This document discusses how transport systems can help ignite e-money and mobile money adoption in emerging markets. It argues that making transport a central part of e-money solutions systematically leads to ignition by reaching the broadest customer base and becoming a top spending category. For ignition to be successful, solutions need compelling value propositions for all participants, sustainable business models, and planned network effects. They also benefit from open technology standards that encourage collaboration between transport operators, mobile networks, banks and other ecosystems. Emerging markets have found successful approaches to digital inclusion through transport-focused applications that combine mobile services, and established lessons can be learned from their innovations.

1. Novembre 2015
Christian Senly
A Call for Open Standards:
Could Transport be the Key to
Igniting E-Money / M-Money?

2. E-money and M-money in emerging markets
ECB: e-money is “electronic store of monetary
value on a technical device that may be widely used
for making payments to entities other than the e-
money issuer…”
 Enables simple interoperability
 E-money as stored value transport
in closed-loop
 M-money as mobile-account based
financial services
 Transport a precondition to achieve network
effect’s critical mass… outside of transport?
 M-money to addresses the unbanked?
Nov 2015 Page 2

3. Ignition?
 M-money Ignition?*
 Yes
 Bangladesh
 Most African initiatives
 Weakly
 Philippines
 Pakistan
 Transport centered e-money
ignition occurs systematically**
 Broadest base of market segments
 Top of wallet position
 Off-line and on-line
 Imagine seamless e-money & m-
money services complementing
each others, and linked to other
ecosystems…
Nov 2015 Page 3
(*)Source: http://www.law.uchicago.edu/Lawecon/
3 active cards per person
99% of population with at least one card
14000 retail shops
67000 point of acceptance
13M daily transactions
(**)Transport e-money’s ignition example: Hong Kong
Next generation
e-money’s ignition
example: Manila?

4. E-money ignition Critical Success Factors in emerging
markets / centered on Transport
Nov 2015 Page 4
? ?
?
?

5. Emerging markets’ real needs result in real solutions
 It is not about replacing existing
payment services or keeping
mobile subscribers subscribe
 The vast majority of people are
still under-served*
 Infrastructures are often not there
 Regulators are more focused on
creating the conditions for private
investment
 Investors enjoy buoyant economic
perspectives
 Resulting collaboration models and
value propositions are singular
Nov 2015 Page 5
(*)Only OECD household majority enjoys access to e-commerce

6. E-money ignition Critical Success Factors in emerging
markets / centered on Transport
Nov 2015 Page 6
Collaborative
Private Ventures
Regulatory

7. How regulators can create the most value out of
Transport?
 Biggest issues of most Transport authorities/operators:
 Access to investment and limited elasticity of Transport fare
 Proprietary lock-ins
 Solutions:
 Leverage the intrinsic value of Transport killer app through
Public-Private-Partnership programs
 With no extra cost/barrier to transport user’s adoption
 Enable innovative business models
 Based on convergence
 Compelling enough for participants to sustain their role
in the new ecosystem
 Powered by open standards and e-money based interoperability
 … while removing/Future-proofing proprietary lock-ins
Nov 2015 Page 7

8. E-money ignition Critical Success Factors in emerging
markets / centered on Transport
Nov 2015 Page 8
Collaborative
Private Ventures
Regulatory
Compelling value-
proposition to all
participants
Transport,
MNOs, Banks,
and so on

9. What business model to link consumers & service providers
around Transport?
Acquiring Program T = 0
Demand side
Application acceptance
Supply side
Application issuance
Transport Project T = 1
Transport Project T = 0
AFCS Project T = 0
Transport Project T = 0 + 7 years
Transport Project T = 0 + 7 years
Mobile & Account-based
reload channels
Transport user base
White-label loyalty programs
Cash & Banking reload channels
Retail merchant clients A
Retail merchant clients B
Retail merchant clients
3rd party acquiring
Private PTO association
user base
Parking & tollway user base
CONSUMERS PROVIDERS
Application
owner
Acquirers
Issuance Program T = 0
Nov 2015 Page 9
Supply and demand sides of an application network are grown in parallel
to sustain closed-loop services adoption

10. E-money ignition Critical Success Factors in emerging
markets / centered on Transport
Nov 2015 Page 10
Collaborative
Private Ventures
Regulatory
Compelling Value-
Proposition to all
participants
Transport,
MNOs, Banks,
and so on
Closed-loop
Business Model
Sustainable
business plans,
Planned network
effect, Business
agility

11. What Technology implication was brought about by
digital convergence?
 Card network effect built on mass transport
is unstoppable
• But so far it is mostly locked into proprietary
technologies and closed-loop programs
 ‘Convergence’ is creating a new wave of
transformation, e.g. payment ecosystem(s)
• But user experience relevance is
ceiled at 20%
• And there a lot more than just payment
in consumers’ digital expectations
 Convergence, centered on Transport,
has a unique potential in terms of
 Market size
 Brand power
 Value creation
Nov 2015 Page 11

12. Chip Providers/Manufacturers
Card/Inlay Manufacturers
System Integrators & Solution
providers
Software Developers
Convergence between Transport and other ecosytems
call for open standards
HCE/Tokens,
AID routing,
Wallets,
Account-based,
Bridging EMV,
M-Banking, …
?
Nov 2015 Page 12
OSPTA is positioned to enable standardization of
the secure element and beyond

13. E-money ignition Critical Success Factors in emerging
markets / centered on Transport
Nov 2015 Page 13
Collaborative
Private Ventures
Regulatory
Compelling value-
proposition to all
participants
Transport,
MNOs, Banks,
and so on
Agile Closed-loop
business model
Technology
Secure,
Interoperable
and Open
Sustainable
business plans,
Planned network
effect, Business
agility

14. What standards, at Mobile App’s age, for public transport
ecosystems?
 Open, i.e.
 Not a Scheme
 Not an App
 Hardware & Operating System agnostic
 Secure
 Incentivizing developers
 Unleashing competition, i.e.
 Innovation
 Economics of scale and cost reductions
 Enabling collaboration between ecosystems
 Transport, Payment, Mobile Services, Merchants,
Insurance Services, and so on
Nov 2015 Page 14
A Platform

15. Who has lessons to learn from emerging markets
E-money / M-money innovations?
 Emerging markets have found the secret sauces to
ignite e-money/m-money
 Delivering unexpected outcomes: Digital inclusion!
Today’s digital inclusion stakeholders should thus consider:
 Transport killer applications and mobile services together…
 …while protecting the future with open standards
Nov 2015 Page 15
Source: PAYMENTS INNOVATION JURY REPORT
Whether in terms of
collaboration &
business models,
value proposition,
or technology: