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How soon can the Arab world accept mPayment?  Janti Abdallah   STS
 

How soon can the Arab world accept mPayment? Janti Abdallah STS

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this presentation was delivered during the Media & Telecom conf. 09 in Amman, Jordan

this presentation was delivered during the Media & Telecom conf. 09 in Amman, Jordan

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How soon can the Arab world accept mPayment?  Janti Abdallah   STS How soon can the Arab world accept mPayment? Janti Abdallah STS Presentation Transcript

  • A Leading e-Payment Solution/ Service Provider How soon can the Arab world accept mPayment? Remittance . m/eCommerce . Topup . Bill Payment Janti M. Abdallah, MBA Division Manager, ePayment Solutions (STS) Executive Director, PAYNET (an STS subsidiary)
  • Outline
    • Introduction
    • Market landscape
    • Business opportunity
    • Involved stakeholders & their needs
    • Defining a mobile payment scheme
    • Advantages of suggested scheme
    • Observations & Conclusion
    • Q/A
  • Introduction
    • The ever-growing number of mobile phone users is a target group that represents an enormous potential for revenue generation
    • Number of Mobile Payment (MP) users worldwide is expected to increase 70% in 2009 *
      • 43.1 million users in 2008 -> 73.4 million in 2009
      • Developing countries are among the most suitable environments for MP
    * Source: Gartner, Inc 2009
  • The Market Landscape (Banks & MNOs)
    • Monthly ARPU of MNOs in Jordan decreased to $16.8 in 2007 (from $18.7 in 2006 and $28 in 2004) – source: Arab Advisors Group, 2008
      • Prices are going down due to increased competition
      • Need to consider VAS that help increase ARPU & reduce churn
    • Banks can’t heavily rely on generating interest on deposits/ loans, as a consequence of global economic crisis
      • Banks are seeking to have other revenue streams in the form of service fees/ transaction fees
  • A sample business opportunity
    • GCC countries host almost an expatriate community of 12.3 million people
    • Inbound remittance to Jordan officially exceeded $3.4 bn in 2007 (a 36% growth compared to 2006), mostly from GCC counrtries (source: Central Bank of Jordan, 2008)
      • What could/ should our market share be?
      • Can we make relevant revenues after funds have been remitted?
  • Research Problem
    • Finding out the factors affecting the adoption of various MP schemes in Arab world countries by relevant stakeholders
    • This will lead to having an answer to our question: “How soon can the Arab World accept mPayment?”
  • Research Population
    • Providers (e.g. MNOs, Banks, third parties)
    • Merchants (e.g. convenience stores, cafeterias, fast-food restaurants, e-tailers)
    • Consumers (MNO subscribers)
  • Variables Affecting MP Adoption
    • The following variables are suggested by academic research (For Merchants)
      • Cost
      • Customer base
      • Ease of use
      • Reliability
      • Security
      • Value proposition improvement
  • Variables Affecting MP Adoption
    • The following variables are suggested by academic research (For Providers)
      • Cost
      • Organizational change
      • Security
      • Standard
      • Revenues
      • Legal barriers
  • Variables Affecting MP Adoption
    • The following variables are suggested by academic research (For Consumers)
      • Cost
      • Ease of use
      • Usefulness
      • Expressiveness
      • Trust
      • Universality
  • Classification of MP (Model 1) Source: ONDRUS and PIGNEUR, 2006
  • Classification of MP (Model 2) Source: KREYER, POUSTTCHI and TUROWSKI , 2003
  • Classification of MP (Model 3) Source: MALLAT, ROSSI and TUUNAINEN 2004 Telephone bill credit card offline payment Direct debiting electronic cash/ digital wallet smart cards/ prepaid cards Method for Settlement post-paid instant-paid Prepaid Deduction Time subscription / standing order Pay per product unit pay per time unit Payment Frequency Account based Token based Basis of Payment Operational Special payment software Dual slot/ dual card phone Internet enabled phone Text message exchange Technology Required No Yes Pre-registration Needed? No Body Merchant Bank/ Financial Service Provider MNO Payment service provider Receiver of Customer Data Others Spec intermediary Bank/ Financial Service Provider MNO Payment Service Provider Participants Macro payments (< $50) Macro-payments (< 5$ to $50) Micro-payments (> 10 cents to $5) Pico-payments (≤ 10 cents) Payment Levels C2C Stationary Merchant (Auto) Stationary Merchant (Person) EC MC Payment scenarios Strategic Instances Characteristics
  • A suggested mPayment Program
    • A dedicated third party “Program Manager” shall spearhead a regional program in alliance with 1 MNO and 1 Bank in each country
      • Issuing and managing m-Wallets; serving wallet-holders and merchants)
    • Rule of thumb: do not reinvent the wheel (work with others)
  • System diagram Banking Host mWallet *12345# USSD G/W ePayment Gateway ATM/ CDM EFT POS
  • Accepting Deposits? mWallet n ($10) mWallet 3 ($50) mWallet 2 ($15) mWallet 1 ($10) Account Z Account C Account B ($85) Account A vAMS @ Program Manager Core Banking System @ Partner Bank Neither Program Manager, nor MNO should handle real cash/ funds
  • Supported Dr/ Cr Transaction mWallet 1 mWallet 2 [1] Via EFT POS terminals deployed @ post offices, exchange houses [2] Via Bank ATMs/ CDMs [3] Via Internet [4] Via EFT POS terminals deployed participating merchants/ outlets [5] Via GSM handset - USSD Bank Account [2,3] GSM airtime? [5] Transfer [5] Top-up [3,5] Goods purchase [3,4] Cash-in [1,2] Credit/ Debit Card [3] Cash-out [1,2] Bill Payment [3,4,5]
  • Revenue Streams * Ancillary revenues shall be used to achieve desired levels of profitability with lower transaction fees (to ensure high competitiveness) Value for MNOs: Reduce churn and increase VAS ARPU Value for Banks: Reach users who were previously unreachable (unbanked)
    • Interest on mWallet balances
    • Advertising revenue (on EFT POS paper receipts & auth tokens)
    Ancillary * (not borne by any) Fees/ Transaction (Borne by merchant)
    • Good purchase
    • Bill payment
    • Top-up
    Fees/ Transaction (Borne by consumer)
    • Cash-in/ Cash-out
    • Balance Transfer
    • Monthly subscription
  • 3 players = 1 provider (1+1+1 > 3)
    • Program manager: Issue mWallets, acquire TXNs, set fees, sign-up merchants
    • MNO: Enable user enrollment, conduct marketing/ customer care, provide access channel (USSD, SMS/ MMS, etc)
    • Bank: Accept deposits, settle funds, avail channels (e.g. ATM, EFT POS)
  • mWallet Advantages
    • Real-time cashless payment mechanism
    • Risk free, no charge-backs
    • Safe - No card/ bank account is required
      • Also suitable for card/account holders who do not wish to expose their cards/ banks account numbers to merchants
    • Seamless customer enrollment (Wallet ID & PIN) via USSD – prepaid & post paid
      • Service is immediately usable on ALL GSM devices, no need for special software nor SIM card
  • Why USSD?
    • Session-based
    • Quick
    • Free
    • Roam-able
    • Centrally manageable
    • Compatible (with all GSM handsets)
    • Portable (not bound to a certain GSM handset)
    • Doesn’t require special SIM card nor special software
    • Easy to use
    • Secure
  • Advantages of suggested approach (for MNOs and Banks)
    • Achieving the sought values with low investment/ organizational change
    • Leveraging the focus and dedication of the third party (Program Manager)
    • Being a part of a bigger regional scheme
  • Program Manager Business Enablers
    • Investment in infrastructure (data center & software platform)
    • Subject-matter expertise
    • Commercial/ legal status
    • Merchant relationships
    • Market exposure and regional outreach
    • Focus and dedication
  • Observations & Conclusion
    • Mobile Payment is becoming a buzz word especially for money transfer/ remittance
      • Big names like Visa, MasterCard, Western Union are trying not to be left out of the competition
      • Some MNOs and banks are moving into circles, trying to attack the opportunity from the right angle
      • TRCs/ TRAs and Central banks are keeping a closer eye on relevant initiatives
      • Huge mobile payment initiatives have already failed
    • The Arab World shall start accepting mPayment very soon (2009/ 2010), given that a proper scheme is chosen
      • Models that have succeeded in other regions might/ might not be suitable for our region
  • ePayment @ STS Running National Payment platforms in Jordan, Qatar, KSA and UAE.. Contracted to process more than 15 million payment transactions a year (> $1 billion in value) Well positioned to undertake a leading role that will help shape a successful MP scheme
  • Thank You! For more information please contact: Janti M. Abdallah, MBA Division Manager, ePayment Solutions (STS) Executive Director, PAYNET (an STS subsidiary) e-mail: [email_address] Mob (JOR): +962 79 697 6771 Mob (UAE): +971 50 1577 637