Knowledgefaber December 2012 Newsletter Contents Pg. Message from Amit My predictions for the year 2013: Expert Interview •Payments will be revamped and Mr. Soma exponential improvements brought through partnerships between money systems, Sundaram………….....2 govt., payment n/w & technology. Saral Mr. Raghuvendra money is one such initiative where Visa, Rao…………………….5 UIDAI and 5 banks are enabling one of the largest financial inclusion systems in the world. We will see more partnerships. News that matters •The point of sale terminal at merchants will ……..…………… ..7 become increasingly mobile. Whether it be Mobile card reader, NFC mobile POS Mr. Amit Goel like that of iKaaz, wireless POS like that of Editorial Pine labs, Mosambee or others. Payment methods’ •Payment revolution will be less aboutCEO, Knowledgefaber integration with different buying a pizza without swiping a credit card devices: way forward and more about the data and insights that can be gathered and improvements made.amit@knowledgefaber. …..……………….8 •Every time technology provides new com payment mechanisms, conservatives Social Media Analytics expect large scale adoption will not happen. Airtel Money………..…9 This thinking will be challenged. After all, a 91-80-41231576 large portion of Facebook 65 mn users in India today used the internet first time to Startups/VC corner access facebook and accessed internet via ………………..….10 mobile. Same thing will happen in Mobile Payments. 2013 will be the year of Payment revolution.
Knowledgefaber December 2012 Expert Interview KF: Where is iKaaz Today? We offer mobile POS for the Soma: We launched our product merchants and mobile wallet on October 17th 2012. iKaaz for the consumers. Interactions team brings in loads of between the consumers and experience in payments (Ex – merchants are simplified by Nokia Money Team). We also means of an innovative Tap & have presence in Africa (Positive Pay solution. Response) and Latin America iKaaz has been formed with a Mr. Soma Sundaram (Slow response). As of now, we very strong team mostly are focusing on the B2B segment comprising of former members and so far the journey has been from Nokia Money. We bring in CEO, iKaaz good and promising. We have a rich level of expertise in theSoma brings in more than two very positive responses from the space of mobile payments as banks and operators. well as consumer services ondecade of experience in the We launched our commercial mobile.software industry particularly in service mid-October this year. We Based on the macro levelthe payments, social networking have also expanded our trends, it is safe to say thatand open source domains. Soma presence to Africa where the consumer adoption is yet toheld a senior management response has been positive; as take off within India & evenposition in Nokia’s global Mobile well as to certain markets in Latin globally we are just seeing aMoney division, prior to which he America where the response has little more traction amongstwas the VP, Product Engineering been on the slower side. But consumers than in the past.at Obopay. Having spent over a overall, we have taken huge We have taken traditionaldecade in the U.S, his experience strides particularly in the last barriers of adoption and arespans start-ups as well as Fortune couple of months and we couldn’t looking to resolve each one of50 companies. Soma has been an be happier with the progress. Our them to ensure success.entrepreneur in the past as well. current focus has been on the We believe consumer adoption B2B segment and strengthening will increase with a growingSoma was instrumental in our presence within the ecosystem presence and ourlaunching MySpace on mobiles ecosystem. We have also goal is for offer a fantasticand developing Microsoft’s received very encouraging product experience tosubscriber download system. responses from Operators & consumers, which is why weSoma was also been involved in Banks who are amongst the have been focusing on thosebuilding large enterprise systems pillars of the mobile payments two drivers. Since we own thefor the Financial, Government and domain. entire product platformUtility sectors. Soma holds a experience we have also beenMaster’s degree in software able to bring costs down bothsystems from BITS, Pilani and KF: What is the USP of iKaaz? for consumers & merchants asholds a Bachelor’s degree in Soma: We offer the master suite we need both to grow.computer engineering from the of mobile payments solution and Consumer adoption has notMadurai Kamraj University. we are unique in offering a low really taken off in India in the cost NFC based solution. past. (contd..)
Knowledgefaber December 2012 ..Expert InterviewAt iKaaz, we believe better that the NFC trail with Nokia We are currently focusing onproduct experience is the driver phone which was conducted in the B2B segment.for increased adoption and hence Bangalore by Citibank in 2009we are focusing on it. We do both costed around US $ 40 per Consumer Mobile Wallet: Thesoftware and hardware by our phone. Additionally, the traditional iKaaz Consumer Wallet forself, that’s how we have been POS in India costs around $200. Enterprises allows enterprisesuccessful in bringing down the So a Mobile POS solution including banks, operators andcost. definitely sounds plausible which is cheap and secure. merchants to offer theConsumer End: Profit Margins arevery minimal in feature phone (low convenience of mobile walletsend phones), so only smart KF: Do you expect competition to their customers for quick andphones are NFC enabled in India. from mobile OEMs in the near easy payments. The iKaazWith less than a fraction of the 5% future? solution can be delivered in theof our smartphones users having Soma: Down the line, mobile form of a mobile app across allNFC, it would have been a slow device manufacturers would definitely have NFC enabled types of mobile phones, as welluptake in India. To address thissituation, we have arrived at a handsets in their portfolio. Apple as through SMS and USSDNFC tag/sticker at the price of as might also come up with an NFC channels for lower-end phoneslow as US$ 2 which equates to phone soon. However, these that do not support apps.about 100 INR. Consumers can handsets would be expensiveassociate their NFC tags with a and their penetration level would Mobile Point of Sale (mPOS):prepaid account or a bank be lower in emerging economies The iKaaz M-POS Tap & Payaccount. which is our forte. our solution is solution allows merchants toAs these NFC tags will be built in emerging economies to replace expensive POSavailable at such low cost for end address a problem in emerging equipment with just a mobilecustomers, it will change the economies. Additionally, we should not forget phone that settles paymentsmobile payments game. Adoptionshould explode. the installed pool of mobile electronically. With theMerchant End: India has more phones (Mobile phones already in solution, merchants canthan 25 million retail merchants. the hands of the consumer) which receive payments fromWe can’t expect everyone to buy do not have an NFC solution. customers with just a tap of aan expensive NFC POSs or smart This is where, our solutions phone at the checkout terminal.phone. Investment cost involved bridges the gap. On one hand, customers areon setting up a POS with NFCcapability is high. To overcome KF: What is the business freed from long queues whilethis, we are going to launch a low model of iKaaz? merchants will be able tocost NFC reader. This reader is Soma: At iKaaz, We offer a significantly reduce thegoing to be huge game changer master suite of services: An NFC transaction cost. and loads offor mobile payments. solution, a solution for the other features can be broughtKnowledgefaber believes that unbanked and we also provide later.NFC tag at US$ 2 is a very cost card readers (Few of oureffective solution considering merchants ask for it: so its for the (contd..) sake of completeness).
Knowledgefaber December 2012 ..Expert Interview Knowledgefaber SurveyCurrently, NFC tags come pre- Knowledgefaber believes that Payment Gateway Transactionprogrammed for payments. On a identification of problem is the key for a firm in this space to be Failuregood will model, we will make successful. For example: “If the •During our discussions withthese tags and readers widely customer problem is standing in various industry expertsavailable across other domains as long queues at a retailer than across the paymentswell, once we have the distributionnetwork in place. ecommerce is the solution. If the ecosystem, KnowledgefaberOur solution also incorporates problem is that people don’t gathered that while there arecash out. We will enable the have cards (unbanked or under- statistics available onfunctionality only we launch it with banked) than prepaid is the “Percentage of onlinea bank. For others, the solution. The USP of “Google transactions failing onfunctionality won’t work as RBI Wallet” in the U.S was to serve ecommerce sites", there is nodoes not permit cash out in India as a forum for merchants to conclusive answer to "Whywithout the involvement of banks. send advertising, loyalty they fail?” promotions, and electronic •In order to address this issue,KF: How do you intend to take coupons to consumers using Knowledgefaber is in thethis solution ahead? near-field communication (NFC) process of conducting aSoma: iKaaz is going to be an technology. “Usability testing exercise”.“Open Eco-System”. We are open •The research would beto partnership even with a firm conducted with a focusedwhich has their existing M group of participants (50 incl.payments solution. Additionally, …….End of Section……. professionals, housewives,we understand that marketing students, retired, etc.). Thesemuscle is required for any firm to respondents would performsucceed in this space. As a result, ecommerce transactionswe are also looking to partner with available in India usingfirms who have the marketing various electronic paymentmuscle to “promote our product”. methods like Credit/To gain more traction and trust inthis space from the consumers Debit/Prepaid.and other business, we will be •Entire transaction(s) processmore transparent and would share would be captured on a dailyour achievements with the general basis for each participant overpublic as and when required. 3 weeks, including insights such as “Transaction failed due to connectivity failure or No OTP generated etc." The key highlights would be shared in one of the upcoming newsletters from Knowledgefaber. Sponsors are welcome.
Knowledgefaber December 2012 Expert Interview Payments Issue is much older and cheque clearing. Nationwide much broader issue than most cheque truncation could remove people tend to be thinking today. the current distinction between There is a lot of noise regarding the “local clearing” & outstation way things are shaping up in mobile cheques. payments but there are other For outstation cheques, the time payment instruments that are much taken is so high that in 2008, more important and have broader National Consumer Forum passed implications than m payments on structure to RBI to improve the Mr. Raghavendra Rao the society. Lets take the example efficiency of payment system. If we of cheques. There was a reason look at countries like Korea, there Independent that there were many countries are no cheques issued and Consultant such as Korea that never had a majority of small consumer- cheque system. Cheques are an business payments are made inefficient system. NEFT and RTGS through electronic, internet or over-Raghavendra Rao currently works were great innovations. But we the-counter payments whichas an Independent banking have still not been able to do away makes the payment systemconsultant wherein he advises with cheques. efficient. In US, the paymentbanks & IT companies on matters of There is tremendous scope of settlement is aimed at T+3 days bystrategy, policy, and critical decision improvement in the Indian payment 2015. U.S in 1978 had passedmaking on business and technology. system, which leads to huge EFT act. In the 80s GovtMr. Raghavendra has held senior opportunity for the new payment encouraged EFT by ensuring allpositions in organizations like methods like Prepaid Cards, NFC Govt. payments >$25000 areCanbank Computer Services, Bankof India and Indian Banks and others. electronic. All the aboveAssociation. He has also worked as Before we go to these new payment mentioned issues/ concerns areadvisor for companies like 3i systems, we must discuss the very good value proposition forInfotech in the past. limitations of traditional methods. “electronification of payments”.Raghavendra, in his 30+ years in Apart from cash, Cheques continue Everyday over 5 lacs tickets arethe banking industry, has guided to play a dominant role in India’s booked online for Railway Ticketsmajor technology initiatives of banks payment system landscape, more on IRCTC Web site. The successat apex level, including introduction so in terms of volumes handled. rate of transactions of most bankof MICR technology, Total Branch Currently, apart from the 66 MICR cards is less than 70%. It shouldComputerization, S.W.I.F.T network, locations (handling around 85% of be noted that using prepaid cardsand Shared Payments SystemNetwork. Mr. Raghavendra has the total cheque volume and value) the success rate is more thanworking association with large multi- for mechanized processing and 90%. Prepaid cards are a verynational banks including ABN Amro, settlement of cheques, there are good model which can electronifyBank of America, Royal Bank of around 1,093 non-MICR centers transaction. Success of a prepaidCanada, OCBC Bank etc and that use a software package for card depends on problemleading Indian banks and large and automating the clearing and definition. Prepaid in India wouldmedium technology companies at settlement process. Last year take off only when we address asenior level. approximately US $ 1,980 billion particular problem of the worth of transactions (1.3 billion consumer. E.g., Prepaid card cheques by volume) were through should be contd..
Knowledgefaber December 2012 ..Expert Interviewdesigned to focus on the less than Divided. To achieve this, firms launching5,000 market - Which is actually our There are few success factors prepaid should be ready tounaddressed market which even a which every firm in this industry spend huge marketing budget.bank finds it difficult to reach. Another should follow: Let us take example ofexample, Consider the payment of 1. Be ready to handle exceptions. Our systems are currently reactive. VISA/MasterCard who follows aproperty tax where a prepaid cardwould be an ideal solution. You could We should be able to address strategy of losses for the first fiverecharge your prepaid card with an exceptions at the real time basis. years; wherein they considerapproximate amount and request any Let’s say, your driver is using a fuel themselves growing only whensecond person to pay the taxes on prepaid card wherein he is facing they make losses. NFC is ayour behalf. This would help you save issues with payment. Systems great solution looking fortime by not going to the Tax office and should be able to get a real time problems. It can provide awould also ensure security as the card approval from the card owner (you) and process the transaction in such foolproof, seamless and simplecan be used only for specifiedpurpose say utility payments, filling cases. There are systems like these solution in many scenarios. Whypetrol, paying school fees with set already in place in some regions. can’t we put it for Bangaloresublimits. Real time approval of For example, in late 80s when Metro or on Churchgate station?transaction for higher limit should be ATMs were installed in India banks In parking system along withpossible by integration of pre-paid & allowed minimum withdrawal even if display of vacancy status andmobile channels. there is a issue with the system. The bank in that case is ready to guide system to locate vacantAs on date Payroll Cards, Gift Cards,Fuel Cards, and Health Cards take a certain amount of risk to parking spot. Similarly there are(Focused on the Medical tourism ensure customer service. Similarly, lot of opportunities withsector) are few examples for banks also installed the concept of technology & BFSI Industry. Asuccessful implementation of prepaid two ATM machines at all places for bank customer traveling abroadin India. Schools, colleges, events, non-stop customer service. Even if walks into a branch for travelersgovernment taxes, registrations are one machine fails, the other would cheque. Why can’t we track himgood use case scenarios. work .(Even while cash was being replenished in one ATM). In and offer him travel insuranceKnowledgefaber believes that thereare supply side challenges in prepaid extreme cases, the card holder can there and then? Real time,cards. To be successful in prepaid call the bank from the phone location specific proactiverequires scale. Small non-serious provided in the ATM. These are few applications will transformplayers will not get approvals and learning which we should apply to banking of the future. NPCI hasserious private non-banking players our payment systems as well. made some efforts in mobilecan only offer weak regulated 2. The second issue which needs to banking. But do the customersofferings without cash-in cash-out. be addresses is that of “Universality”. We have noticed that understand how to obtain MMID?Banks who have the scale are slow tomove. They are being exposed to so there are so many firms launching Why is the IMPS volumes notmuch of innovation such as NFC, prepaid cards which work only going up? Banks are ready tomobile banking, bank apps, mobile across few locations. As a embrace technology and workcard readers, IMPS, and prepaid that consumer, we would like our card to with partners.their focus & span of attention is work across merchants pan India.
Knowledgefaber December 2012 News That MattersVisa Launches New Payment Service reduced retailer and brand confidence in Surpassed in customer spending inin India – Links Indian Unique the technology. The research found that, the first half of the year.Identification with Visa Accounts as a result, there have been fewer http://goo.gl/1Ar1g rollouts and NFC campaigns.Visa announced a partnership with five Consumers would have less NFC Qualcomm honored in India, even asof Indias leading banks to provide visibility and opportunities to make it debuts a chip that may transformAdhaar holders, the Indian national payments would be more restricted, mobile paymentsidentity system, access to a Visa threatening a cycle of "NFC indifference"account. The system will provide tens of in the short-term. Wireless technologies leadermillions of Indians with access to http://goo.gl/9UxVc Qualcomm has announced thefinancial services and electronic availability of a new ultra low powerpayments for the first time. The new American Express launches first NFC communication chip for mobile devicesaccount, called "Saral Money" uses prepaid card in Spore like smart phones, that is likely to kick-biometric information, such as start the business of contactless or tap-fingerprints, to verify and authorize American Express has chosen n-pay phone-based mobile payments.payments. This new initiative brings Singapore to launch its first contactless The company’s subsidiary Qualcommtogether Visa, UIDAI, Axis Bank, HDFC prepaid card by partnering local payment Atheros, has incorporated near fieldBank, ICICI Bank, Indian Overseas company EZ-Link to release the youth- communication (NFC) into theBank and the State Bank of India. Now, targeted offering. It decided on QCA1990 -- the industry’s smallest,by linking Visa accounts to the national Singapore because of the governments ultra-low power system-on-chip (SoC)identity system, customer identities can push in contactless payment technology. with an overall footprint that is 50 percentbe verified via biometric recognition data Its strong ties with the locally-based EZ- smaller than current NFC chips availablestored centrally. Link also played a part. he company has in the market.http://goo.gl/wJkoo been separately investing in contactless http://indiatechonline.com/it- payment infrastructure, so local happened-in-india.php?id=918Mobile NFC growth forecast scaled merchants can accept payment fromback cards such as the Imagine prepaid card Visa and Network International unveil http://goo.gl/JVl00 mobile POS terminals in UAEUK telecommunications research Visa, has announced the launch ofcompany Juniper has published revised China’s UnionPay Vies With Visa for mobile Point of Sale [mPOS] terminalsforecasts for the global NFC market, Global Card Dominance in the UAE, an innovative and low costsignificantly lowering its estimates for UnionPay is extending its initiative that has the potential to facilitatetake up in the North American and international reach. It is now fast and secure card payments andWestern European markets. accepted in 135 countries. Its rise is grow the footprint of card acceptanceJunipers report suggested that causing friction as the firm grabs across the country.Apples decision to omit an NFC market share from Visa Inc. as well http://www.ameinfo.com/visa-chipset from the iPhone 5 has as MasterCard Inc., which UnionPay network-international-unveil-mobile- pos-323427 Knowledgefaber Insights:Knowledgefaber believes that identification of problem is the key for a firm in this space to be successful.Don’t bring solutions that are still looking for a problem. For example: “If the customer problem is standing inlong queues at a retailer than probably ecommerce is the most fitting solution. If the problem is that peopledon’t have cards (unbanked or under-banked) than prepaid is the solution not NFC or mobile money. The USPof “Google Wallet” NFC initiative in the U.S was to serve as a system for merchants to send advertising,loyalty promotions, and Location aware coupons to consumers using near-field communication (NFC)technology over and above shopping and mobile payments.
Knowledgefaber December 2012 Editorial – Vipul Vohra Payment methods’ integration with different devices: way forwardThere was a time when the only way What about Indiato make a utility bill payment was to In today’s world, any paymentstand in long queues and present solution concept is centered With a mobile phone subscribercurrency notes or a cheque/demand around its integration with various base of approximately 900 million,draft etc. Then came along e- devices mobile devices can really help inpayments and m-payments which the off-take of non-physicalintegrated the payment modes like When Square conceptualized its payment solutions in India. Inbank account, credit/debit/prepaid mobile card reader, it thought of India, the m-payments market iscards etc. with devices like laptop, building a product based upon expected to be $1.15 billion intablets and smartphones making our harnessing the popularity of i-phones 2016 growing at a CAGR of 68%lives much more simpler. Penetration and i-pads in U.S. In India, Ezetap from $86 million in 2011. However,of technology in our daily lives has went one step further and made its real challenge will be merchantresulted in a paradigm shift in the way mobile card reader functional not acquisition. Airtel Money haswe make payments. This trend only with smartphones but also around only 7,000 merchantsstarted with our desktops/laptops feature phones. iKaaz conceptualized enrolled for its program. However,becoming a tool for doing online a $2 NFC tag, which will provide any this problem can be tackled by thebanking. Smartphones, tablets and phone with the NFC technology entry of banks which can utilizeeven smart TVs are taking this trend functionality, keeping in mind the the existing networks like Visa andforward. Mobile card readers are high proliferation of feature phones in Mastercard to widen the reach ofeven enabling merchants to accept India. Above examples clearly show wallet programs. Entry of playerspayments through a hand-held how the device is taking the center like M-Pesa, iKaaz, Ezetap candevice. The fusion of various payment stage as far as the payment solutions further drive the growth of devicemethods with these devices is helping are concerned. Devices have driven payments. Also perhaps,in the realization of the utopian dream become the starting point of any these new solutions provider haveof “cashless society.” product strategy in this domain. Even to provide low cost solutions and names like Airtel and Google are incentivize consumers and launching payment solutions (Airtel merchants for changing the long Money and Google Wallet) targeting entrenched old school payment to tap this huge potential opportunity habits. For instance, Citibank’s originating from device and payment NFC trials in Bengaluru provided a solutions fusion. Though, it is a lot of incentives to the consumers different matter that all the above for adopting NFC payments and examples are yet to see widespread as a result, the trial was a adoption for one reason or another. success. Total cost of a NFC enabled phone was subsidized by Saying that, it is inevitable that in the the bank. iKaaz’s $2 future most of our payment needs will NFC tag is another example of an be taken care by a handheld device. innovative low cost solution. More M-payments market globally is innovations like these will surely expected to be $170 billion by 2015 provide a boost to overall compared to $60 billion in 2011 and payments ecosystem. proliferation of smartphones and tablets etc. are going to play a large role in this growth .
Knowledgefaber December 2012 Social Media Analytics Knowledgefaber tried to gauge the user satisfaction while using the popular semi-closed mobile wallet in India, Airtel Money, based on the response of users about their experiences of using Airtel Money on different social media websites. Keyword used: Airtel Money Filters: India, - Kenya, -Africa, Posted in last 2 months Source: Various Social Media Analytics Tools These were the findings: Few responses captured by us: Positive: @albelainsti Not very fast, but is simple and secure and the best part is that offer me the convenience of instant money transfer to another airtel money wallet Negative: @mkihuha I found it pretty complicated as for logging in, we have to solve a captcha, which is time consuming and boring too Neutral: @AIRTEL_KE w@ if all I’m interested in is to be loading my Airtel Money AC & not the mobile banking services? Knowledgefaber Insights: There is a very high percentage of neutral sentiments, because users are not well informed about how to use it. KF believes that there is a clear need for consumer awareness and education about such services. Positive responses are higher than negative responses, because people are finding it useful and convenient, but there are few users who find it complicated and time taking too.Performance Indicators RelevanceStrength It is the likelihood that the brand is being discussed in the social media. It is calculated as :phrase mentions in last 24 hours divided by total possible mentions.Sentiment It is the ratio of mentions that are generally positive to those that are generally negative.Passion It is the likelihood that the individuals talking about the particular brand will do so repeatedly.Reach It is the measure of the range of influence, i.e. number of unique authors referencing the brand divided by total number of mentions.
Knowledgefaber December 2012 Humor in use cases Startups/VC Corner – Nagarajan Ganesan ZaakPay ZaakPay is an online payment solutions provider founded by Upasana Taku and Bipin Preet Singh and raised a little less than $1 million funding from Sequoia Capital in 2012. ZaakPay’s flagship product – Webpay which enables e-commerce players to accept payments online through cards was launched in March,2012. ZaakPay expects to break even in the next two years and is eyeing a top line revenue of about Rs 50-70 crore in the next fiscal year. Gharpay Gharpay is a doorstep cash payment network which collects cash from customer’s doorsteps on behalf of its clients. It is founded by Abhishek Nayak and Arpit Mohan and funded by Sequoia Capital. It consists of Aditya Mishra 63 employees and 17 clients including Redbus, Cleartrip, Dealsandyou.com and Ferns’N Petals etc. My Mobile Payments Ltd. My Mobile Payments Ltd. is a Mumbai based Did You Know? start-up and offers semi closed mobile walletKnowledgefaber expects that the biggest “Money-On-Mobile.” The company wasapplication area of the mobile card reader will founded by Jolly Mathur and has raisedbe e-commerce, where it will enable card on $29.7 million from Texas-based Calpian Inc.delivery. The company aims to cater to the masses by making available mobile payments for mobile recharge, money transfer, DTH recharge and purchase of air/train/bus and movie tickets. Money On Mobile’s mobile payment platform can be accessed via SMS. For sponsoring this newsletter, write to email@example.com To Unsubscribe, write to firstname.lastname@example.org