Mobile financial services in the developing world


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[MobileMonday Switzerland #2 : Mobile payments and banking.]

Simon Cavill is an acknowledged industry expert in mobile phone, payments and digital broadcasting with over 25 years of industry experience and a raft of patents to prove it. As the CTO of Mi-Pay, Simon was instrumental in the creation and development of this company from start-up to a mature mobile payments business with operations on four continents.

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Mobile financial services in the developing world

  1. 1. Africa today - Europe Tomorrow? Deploying the Last Mile of financial services Simon Cavill Mi-Pay Ltd
  2. 2. At the forefront of the hottest trends in payments worldwide • Mobile Initiated Payments & Pre-Paid Top-Up Outsourcing • Domestic & International airtime and person to person payments • Meter Initiated Payments (Pre-paid Utilities) • Micro Payments (e-Wallets issuing & Micro-finance Services) • Mobile & Internet Payments (Service Provider) • Media Interactive Payments (Mobile Digital Broadcast & TV)
  3. 3. Mi-Pay – Mobile Payment Veterans? • Specialists in secure mobile initiated financial services and payment applications • 4-year track record of deploying mobile applications worldwide – 18 countries; 5 languages • Working with – Banks & Core banking software providers – Payment services providers – Mobile operators and MVNO’s • Implementation partners include – Logica, Unisys, Isys Mobile, Masabi, FE Mobile • Customers include – Cliq Radio - Live music downloads from UK radio stations – Misys and Temenos – retail banking software suppliers – Mobile operators across Europe, The Middle East and Africa – And several projects in course of completion in Sudan, Kuwait, Tanzania, Ghana, Senegal etc. 3
  4. 4. Choices, Choices… The Rich have a wide range of choices – The Poor do not… The Rich have immediate access to a wide range of payment methods and financial services – The Poor use cash only and have very limited access to financial services The Rich trade effortlessly – The Poor would like to if they had the tools and services to do so There are more Poor people in the world than Rich ones… Mother is the necessity of invention – There are many interesting and innovative uses of mobile phones across the developing world largely driven by the lack of any other infrastructure available to the mass of potential consumers. 4
  5. 5. This is Our Market… That Lady in the blue dress on the top right is our key client – She is a pre-pay top up vendor amongst other things and is the focus of our B2V (Business to Vendor) strategy. We either get her a special SIM or side-load our Java applet onto her phone supplied either by the operator or distributor she works for. This application enables her to provide a direct electronic top-up channel to her customer base removing the need for her to sell coupons or scratch-cards, although it does not actually stop her doing so. The same device also provides basic stock control and enables her to act as a mobile ATM and/or deliverer of financial services to her local client base. 5
  6. 6. And it’s a Large Market… 2.5 Billion ??? Lots more!! Potential market of 6.3 Billion people Do not underestimate the millions of consumers across the World that currently share a single handset between them. Bringing financial services to these shared users is a real technical challenge! 6
  7. 7. Some of whom are short on resources… are Our challenge is to delivery a wide range of financial services to people like this…. No access to a bank or any other financial infrastructure in daily life as in the developing World, most bank branches are confined to cities. The only device 7
  8. 8. In the most unusual places…
  9. 9. Where the phone is often the only contact point for financial services… There are a whole range of drivers impacting the adoption of mobile initiated payments and financial services to both existing and potential mobile phone consumers around the world. 9
  10. 10. So what are the Real Challenges? Bringing a variety of financial services to potential consumers across the developing World
  11. 11. here’ OK, So here’s the Technology Slide Voice (IVR) SMS Universal but requires careful Works on 3 Billion handsets design Used almost universally Voice recognition for secure ID only Less secure Simple and effective Encrypted SMS adds security USSD Universal across all GSM devices Menu driven - easy to use More secure than SMS and WAP Secure Java Applet NFC APPLICATIONS Best client experience Tying Ad views to payment opportunities Flexible and brandable Small retail payments from SVA’s Extremely Secure Ads / promo / service discovery Multi-factor authentication Instant free content in retail stores 3Des encryption locally and in transmission Transport No sensitive data on handset Simon’s Law – There are only three universal delivery platforms for the mobile handset that can reach every mobile phone consumer – SMS text messaging, Voice and USSD. Everything else is a risk at it relies on the consumer having a phone that can initiate an IP connection. Mi-Pay uses Java applications where they can be deployed to “known” groups of users such as vendors with suitable handsets. Consumers interact with Mi-Pay’s mobile initiated financial services through SMS or USSD typically. An IVR system can be supported where appropriate. 11
  12. 12. The Last Mile of Financial Services Micro- Bill Micro- Utility Insurance Payments Finance Payments Pre-Pay Person to Pension International Phone Top Person Distributio Money Financial up’s Payments n Transfers Services Education Airtime as Tax International Fees Currency Payments Airtime Transfers Pre-Pay Funeral Banking the Unbanked Fees MOBILE MOBILE AGENT AGENT Agent Java applet, Networks USSD USSD, SMS, Consumers IVR (Voice) R $ R $ R $ Mi-Pay 12
  13. 13. Mobile Money Transfer Mi-Pay’s strategy is to work with and through mobile operators and financial service providers across the world to build and maintain mobile initiated money transfer services that combine the simplicity, cost advantages and reach of the Hawala type schemes with the strengths of a financially compliant service run through the locally trusted brand of the mobile operator or bank as appropriate. The system has unique advantages as it enables the operators to hold the inbound remittance flow of money offshore and then offset this value against the locally held vendor cash balances. We then instruct the vendor to issue cash to the recipient on the production of a SMS containing a one-time PIN plus their national ID card to the vendor. 14
  14. 14. Airtime as Currency In many places, the operator is the trusted brand and has an enormous reach both politically and geographically. We can use this to potentially create a separate currency based on airtime that can be transferred between consumers or redeemed for cash at certain pre-pay vendors who in turn hold the airtime minutes and resell them to other customers. 15
  15. 15. forward… Our current road map going forward… Educational loans/ Micro-investment Group finance microloans Savings Household Life insurance Pensions Individual microloans Health insurance Housing loans remittances Consumer finance Target Clients Grants and subsidies Agricultural finance Individual microloans leasing Small Business Group Life Weather microloans insurance Crop insurance insurance Available today Product Availability Early planning and experiments 16
  16. 16. What’s the relevance of all this to Europe? Making it all work Large scale deployments will provide working models Manage fraud, compliance, & dispute management – Indemnified services? Airtime/Money Transfers Family / friends can top up / recharge phones of relatives overseas from their own handsets Transfer small amounts of money instantly to those with or without bank accounts Airtime recipients can use received airtime as “currency” forwarding to others on a domestic P2P basis SEPA – P2P Transfers Direct transfer of small amounts between individual using their handsets Simple Bill presentment and non retail payments NFC is still a long way from practical deployment Practical experience gained elsewhere will be key…
  17. 17. You… Thank You… Visit us on: Or contact us directly Simon Cavill - Mi-Pay Ltd Tel: + 44 1483 794920 Mob: + 44 7733 307123 Skype: simoncav Email: simon.cavill@mi- 18
  18. 18. Mobile Money Worldwide International / Domestic Airtime and Money Transfer Currently developing & deploying white label systems for operator groups across four continents Can receive payment requests from over 100 countries Fully compliant with all appropriate local & international regulations Can be provided on an indemnified basis - we take on fraud and other risks Operator centric approach minimizing use of banks and other money transfer services Airtime Transfers Family / friends can top up / recharge phones of relatives overseas from their own handsets Recipients can use received airtime as “currency” forwarding to others on a domestic P2P basis Money Transfers Unique approach - Offset inbound hard currency transfers held offshore against pre-pay cash already held in local currency Low cost approach maximizes revenues whilst enabling consumer to use the service for “free” Cash transfers paid locally to recipients through operators top up/recharge vendors Includes bill payment and other financial services through agent network Mi-Pay is extremely active in this space, currently working with operator groups in Europe, the Middle East, Africa, Asia and the America’s to deploy a mixture of airtime and money transfer systems. 19
  19. 19. Future… The Future…?? International / Domestic Airtime and Money Transfer Already starting to interconnect “Sending” and “Receiving” operators National Payment Switches Airtime Transfers Could airtime be the ” Euro” of the developing world? Direct linking of people’s pre-pay accounts to others overseas – Auto top-up Financial Services Using existing or parallel agent networks to roll out financial services nationally Pension Payments Healthcare survey’s and Insurance schemes Savings plans Huge interest in Micro-Finance from overseas development agencies There are already interesting discussions around the creation of exchanges between non competing operator groups to enable the transfer of airtime and/or money across the World. 20
  20. 20. are… Who we are… Established in 2003 on the back of a friendly exit from LogicaCMG UK HQ and secure data centre near London. Other offices in; Sibiu, Romania - Merchant support, finance & back office reconciliation Dubai UAE - Mid/Near East & Africa sales, secure data centre, local project management and support Privately owned. Minority shareholders include: VocaLink (National UK Payment switch owned by Bank of England, Barclays and Natwest and other UK clearing banks) Retail Decisions - Global Fraud screening company Close Brothers Investment Bank Founder member of GSMA Mobile Money Transfer Vendors Group Offer indemnified top-up payment services (UK & Europe) Web, SMS, Java, WAP, USSD & IVR 21
  21. 21. do… What we do… Provide secure, white label services on an outsourced basis to mobile operators, the finance industry and media owners across the World. Manage direct pre-pay top up services for mobile operators and other pre-paid account services - from bank accounts, cards, or cash over the counter Domestic Peer to Peer mobile money transfer services in two major markets Mobile e-wallet in several markets for utility bill payment, pre pay top up, loan funding repayments and other services International mobile cash remittances in five transmission corridors - UK to India, UAE to Asia, EU to EU, EU to Africa, and USA to Latin America (2009). Current clients include Vodafone, Orange, Du (Dubai), Mas Vida (Spain MVNO), KPN/Telfort (Holland), Carphone Warehouse and Tesco Mobile (UK MVNOs), Cliq (UK Radio), Luup, 6Telecom, and other major operator groups Offer indemnified top-up payment services (UK & Europe) Web, SMS, Java, WAP, USSD & IVR 22