgqYQZjABiUh8lgcllMUINvKvCusI7qCcHtJihp8ulPc-uofOVy6fp4HA9BT/s1600/Visa_payWave_jpg_pagespeed_ce_FwVBUBEJ0z.jpg" imageanchor="1" style="clear: left; float: left; margin-bottom: 1em; margin-right: 1em;"><img border="0" height="213" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhF9_cUNW8Ap9Og-MnhTbBPXeOePqDZwPzIE2ROc1VcRQ8EGyQBs71Qohbj9Q7WSQKDzbsR76oafgqYQZjABiUh8lgcllMUINvKvCusI7qCcHtJihp8ulPc-uofOVy6fp4HA9BT/s320/Visa_payWave_jpg_pagespeed_ce_FwVBUBEJ0z.jpg" width="320" /></a>Most of us belong to a group that are fascinated by new payment technology and also (often) love gadgets. This is why it comes so naturally to us to consider using our phone to tap and go. For many others this is quite a strange concept, if we want think about it for a while. In the mind of the average person, this is quite a strange way to transfer payment.</div>
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In a recent study conducted by Barclaycard in the UK, more than 80% of UK citizens now can recognize the contactless symbol (this has doubled in the past year). (Read <a href="http://www.finextra.com/News/Fullstory.aspx?newsitemid=24004">here</a>). Forrester research, in a recent article expects that it will still take a decade for NFC to become mainstream. They predict that it will take three to five years for critical mass (15% to 25%) to be reached (Read <a href="http://www.marketingmagazine.co.uk/news/1144284/NFC-payments-decade-away-mass-market-claims-Forrester/">here</a>). <br />
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For NFC to become mainstream, most subscribers will have to be educated. The payment mechanism will have to be explained and supported with clear instructions and guidance. Only when the average consumer understand and have been made comfortable with the implications of NFC payments will it be used extensively.This will only be possible through extensive education.</div>
Hannes@Homehttp://www.blogger.com/profile/05855107176790028364noreply@blogger.com1tag:blogger.com,1999:blog-38136534.post-57777799643324337292012-12-14T18:28:00.000-08:002012-12-14T18:28:00.472-08:00The balance of non-competitive behavior in mobile payments<div dir="ltr" style="text-align: left;" trbidi="on">
<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgOrdyIlAkkdpcz3u0bMTspMOX85Bi0R2Ll_S_TcdL5SsPujEct2H9R7use1MneB87bl-O3lxJYRK3ymyLRDyNDNSN9e5rsEMLoyQpROEZv7skdtHATMmqCJvS4PptHrgz6ewZr/s1600/fight-back.jpg" imageanchor="1" style="clear: left; cssfloat: left; float: left; margin-bottom: 1em; margin-right: 1em;"><img border="0" height="233" nea="true" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgOrdyIlAkkdpcz3u0bMTspMOX85Bi0R2Ll_S_TcdL5SsPujEct2H9R7use1MneB87bl-O3lxJYRK3ymyLRDyNDNSN9e5rsEMLoyQpROEZv7skdtHATMmqCJvS4PptHrgz6ewZr/s320/fight-back.jpg" width="320" /></a>Some-one recently showed me a Spanish article published in Columbia (Read <a href="http://www.portafolio.co/economia/asobancaria-acusa-claro-atentar-contra-banca-movil">here</a>). My Spanish is almost non-existent with only a few emergency words like "cerveza", so the only way that I could understand the article was to get it translated with Google Translate. Turns out, that the local banking council has been complaining about the business practices displayed by Claro (the dominant carrier in Columbia).<br />
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According to the article (and the cryptic Google translation), Claro decided to charge between seven and thirteen times more for banking transactions on their network. If I understand the article correctly, this is to fund the additional infrastructure required to offer banking services on their network. We that work in the industry has seen this behavior in other markets where carriers use their unique position to effectively block banks to offer financial services (or even worse) to compete with them, by implementing punitive commercial tariffs to effectively keep banks out of mobile banking.<br />
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This behavior is absolutely deplorable and a reflection on the ethics of companies that follow these practices. It is probably illegal in most countries and carriers following these practices should be confronted with legal procedures. By following such practices, the development of branchless banking will be delayed and slowed down. The result of this is that the poor and the most needy will suffer most. Some-one, somewhere should feel ashamed of their way of doing business.</div>
Hannes@Homehttp://www.blogger.com/profile/05855107176790028364noreply@blogger.com1tag:blogger.com,1999:blog-38136534.post-87548279164812894762012-12-09T14:50:00.000-08:002012-12-09T14:50:17.475-08:00This time round, Google may have launched a Wallet that might work<div dir="ltr" style="text-align: left;" trbidi="on">
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<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjQTsZvvgV7OxVUZrrcit5qXjMoLEyJY6bbbk2uwXpyiHydkA5AAbSvKUtDKd_p7gAGG_f9EvfE1u7kp_8hU13bzZTLqUFybx0jhv7PisTcRVBpXsVMCYJAQYEJJBhYbDH3cdGI/s1600/google_wallet_logo.jpg" imageanchor="1" style="clear: left; cssfloat: left; float: left; margin-bottom: 1em; margin-right: 1em;"><img border="0" nea="true" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjQTsZvvgV7OxVUZrrcit5qXjMoLEyJY6bbbk2uwXpyiHydkA5AAbSvKUtDKd_p7gAGG_f9EvfE1u7kp_8hU13bzZTLqUFybx0jhv7PisTcRVBpXsVMCYJAQYEJJBhYbDH3cdGI/s1600/google_wallet_logo.jpg" /></a></div>
When Google Wallet was released last year, I predicted that it would fail (Read <a href="http://mbanking.blogspot.com/2011/06/google-wallet-will-not-work-here-is-why.html">here</a>). I based my argument on the fact that it would be too difficult for them to build a workable payment eco-system for the thing to take off. Based on the fact that the first version of the wallet was scrapped and a totally new version (Google Wallet 2.0) was launched seems to me that I was right.<br />
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This time round, I think that they have launched something with real potential. While the model is still extremely risky, it is worthwhile to watch. Google has effectively linked two transactions together to provide a pseudo-experience that you are paying with your own card. Google is prepared to loose money on every transaction in the process (Read <a href="http://www.finextra.com/community/fullblog.aspx?blogid=6890">here</a>). They are probably doing this to get to the crucial purchase data. The risks is that they would loose significant money before they can show sufficient monetary value.<br />
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The other risk is that they expose the payment eco-system to liability risks. Because of the two transactions (tied together), existing dispute mechanisms will not work. Charge-back rules and other protections built into classical payment schemes are broken. This is probably why Google Payments Company (GPC) require the subscriber to hold them harmless in the Terms and Conditions ("You agree to release, GPC, .... and their agents, contractors, officers and employees, from all claims, demands and damages" (Read <a href="https://wallet.google.com/customer/tos/viewdocument.html?family=0.buyertos&gl=ZA">here</a>))<br />
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So providing that Google can manage the significant risks and provide sufficient incentives (maybe in the form of coupons and special offers) for subscribers to use the service, this time round, the wallet may just get traction.</div>
Hannes@Homehttp://www.blogger.com/profile/05855107176790028364noreply@blogger.com0tag:blogger.com,1999:blog-38136534.post-66672825615299178442012-12-09T14:10:00.001-08:002012-12-09T14:10:31.028-08:00Are we seeing the start of a mobile payment bubble.<div dir="ltr" style="text-align: left;" trbidi="on">
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<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjlOiOp4qIocfaNcoOHqMAFJ3goR6v5e6tjjLiiCPGod8pg9bAdLwYWb9dPvcWSdIffvsvzt4s3TWYpUDit01ngcFCI59vP9wUPxVDWycCDFEAmnJHNkn_vaEYSyHV_eBvDrxYO/s1600/bubble.jpg" imageanchor="1" style="clear: left; cssfloat: left; float: left; margin-bottom: 1em; margin-right: 1em;"><img border="0" height="320" nea="true" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjlOiOp4qIocfaNcoOHqMAFJ3goR6v5e6tjjLiiCPGod8pg9bAdLwYWb9dPvcWSdIffvsvzt4s3TWYpUDit01ngcFCI59vP9wUPxVDWycCDFEAmnJHNkn_vaEYSyHV_eBvDrxYO/s320/bubble.jpg" width="277" /></a></div>
The definition of a stock-market bubble is a high activity of purchase of shares in stock that cannot support the prices being paid on the fundamentals of the business. Since the inception of stock-markets investors were warned not to invest during bubble times. In an article published in August Dan Freed alluded that one may be seeing the start of a bubble in mobile payment shares. (Read <a href="http://www.thestreet.com/story/11672507/2/mobile-payment-bubble-just-starting-to-inflate-street-whispers.html">here</a>).<br />
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In the article the following valuations/transactions are quoted as red flags:<br />
<ul>
<li>The growth in eBay's value on the announcement of the deal between Discover and Paypal.</li>
<li>Square's implied valuation of $3.25B after recent fund-raising</li>
<li>Starbucks valuation on the back of mobile payment announcements.</li>
</ul>
Since the article, further investments in mobile payment companies have shown very high valuations (not supported by real revenue). Below are some examples:<br />
<ul style="text-align: left;">
<li>iZettle raises $31.4M dollar Series B funding (Read <a href="http://www.inc.com/john-mcdermott/square-rival-raises-31-million-in-funding.html">here</a>).</li>
<li>Paynearme (a start-up mobile payments company) raises $16M (Read <a href="http://www.inc.com/john-mcdermott/square-rival-raises-31-million-in-funding.html">here</a>).</li>
<li>Braintree (a supplier of payment services - including mobile payments, to start-ups) recently raised $35M (Read <a href="http://www.mobilepaymentstoday.com/article/202311/Braintree-adds-another-35M-in-funding">here</a>).</li>
<li>Paydiant (a start-up providing a white-label solution to banks) raised Series B funding of $12M (Read <a href="http://bostinno.com/2012/07/10/paydiant-series-b/">here</a>)</li>
<li>Monitise confirming that they are in talks to raise £100M (Read <a href="http://www.cellular-news.com/story/57587.php">here</a>).</li>
</ul>
It does look as if we may be seeing some of a bubble forming. Question is; what does this mean?</div>
Hannes@Homehttp://www.blogger.com/profile/05855107176790028364noreply@blogger.com0tag:blogger.com,1999:blog-38136534.post-9695074415565754452012-10-31T05:57:00.001-07:002012-10-31T05:57:25.470-07:00Summer was a bit late for Isis<div dir="ltr" style="text-align: left;" trbidi="on">
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<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgl_WPLp_umvpjUqdjHvYIpNhOMgwit8v2O-P2b8EJV_L2FVDZxxfyhAi33iQXZgZSN53XWYYQQ_OnNvzbzGQ3MsyMUKhmqyi_xXyatAiZDuGvyTYsyH7N_w0Lw5Ma7hVyH-HIP/s1600/isiswhatis-e1333727828702.jpg" imageanchor="1" style="clear: left; cssfloat: left; float: left; margin-bottom: 1em; margin-right: 1em;"><img border="0" qea="true" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgl_WPLp_umvpjUqdjHvYIpNhOMgwit8v2O-P2b8EJV_L2FVDZxxfyhAi33iQXZgZSN53XWYYQQ_OnNvzbzGQ3MsyMUKhmqyi_xXyatAiZDuGvyTYsyH7N_w0Lw5Ma7hVyH-HIP/s1600/isiswhatis-e1333727828702.jpg" /></a></div>
<a href="http://www.paywithisis.com/whatis.xhtml">Isis</a> is a wallet solution for many payment instruments that reside on your phone. It is a product supported by key mobile operators (Verizon, AT&T and T-Mobile) with the prime objective to activate the NFC capabilities in mobile phones. The drive is to create an acceptance mark (Isis Ready, Pay and Go or Pay and Save) where Isis phone app can be used to pay.<br />
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Isis were planning to have the first deployments ready and start accepting transactions at the end of summer. Austin and Salt Lake City was selected as the first cities where the solution would be trialed. But unfortunately, some snags lead to delays. (Read <a href="http://news.cnet.com/8301-1035_3-57512526-94/isis-mobile-payment-service-hits-snag-delays-trial-run/">here</a>). Good news was that the delay was not too long with the promised launch taking place this month - a bit late for summer (but just) (Read <a href="http://www.vendingtimes.com/ME2/dirmod.asp?sid=EB79A487112B48A296B38C81345C8C7F&nm=Vending+Features&type=Publishing&mod=Publications%3A%3AArticle&mid=8F3A7027421841978F18BE895F87F791&tier=4&id=15D70C4A906D495A863ED777FD837A93">here</a>).<br />
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The reason why this offering is interesting (and probably on the right track) is that the security is based on a special SIM card. (In other words, the secure element resides on the SIM). It also seems that the participating operators have constructed a commercial model that could potentially work. This is much more likely to succeed than Google wallet.</div>
Hannes@Homehttp://www.blogger.com/profile/05855107176790028364noreply@blogger.com0