Liberating A Cash Based Society

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Liberating A Cash Based Society

  1. 1. 2008 LIBERATING A CASH BASED SOCIETY S Foss Triune Payment Solutions, Inc. 8/1/2008
  2. 2. LEGAL NOTICES NOTICE SPECIFIC TO DOCUMENT Permission to use Document provided that (1) the below copyright notice appears in all copies and that both the copyright notice and this permission notice appear, (2) use of such Document is for informational and non-commercial or personal use only and will not be copied or posted on any network computer or broadcast in any media, and (3) no modifications of the Document are made. Accredited educational institutions, such as K-12, universities, private/public colleges, and state community colleges, may download and reproduce the Document for distribution in the classroom. Distribution outside the classroom requires express written permission. Use for any other purpose is expressly prohibited by law, and may result in severe civil and criminal penalties. Violators will be prosecuted to the maximum extent possible. COPYRIGHT NOTICE Personal use of this material is permitted. However, permission to reprint/republish this material for advertising or promotional purposes or for creating new collective works for resale or redistribution to servers or lists, or to reuse any copyrighted component of this work in other works must be obtained from Triune Payment Solutions, Inc.™ Triune Payment Solutions, Inc. | Summary 2
  3. 3. Table of Contents Summary ....................................................................................................................................................... 4 Cash Is King ................................................................................................................................................... 5 Observing the Market ................................................................................................................................... 6 National History ........................................................................................................................................ 6 Geography ................................................................................................................................................. 6 Political Stability ........................................................................................................................................ 6 Technology Infrastructure ........................................................................................................................ 6 Population ................................................................................................................................................. 7 Merchants ................................................................................................................................................. 7 Payment Methods ..................................................................................................................................... 8 Our Strategic View ........................................................................................................................................ 9 Concept ....................................................................................................................................................... 10 Transaction Methods Compared ............................................................................................................ 10 Conclusions ................................................................................................................................................. 11 End Notes .................................................................................................................................................... 12 Triune Payment Solutions, Inc. | Summary 3
  4. 4. Summary The Triune Payment Solutions group offers more than seven decades worth of exceptional executive management, operational knowledge and technological innovation skills specializing in the creation of advanced electronic payment solutions for both domestic and international use. The group was founded for the sole purpose of bringing together diverse and highly talented individuals to put forth fresh and innovative approaches to monetary payment issues. In past years this group has been responsible, as individuals and partners, for some of the most significant technological and innovate business methods currently utilized in electronic payment systems. This methods and systems include advanced risk avoidance, domestic and international money transfer, stored value card systems and ecommerce systems. As Thought Leaders in the electronic payments industry the collective has, for a number of years, had direct and indirect relationships with a number of Pacific Rim nations including the Philippines. The group has realized after years in dealing with the top tier Philippine Banks and Philippine governmental officials that there was an opportunity to create a unique electronic payment system that would capitalize on the domestic payment issues that were and are prevalent in most Pacific Rim countries. The first stage of that opportunity has already been seized and through the efforts of Triune Payment Solutions a robust, effective, risk adverse electronic payment system has been launched with the cooperation of the Philippine government, banks, technology infrastructure providers and Triune’s internal resources. We recognize that this first step has started a revolution that will liberate the domestic Philippine cash payment based economy and move it towards an effective, non-discriminatory method of commerce that can and will change the economy of the Philippines as well as the potential impact on the international economy as well. The following discussion provides our view of the revolution and what impact it will have on both national and international commerce. Triune Payment Solutions, Inc. | Summary 4
  5. 5. Cash Is King The historical use of representative money in the many countries of the Pacific Rim has its roots in the European models of the 18th and 19th centuries. Many of the current monetary system models have been elevated from the original use of representative money to fiat money in the late 20th Century. However, the actual practice of exchange of currency for goods and services has not changed. Without providing an in-depth historical lesson on the rise of monetary systems throughout the Pacific Rim we believe it is sufficient to state that with few exceptions; Australia, New Zealand, Japan, and Singapore, the remaining nations are mired in a middle ground where the extension of credit and electronic commerce are either sparse or non-existent. This is not to say that these countries do practice modern Central banking or have reasonably sophisticated banking systems. It does reflect on these countries inability to move into the current models of commercial growth centered on the use of the Internet for business to consumer trading. It is paradoxical that in many of these countries the use of technology is high, particularly in the use of mobile telephony and participation in the social use of the Internet as observed in figure 1. The growth of eCommerce across the developed world is becoming a major component in the calculation of the Gross Domestic Product (GDP) of many countries. The current GDP contribution of eCommerce / ITC, as of 2007, to the U.S. economy was estimated at 3.6 percent.1 As the GDP is an 1 2007 UN Report for Information & Communication internal contribution to a country’s valuation, Technologies 3.6 percent equates to a very large number as the total US GDP for 2007 was estimated at $13,807 Billion Dollars. While the Philippine GDP for that same time period was significantly less ($298 Billion Dollars2). There were no appreciable contributions by the eCommerce sector to the Philippine GDP. The good news is that the Philippine GDP continued to grow at a 7% rate over the prior year ranking it as the 37th largest economy in the world.3 The impact of a vibrant eCommerce Industry is obvious when observing the preceding figures. However, to build such a major contributor to a nation’s economic power requires a number of favorable conditions to be in place or the opportunity to create those conditions exist within the nation’s boundaries. The need to move a domestic population from a cash based economy is one of the prime conditions that needs to be met to insure a proper foundation is created for a thriving eCommerce Industry to exist. Triune Payment Solutions, Inc. | Cash Is King/ 5
  6. 6. Observing the Market National History When considering the necessary precursors to the birth and growth of an eCommerce based environment it is necessary to understand the fundamentals of the existing points within the Pacific Rim countries that support eCommerce as a method of creating economic opportunity and growth. The first is partially based upon historical precedent in which the nation has a historical pattern of industrialization and movement into the post-Industrial age. The International Monetary Fund (IMF) has categorized nations meeting these conditions in the Pacific Rim as having advance economies and has been previously identified. 2 Pacific Rim Advanced Economies Geography It is of interest that these advanced economy countries have, in general, geographically constrained boundaries which have lead to the growth of the nation. The general lack of contagious land mass is indeed a barrier to homogenous national growth. The remaining economically non-advanced countries are subjected to this geographically barrier, particularly the Philippines with over 7,000 islands and Indonesia with more than 17,000 islands comprising their respective nations. Political Stability The continuity of the national policies and the political will to provide governmental assistance to technological development are essential to the growth of a eCommerce Industry within a nation. In particular the Philippine government has had a track record of stability from its independence in 1946. The current Philippine government has provided the necessary incentives for foreign investments and is actively promoting the growth of eCommerce as a means to assist its people in both educational and commercial terms. In contrast the Indonesian government that after its independence from Holland in 1962 almost immediately fell into a authoritarian state, limiting its interaction with the Western Nations which created a lag in development of its economy. After 1998 the Indonesian government has become more stable and has activity promoted foreign investment and actively promoted eCommerce as a method to create economic growth. Technology Infrastructure A major concern for the development of a strong eCommerce is the ability of a nation to provide a robust means to facilitate the accessibility of the Internet. Past the underlying telecommunications infrastructure is the need for reliable and stable co-location facilities and the technical experience to provide 24 hour support within these facilities. Triune Payment Solutions, Inc. | Observing the Market 6
  7. 7. In the case of the Philippines the nation supports an extremely robust telecommunications network centered on the capital city of Manila. From that center a reasonably reliant network crosses the nation with a fairly high rate of accessibility. In addition to a national telecommunications backbone there are a number of co-location facilities that more than meet the requirements of Tier One facility using OC192 connections and the necessary security and redundancy to run domestic and international based eCommerce systems. Additionally 3 Telco backbones for Pacific Rim the domestic infrastructure supports an estimated 23 Million individual Internet users as of 2008. Estimated ownership of personal computers in a household is about 2 Million personal computers. Population The population obviously plays a significant role in the ability for a nation to support an eCommerce Industry. More than half of the current population of the Philippines, some 90 million, resides on the island of Luzon, which is the focal point of the current economy. The average literacy of the population is more than 92%. This ties to the high use of technology based communications systems such as mobile phones and use of the Internet. Currently the estimated purchasing power per capita is about $5,700. This obviously takes into account the large agrarian economy. One additional point is that approximately 8% of the population (approximately 7.2 million) lives outside of the country as domestic labors. Triune has substantial contact with the Philippine Overseas Employment Administration (POEA) on other projects to assist those living abroad with a reasonable method of transacting retail and other transactions using stored value products. This particular population also assists the economy of the Philippines by sending remittances to their families on a regular basis. Current estimates show approximately $11 Billion dollars sent to family members in 2007. This is a very important aspect of the economy and should not be overlooked as helping power an eCommerce Industry. Merchants Obviously it is necessary to have a merchant base that is willing to consider or has to some limited extent utilized the sales channel offered by eCommerce. While involved with other projects in the Philippines we have uncovered a significant opportunity to bring a large group of brick and mortar merchants that are willing to engage in this emerging sales channel. Currently there are a handful of online merchants doing business in the Philippines and for the most part are faced to those Filipino’s living abroad, primarily in the United States, to have hard goods sent to family members still living in the Philippines. These merchants are currently constrained to the use of non-Philippine based payment systems as merchant acquiring for online transactions has not yet made significant inroads yet. Although dated, a Triune Payment Solutions, Inc. | Observing the Market 7
  8. 8. UN survey4 provides some information as to the spending patterns that have existed and what types of goods or services are purchased.  90 percent of Internet traffic in the Philippines goes to the USA.  The top five products and services that Filipinos buy online are books (54 %), computer software (33 %), domain names (31 %), web hosting (25 %) and computer hardware (24 %).  The top five sites Filipinos shop at are Amazon.com (54 percent), eBay (11 percent), myAyala, Network Solutions (8 percent) each, Barnes and Noble (6 percent) and Register.com (6 percent).  Filipino online shoppers spend an average US$522 per year. Payment Methods Traditionally payments made for online transactions are restricted to transaction accounts (credit / debit card accounts) or via bill payment systems such as PayPal. However, in the Pacific Rim non-advanced economic nations the possession of such accounts is highly restricted due to the inability of reasonable credit risk management and large reoccurring losses due to a high level of fraudulent activity. The primary associations normally used, VISA, MasterCard and American Express are not making their brands readily available in the Philippines as well as the surrounding nations. The merchants that do offer other payment methods for online transactions are very cumbersome and in our view provide a significant obstacle to the growth of the eCommerce Industry. Some of the other available online payment options include the use of a manual bank transfer in which the consumer must provide proof of funds availability in their bank account prior to the 4 Transaction Cards in Asia Pacific completion of the sale and shipment of goods. Another option other than the use of a transaction card is payment thorough Western Union as illustrated in figure 5. These payment options do not make sense under the current conditions of economic status if an eCommerce Industry is to move forward. In our view a new application of a traditional method is necessary to move this Industry forward. 5 Online Merchant Payment Options Triune Payment Solutions, Inc. | Observing the Market 8
  9. 9. Our Strategic View Taking all of the current observations into account Triune has concluded that the failure of eCommerce Industry growth falls squarely upon the inability of existing payment methods to reach the lowest level of the national population within the non-advanced economy nations. It is our view that the following provides the basic reason for the failure of eCommerce to take hold, particularly in the Philippines. Based upon this very simple observation Triune has elected to further its existing business in the Philippines to include a new method of generating eCommerce, primarily Business to Consumer, transactions. In the current state we have created and assisted in the deployment of a payment system application which is currently running on dedicated servers in a Tier One collocation facility in Manila. This payment system is supported by one of the largest Filipino-owned financial institutions in the nation which Triune engaged for this project. The current application is utilized as a “eWallet” payment system for international online payment services that courts the consumer that does not wish or cannot use transaction card accounts to complete eCommerce transactions. The application was designed to support all of the current U.S. banking standards as well as accommodate the national banking practices and laws of the Philippine government. It is this application that provides, what Triune, views as a payment method that will permit the expansion of eCommerce to the vary base of the national population. The current application, while geared towards use in the International market, is modularized and is highly adaptable to the few changes necessary to launch it as a domestic product. In the current state Triune believes that a modified application, existing contacts with multiples of large retail merchants in the Philippines, the addition of a third factor not previously discussed which is the direct contract with a group of more than 1,200 existing Filipino outlets where financial transactions are conducted and the backing of several Filipino financial institutions the growth of a eCommerce Business to Consumer Industry can and will succeed. Triune Payment Solutions, Inc. | Our Strategic View 9
  10. 10. Concept The logical extension of the strategic view of Triune is the overarching concept that will define the payment system for non-advanced economy nations. This concept, while generalized for this discussion, provides counterpoints to what we feel are failure points in the current available payment methodologies. Transaction Methods Compared Triune Payment Solutions, Inc. | Concept 10
  11. 11. Conclusions This document has attempted to show, at a very high level, how a national economy can be impacted by the contributions of an eCommerce Industry that is energized existing concepts and components. It only awaits those who have the ability to mold those concepts into a system that works. Triune believes that the ability to make online payments easy and safe for all parties involved with the transaction; the consumer, the financial institution and the merchant presents a valuable opportunity for those that see the future of eCommerce in the non-advance economy nations of the world outside of the traditional methods. Triune has the experience, knowledge and proven ability to provide the innovative systems necessary to complete such a project and is ready to move forward with the proper partnerships. Triune Payment Solutions, Inc. | Conclusions 11
  12. 12. End Notes 1 Bureau of Economic Analysis, “Downturn in Finance and Insurance Restrains Real GDP Growth in 2007” http://www.bea.gov/newsreleases/industry/gdpindustry/gdpindnewsrelease.htm 2 Indexmudi, “Philippine Economy”, http://www.indexmundi.com/philippines/economy_profile.html 3 Wikipedia, “Economy of the Philippines”, http://en.wikipedia.org/wiki/Economy_of_the_Philippines 4 United Nations Asian Pacific Development Information Program, “ITC – Profile Philippines”, http://www.apdip.net/projects/dig-rev/info/ph Triune Payment Solutions, Inc. | End Notes 12

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