Wednesday, November 26, 2008

Beem from Mobile Sense makes no sense whatsoever

Does no-one remember the hard-learned lessons of LUUP in the UK? I can't believe that someone else is giving the exact same model a go, especially as nothing in particular has changed in the consumer-need profile or technology maturity profile....

Hope they have the same millions that LUUP's backers do...

m-Payment: Beem Money In The UK

Submitted by Mike Grenville on Mon, 17 Nov 2008 13:31

A new mobile cash transfer and payment system using SMS has been lanched in the UK.

Mobile Sense has launched a mobile cash and payments system called Beem that via text messaging. Using SMS, it can be used by anyone, on any mobile handset, across any network, and is not tied to any bank.

Users load up their Beem account and 'beem' it to pay for goods and services as well as send money to friends and family. All cash transfers take immediate effect and users can have access to their Beem account 24 hours a day, seven days a week, irrespective of location.

Simple SMS Sign Up

Signing up for the service is as simple as sending an SMS. New subscribers simply text 'hello' to Beem 07781 484668 and once they receive a response text back they can choose a password of between 4 and 8 characters to continue. Sign up is free online or just the cost of a text through a mobile phone and once registered users can load up their cash via their debit card and also beem any cash they receive back to their bank.

The only charges for using the service are the costs of sending the texts which are covered by a user's network operator price plan. The service is totally secure and subscribers' details are all kept completely private. Users can even protect their debit card details with a second password.

Kerl Haslam, Beem founder and CEO, said: "Users can even use our 'bank it' facility to text money back to a bank account. If you now forget your cash card or money, there is no need to go via an ATM to get cash, with Beem you can load cash into your account through a simple and secure text message and have access to cash within seconds."

Short Merchant List

The company makes money by charging a small commission fee to the providers of goods and services, similar to how credit card companies charge. It also charges a fixed fee of 75 pence for users to transfer money from a mobile wallet to a bank account.

Businesses that sign up as a Beem merchant will be able to accept secure payments from customers via text either in store or remotely. The service requires no additional hardware or software. Beem also provides merchants with SMS text, opt-in, opt-out, marketing opportunities. Merchants on board so far with Beem in the UK include several pizza chains, taxis firms and University students unions at Brunel and Hertfordshire. However this short list is not going to generate mass adoption and for it to become "real mobile money" as it claims it will need a wide range of merchants or a cluster for a particular market niche.

The company is in discussions with the London Organising Committee of the Olympic Games for a cashless payment solution for tickets, travel and merchandise in 2012.

Strong Competitors

It has some strong competitors already who, although they have made progress, are still not yet mainstream. For example in the UK PayPal launched mobile in 2006 and started with over 10 million subscribers with 164 million accounts worldwide, though how many use PayPal Mobile is not known. There is also the TextPayMe service that is now powered by Amazon Payments and Luup and Anam Mobile to name a few.

In addition to pushing into the UK market, Mobile Sense has an ambitious aim to be a global company with at least one branch on each continent in the next three years with a global franchising programme through 2009 to cover Brazil, Israel, Africa, Russia, and China.

While in theory mobile payments is a good idea, for it to really take off it has to meet a real consumer need and remove a pain point that they experience. While in some parts of the world such as Kenya, where a large portion of the population are unbanked this has happened, to become widespread in the UK Beem will struggle to find a way to capture both merchants and consumers imagination.

NBAD launches mobile payments in Abu Dhabi - 160 Characters

m-Payment: SMS Bank Payments In Abu Dhabi

Submitted by Mike Grenville on Mon, 17 Nov 2008 15:20

The National Bank of Abu Dhabi (NBAD) has rolled out an SMS based payment service that allows customers to access their bank accounts via mobile phones to pay, send, and receive money.

With the NBAD Arrow service, account holders can make a range of payments and money transfers instantly and securely from their mobile phones. This is the first in an 18-month roll-out plan agreed between NBAD and Luup which will extend to remittances, salary payouts, merchant payments and bill payments.

In the first stage of the roll-out, users can make transfers from their NBAD bank account to anyone in the UAE using their mobile phones. If the receiver is also an NBAD Arrow service user, the money goes straight into their bank account, otherwise the amount can be withdrawn from any NBAD ATM within 24 hours by using a code received via SMS.

To send money, users send PAY, the recipient's mobile phone number, the amount and the secure ID token code to 2666. So for example SMS: Pay 0519123456 300 123456 This will send 300 dirham to the person with mobile number 0519123456 with the example secure token code 123456.

In addition, users can pay utility bills as well as donate to charities like the UAE Red Crescent.

Mobile penetration rates outstrip Internet penetration rates by far in the Middle East region and in the UAE it is over 100 percent.


NBAD is a pioneer in the m-payments space because the bank’s senior management realized early on that the existing payment systems lag behind the available technology. NBAD has received many prestigious awards for its innovative products and services. Last month, the bank won ACN Arab Technology Award for Banking & Finance project implementation and CIO of the year and one of the systems the jury especially lauded was our ‘SMS Money Transfer’ service,” said Mr. Ahmed Al-Naqbi, Senior Manager, Channels and Electronic Banking Services at NBAD.

During the launch promotional period, all Arrow services will be FREE until 9th January 2009. Afterwards sending money to anyone in the UAE wil cost 3 AED (0.54 GBP) and paying a bill or donating to a charity will be 1 AED (0.18 GBP) + 2% of transaction value.

Paybox expands its mobile payment service - 160 Characters

m-Payment: Sybase 365 Partners With Paybox

Submitted by Mike Grenville on Tue, 18 Nov 2008 10:51

The partnership agreement between Sybase 365 and mobile payment solutions paybox will extend mobile payments and mobile money services to customers worldwide.

Financial institutions, mobile operators and merchants will now be able to offer their customers various mobile payment services such as payments for goods and services, money transfer and mobile airtime top-up more easily.

Sybase 365 already offers mobile payments via premium SMS billed and mobile banking services. With this agreement financial institutions, mobile operators and merchants will be able to offer their customers mobile payment services including payments for goods and services, money transfer and mobile airtime top-up.

“paybox and Sybase 365 will offer solutions for mobile payments and person-to-person money transfer targeted at both emerging and developed markets” said Matthew Talbot, vice president, mCommerce, Sybase 365

Eckhard Ortwein, CEO paybox said that “This agreement is a natural progression of where the market is headed and what customers are demanding from their mobile phones. By combining mobile messaging and mobile payments offerings, Sybase 365 and paybox are establishing a global standard for mobile commerce services” he said.

An officially certified GSMA Mobile Money Vendor, paybox covers the entire value proposition for emerging markets where mPayment, mBanking and mCommerce solutions create low cost banking services for the unbanked. paybox is behind the mpass SMS payments with O2 and Vodafone recently launched in Germany and has been selected as a finalist for the ‘CHANGING LIVES AWARD’ at AfricaCom.

Tuesday, October 14, 2008

New E-Monday rules coming out of Brussels - reported on the Register

Brussels bemoans low take-up of electronic cash

It's as if the people don't trust the financial system

The European Commission has launched a new legal framework to boost the use of "electronic money" within the EU, even as we all realise we had even less real money than we thought.

The Eurocrats have admitted that earlier utopian predictions that we’d all be loading cash on our mobile phones, travel cards or internet accounts have proved to be somewhat overblown. In part, it is blaming itself, saying current rules “have hindered the takeup of the electronic money market, hampering technological innovation”.

Translated, this means the foolish peasants (the rest of us) have refused to stop keeping anachronistic wads of notes and piles of coins in stupid places like pockets, in wallets, under mattresses, that sort of thing, when what they really should be doing is paying smart young things to take their money and convert it into cyber cash, loaded on trustworthy items like phones, Oyster cards, servers and deelie boppers.

So, in the interests of keeping the dream alive, Brussels has proposed a new framework for “issuing electronic money”. This will include a “technologically neutral and simpler definition”, ie that electronic money is “monetary value stored electronically on receipt of funds and which is used for making payment transactions". This will include e-cash stored on devices in the holders' possession or “remotely at a server.”

Brussels also promises a “new prudential regime”, which it promises will ensure “greater consistency between prudential requirements of electronic money institutions and payment institutions under the Payment Services Directive”.

This will include an initial capital of €125,000 “enabling market entrance for smaller players and a new formula to determine ongoing capital”.

If this sounds like a recipe for small fly-by-night operators to barge into the cyber economy, let’s just consider what a mess the old established financial players have made of the real economy over the last few months.

The Commission reckons these changes will give the market a shot in the arm, and “estimates show that this industry could reach a volume up to €10bn by 2012”.

The only thing missing? A reason why consumers – as opposed to financial institutions and other corporations - would actually want to move to electronic versions of cash. See if you can find one in the Commission’s working document here. ®

Monday, October 13, 2008

Stats & Research: Mobile Banking Becoming A Reality

Posted on 160 Characters Association

Submitted by Mike Grenville on Mon, 06 Oct 2008 12:47

A study earlier this year suggests that mobile banking is becoming more of a reality and that while consumer education remains key to widespread adoption there are a number of outdated misconceptions that the study by Sybase 365 tries to change.

The results of a survey completed in February 2008 (“Mobile Banking: The Second Wave. Global Mobile Banking Survey 2008”) commissioned by Sybase 365 showed that some 34% of banks offer mobile services to customers and an additional 32% plan to offer mobile services in the next 12-24 months.

Although there have been many attempts to bring the benefits of mobile to consumers, the response from the market so far has been measured at best. However the research conducted among 32 European banks, 30 US banks and 30 banks from the Asia-Pacific region concludes that the next two years will see a second wave of mobile banking provision and adoption taking the lead from early adopters in Europe and Asia.

Banks To Double

According to the survey, the number of banks offering mobile banking is set to double in the next two years and the number of customers using mobile banking services is also expected to increase significantly from existing levels. If respondent intentions play out, the number of banks that do not offer mobile banking will be in the minority by 2010, rather than the majority, as is the case today. “The potential of mobile banking has been discussed for quite some time,” said Matthew Talbot, vice president, mCommerce of Sybase 365. “While it has been slower to emerge in North America than elsewhere in the world, mobile banking is becoming more of a reality each day. This is largely due to technical issues around standards and interoperability being resolved and the availability of more robust technology platforms such as Sybase mBanking 365."

Dispelling The Myths

There are some myths around mobile banking that the report hopes to dispel. Some of these are:
  • Mobile banking is not secure. Misconceptions around security stem from consumers’ lack of experience and geographical penetration of mobile banking services. The 2007 survey (Sybase 365, commissioned Consumer study: “Nano-economics: Mobile Opportunities for the Financial Sector”) revealed that 63% of European respondents; 83% of Australian respondents, and more than half of respondents from the Americas who use mobile banking services, state that mobile banking is secure or very secure.

    Clearly, a vital step in dispelling this myth lies in education, availability and usage. The 2008 survey found that 71% of banks are doing just that by using mobile alerts to help boost consumer confidence in mobile banking services. Customers’ mobiles devices can actually help improve security because they can be used as an alternative to PIN tokens for identification. Mobile alerts can also be set up to notify customers of fraudulent activity on an account, enabling a rapid response leading to increased confidence for mobile services.

  • Little consumer demand for mobile banking solutions. In fact, one in three mobile users said they would like to be able to deal with their finances ‘on the move’. Almost one-quarter of consumers surveyed said they would consider switching banks if they were offered mobile banking services.

  • Additional Charges. Some believe that mobile banking is just another way to charge customers for additional services. However some 87% of respondents to the 2008 survey cited the reason their bank implemented mobile banking services was to improve the overall customer experience.

  • For financial institutions, mobile banking is only about cost savings. Certainly mobile banking can lead to cost savings. The 2008 survey revealed 65% of financial institutions who focus on growth from existing customers have introduced mobile banking services to reduce customer service costs. However many financial institutions are using mobile solutions as a way to extend customer services such as PIN reminders or dispute resolution and are recognizing mobile as a new channel to reach customers with marketing, promotions and related offers.

  • It only means Balance Checks. It is another myth that when financial institutions talk about mobile banking they’re referring to the ability to check an account balance or stock prices via a mobile device. While that is a goo dplace to start, financial institutions are increasingly offering a wide-range of mobile services. In fact, nearly three-quarters of 2008 survey respondents said they provide customers with the ability to do money transfers and nearly 30% allow customers to do bill payment via a mobile device.

Untapped Potential

There is a great deal of potential ways that mobile can be used in the banking world. For example many bank customer call centers are burdened with rudimentary account enquiries that can easily be alleviated with SMS-based services. However the study only found that 15% of banks sent a statement by SMS following a telephone enquiry.

With those financial institutions currently offering mobile banking services seen as somewhat ahead of the curve in terms of provision, it is unfortunate that 58% of them agree that the CRM potential created by mobile data is not best utilized at present.

The report concludes that while the first wave of mobile banking services was a steep learning curve, the second wave is comprised of a more informed provider community and a more enthusiastic customer base, both of which suggest a promising two years ahead.

Download a free copy of the Sybase 365 mBanking Study here.

Friday, August 08, 2008

Grameen Bank & Obopay Partner -

Aug 5 2008 6:48AM EDT

Mobile Banking for the Poor

At a press conference this morning in Mumbai, mobile-banking company Obopay announced an alliance with Grameen Solutions -- an alliance with an extraordinarily ambitious goal. In ten years' time, the companies said, they would like to see 1 billion of the world's poor -- people living on less than $2 a day -- receiving banking services via their mobile phones. It probably won't happen, but it would be amazing if it did.

Mobile banking is not new, of course, although it is still young. What sets this particular initiative apart are three things: its global ambition, its emphasis on the poor, and the central role of microfinance institutions (MFIs).

Mobile banking is of course banking, and banking is regulated nationally, not globally. As a result, it's hard to scale mobile banking across borders -- but that's precisely what Obopay and Grameen are trying to do. They're starting in India and Bangladesh, with a small core team of engineers looking carefully at what works and what doesn't in the real world. They will then offer that expertise to anybody in the world who wants it, and plan to entrench themselves as a "center of excellence". If MFIs in Congo or Nicaragua want to team up formally with Grameen and Obopay, that's fine; if they just want to talk to them to get advice on how to proceed on their own, that's fine too.

In any event, the system being set up by Grameen and Obopay is designed from the beginning to be able to handle payments and remittances not only nationally but also internationally. The problem of domestic remittances is often overlooked: large cities like Dhaka are home to millions of migrants who would love to send money back to their families elsewhere in the country but who are unbanked and have no real means of doing so. The ability to remit money domestically with little more than a text message could be revolutionary.

Then, of course, there's international remittances -- which already account for an enormous part of the annual capital inflows into many countries around the world, especially in Central America. Compared to Western Union or banks, the ability to send money directly from mobile phone to mobile phone is orders of magnitude easier and cheaper.

Then there's the emphasis on the poor. Although the poor are more likely to be unbanked and therefore in need of mobile banking services, they haven't been directly targeted by many of the first wave of mobile banking providers. As Gautam Ivatury and Ignacio Mas write in their excellent overview of the situation as it stands today,

Providers experimenting with a new technology or business model typically seek to reduce risk by focusing on known markets (avoiding the "double gamble" of new business model and new customer segments), and within those on likely "early adopter" subsegments (i.e., those more naturally predisposed to try the new offering).

The poor, of course, are both a new customer segment and generally the very last adopters of any new technology. It's hard to sell banking services to someone who neither knows nor understands what a bank is.

So that's where MFIs come in: they can play a crucial role in reaching out to, and educating, potential customers among the world's poorest people.

Grameen Solutions' CEO, Kazi Islam, told me that I shouldn't try to extrapolate forwards from where mobile banking stands today, but rather work backwards from the needs and capabilities of the world's poor. MFIs have been reasonably good at extending credit to such people, but they've found it much harder to offer savings accounts, since banking licenses are hard to come by.

Other financial services, like microinsurance -- especially crop insurance for people working small plots of land -- have barely gotten started: insurance "doesn't make sense if it costs 20 rupees to collect 25 rupees," said Islam at the press conference. "It's all about reach, and cost and operational reasons make it difficult to reach these people."

With mobile banking, reach is effortlessly expanded, piggybacking on the massive investments made by mobile-phone companies. Meanwhile, costs are tiny: in the US, Obopay's money-transfer fee is a flat 25 cents for any amount up to $1,000.

All the same, the goal advanced at the press conference this morning is so ambitious that I give it only a small chance of success. One big reason is China: without access to China's rural poor it's going to be almost impossible to reach the 1 billion goal. And while China's rural poor are getting cellphones at an astonishing pace, the chances that they'll be able to plug them in to a global -- or even national -- payments system still seem remote. On the other hand, no one imagined ten years ago the progress that China has made to date; if you extrapolate that rate of change, anything is possible.

Another risk is that the goal will be reached but in name only: people might have mobile-banking accounts, and might even automatically get such an account when they get their phone. But the accounts might not be used, and insofar as they are used, they might be used only for payments and not for real banking services. It's relatively easy to see a world where mobile phones are used as mobile wallets, containing roughly as much money as one might have in a real-world wallet. It's harder to see a world where mobile phones are used as mobile bank accounts, home to individuals' life savings.

There's also the effect which mobile banking might have on repayment rates at MFIs: experience in Kenya suggests that letting people make their loan payments via mobile phone rather than in person at a group meeting results in higher delinquency rates.

And insofar as mobile banking does take off, it will inevitably and necessarily do so primarily via the mobile phone providers themselves. Depositing money into one's mobile bank account must never be harder than buying extra airtime for one's phone; ultimately there's no reason why airtime charges can't come straight out of the bank account, combining the two accounts into one. What's more, mobile operators already have a network of agents licensed to accept cash on their behalf; it seems silly to try to build a parallel bank-agent network from scratch.

It's a great idea for banks and MFIs and mobile phone companies all to pull together in the same direction, resulting in a global open system which benefits from massive network effects. But with a couple of big exceptions like Grameen, and possibly not even there, the MFIs will always be dwarfed in size, reach, and importance by the mobile-phone operators. The MFIs risk being marginalized, to the point at which the poor get forgotten in the drive towards broader mobile-banking adoption. And without MFIs to help guide the way, the chances are that the poor won't embrace mobile banking of their own accord.

Obopay CEO Carol Realini understands this. "The carriers could be the MFIs, but you don't want to take away from the MFIs," she told me. "They serve the customers, and they're part of the last mile to the customer. They offer services beyond transactions. They're underwriting loans and coaching customers. Having the MFI play an active role with the poorest people is great, because they're not comfortable with credit and savings. The MFIs make the approach to the poorest people that much better, and it helps them understand how to use this powerful new tool."

The promise of mobile banking for the poor is that mobile phone providers have managed to get a degree of penetration among the world's poor that MFIs can only dream of. But that's also the peril. The mobile phone providers are likely to continue in the direction they're headed in at the moment: staying away from banking regulation, confining themselves largely to payments rather than fully-fledged banking, and targeting their entire customer base without any particular emphasis on the bottom of the pyramid. The MFIs, by contrast, are going to want something which is both narrower and more ambitious. Will the mobile phone companies sign on, even if they see lots of regulatory headaches and very few profits by doing so? The answer to that question could be the answer also to whether Obopay and Grameen Services will come close to achieving their 10-year goal.

Saturday, February 23, 2008

Glenbrook covers the launch of the Visa Mobile Platform initiative

Visa's Mobile Platform Initiative

First announced in January at the Consumer Electronics Show, the Visa Mobile Platform initiative, developed by Visa International's Strategic Partnerships and Innovation group, has the ambitious objective of laying "the foundation for the commercial availability of mobile payments and services to millions of mobile users around the world."

What Visa's been doing is working with selected mobile and related-technology vendors to define a core set of building blocks - a mobile platform - that allows Visa member banks to begin the process of taking mobile payments trials to market.

Today, a bank wanting to trial mobile services with a group of its customers would have to spend a lot of time sorting through the various vendor offerings in the mobile space to select and then integrate the best-of-breed components to build a mobile payments service suitable for conducting a consumer trial. With its Mobile Platform, Visa has short-circuited that process on behalf of its member banks - enabling them to get into the market with mobile services trials much faster. The end objective in this initial phase is to support a much more rapid learning from actual consumer trial experiences as to what features are really most important to consumers in a mobile payments service.

To help simplify the myriad choices among the various technologies and providers, Visa has made some simplifying assumptions in assembling the Mobile Platform. One example is limiting the market opportunity for trial of contactless payments to only new handsets containing the necessary NFC and other technologies required to support secure mobile payments for contactless POS applications. By not attempting to support the thousands of existing handset models - which simply can't support contactless - Visa clarifies how the contactless use case has to be supported for any trial - thereby avoiding all of the hassles of trying to layer on mobile payments onto today's mobile installed base. Visa is promising to add other mobile payment service use cases (remote commerce, person-to-person payments, etc.) over time to the Mobile Platform. Some of those services may end up being capable of supporting a subset of existing handsets.

It appears the most significant trial announced by Visa to date is the one announced on February 8 by SK Telecom and Visa for Korea. Visa had worked together with SK Telecom several years ago in deploying infrared-based POS technologies for local payments using mobile phones. The new trial, built upon components of the new Visa Mobile Platform, is focused on enabling mobile handsets provided by SK Telecom to be personalized with payment card information over the air from the consumer's financial institution. Once personalized over the air in the fashion, the handset is fully capable of functioning as a contactless payment "card" for local POS purchase transactions.

Glenbrook believes one potential concern for Visa could be the seeming acceleration in decisions being made by larger banks in the US to deploy mobile banking capabilities in 2007. Several large banks have announced mobile banking initiatives with more decisions expected soon. Once a few of the majors move, the rest of the industry seems compelled to respond. However, currently Visa's Mobile Platform focuses primarily on the "hard problems" of mobile payments, not directly on the much easier requirements for supporting mobile banking. Even though it integrates some mobile banking functionality, Visa's Mobile Platform could run the risk of being somewhat less relevant to US banks in the near term as they jockey for position in supporting their near-term competitive needs to offer basic mobile banking functionality.

At Glenbrook, we'll be continuing to watch Visa's announcements regarding additional trials of Mobile Platform and look forward to hearing from Visa, in due course, about some of the learnings based upon actual consumer trial experiences conducted by its member banks.

Amazon DevPay has introduced another new web services offering - this one called DevPay. "This new service allows entrepreneurial developers to wrap their own business models around Amazon S3 and Amazon EC2, taking advantage of Amazon's existing customer base and billing infrastructure. With DevPay, developers can focus on being creative and innovative while dispatching the less-than-glamorous aspects of dealing with bank accounts, credit cards, and so forth to us."

Apple has filed a iPhone Wireless payment patent

Apple files iPhone wireless buying patent

Apple has filed a new patent for a wireless transaction system that looks like it will be used in the iPhone and allow users to order products and pay for them instantly. Apple's patent details their merchant-client wireless system which will work with cellular, WiFi, WiMAX or Bluetooth networks. Among the areas covered by the patent are the ability to access restaurant menus on the go. The system would allow merchants to be able to push their new ads to devices that are tuned into this new web service, and hence would require local merchants to be on board with the initiative. The system also includes a mechanism for for merchants to report a stolen iPod/iPhone if the owner has properly reported that information to Apple in a timely manner. Apple states that in some cases "whenever a wireless media player comes within range of the wireless data network, the wireless media player can be (unbeknownst to the user) directed to send a wireless media player identifier that uniquely identifies the particular wireless media player to the wireless data network. The wireless media player identifier can be used to track lost or stolen media players when the rightful owner has placed the wireless media player identifier in a central database of lost or stolen media players. In this way, if a lost or stolen media player is tracked, any number of subsequent actions can be taken such as notifying the authorities, disabling the wireless media player, displaying a notice to return the wireless media player, etc. thereby providing a strong disincentive for stealing the player."

In one example a user instruction directs the wireless media player to open a graphical user interface (GUI) on a display that includes a list of items previously purchased from the merchant stored in the memory. However, in some cases it may be desirable to store customer information (such as the list of previously purchased items) on either or both the local server or the central server. In this way, even in those cases where a user purchases a new item or is using a different media player than would otherwise be used that does not have a current, or accurate, customer preference file for that particular user, the local server or remote server can be used to update, or synchronize, the local memory.

APACS - Payment Myths

APACS, the UK payments association, has published a new report titled "Payment Myths" icon_PDF_small.gif that it says "uncovers the facts behind payment trends in Britain." According to APACS, the booklet uses statistical evidence to help consumers better understand the payment options available to them and offers advice on the best ways to manage their finances; no matter what payment method they use. The report uses APACS statistics to show examples of the way we use cash, our susceptibility to fraud and the new demographic make up of online bankers – to name but a few.

KPMG's report on Mobile Payments in Asia

Get the full report here.

Payoneer on Prepaid Devit Cards on E-Commerce Times

Payoneer: Taking Prepaid Debit Cards to the Next Level

Some customers see the approach to Web payout options that Payoneer provides as better than cash. In's case, Payoneer's prepaid debit card, which carries the 2CO logo, lets that company pay its vendors by depositing the money due directly to the account of the person issued the card. "The challenge we had was how could we do this internationally," said oDesk CEO Gary Swort.

Payoneer is a startup firm that is pushing this concept of prepaid debit cards to leverage more Web payout services through the use of reloadable debit cards. Its CEO sees a strong demand for a new approach to handling business transactions over the Internet.

Some industry watchers predict that online payment options such as debit cards will take off this year. For example, analyst firm Celent predicts alternative payment methods such as debit cards will more than double by the end of 2008. These new transactions, known as Web payouts, now comprise 26 percent of all transaction volumes, while credit card volumes decline.

"A real need exists for a low-cost, worldwide payment solution with responsive customer support tailored for online businesses," Yuval Tal, CEO of Payoneer, told the E-Commerce Times. "The payment process from Internet companies to individual payees is unique and requires many adjustments compared to the typical check-cutting process."

Tal started Payoneer to provide a new type of payment channel for e-commerce companies and workers. His goal is to solve problems in other payment methods, such as checks and wire transfers for international payroll.

The Need

More traditional payment methods for online transactions and remote per-project workers are costly and cumbersome.

"Paper checks get lost or stolen overseas often, and banks overseas can hold funds for up to 30 days and charge high foreign currency exchange rates," Tal said, adding that wire transfers are costly and lock recipients into costly bank fees.

Traditional money transactions through PayPal often are cumbersome for obtaining cash abroad, or they require a minimum three-day hold, he explained.

The Problem

Take the case of, a reseller for thousands of online businesses. That company was drawn to Payoneer's debit card solution to better navigate international banking barriers.

"We are a worldwide company, so some banking services are not easy to work with. We found a huge difference [with Payoneer] to using PayPal," Geno Arce, business development specialist for, told the E-Commerce Times.

oDesk, which runs an on-demand global workforce, faced similar payroll issues with its international clients. The company enables buyers of services to hire, manage and pay technology service providers from around the world. oDesk serves as the management arm for hiring remote workers registered in its database on a per-project basis and handles all billing and payment services for firms using its manpower.

"Making payments to our customers in 60 countries, we struggled to pay the workers in their own locales. It was expensive to wire money and use different banks worldwide," Gary Swort, CEO of oDesk, told the E-Commerce Times.

The Solution

Payoneer provides prepaid Visa and MasterCard accounts to its affiliates that choose them. Also, Payoneer handles payment processing/clearance services. The company lets card holders view account balances and transaction histories.

Some customers see the approach to Web payout options that Payoneer provides as better than cash. In's case, Payoneer's prepaid debit card, which carries the 2CO logo, lets that company pay its vendors by depositing the money due directly to the account of the person issued the card.

"The challenge we had was how could we do this internationally. We haven't found any company to do this at this price," Swort said about oDesk's experience with Payoneer. "It's very cost-effective. We don't want a lot of fees."

The Product

Payoneer's approach to solving the Web payout dilemma involves an option to pay revenue shares to their partners by giving them a reloadable prepaid debit card from a major credit card bank instead of sending a paper check or wire transfer handled through existing online payment services from PayPal, Google (Nasdaq: GOOG) and others. The new payment methods also make doing recurring business online and paying remote workers more convenient, Tal explained.

Companies can upload payments securely and swiftly. The prepaid cards make funds available to affiliates anywhere in the world that the Debit Visa or MasterCard is accepted. The money is available to the payee in U.S. dollars or is converted to the local money standard using the credit card company's exchange rate. Transactions under US$10,000 are almost always far more favorable than the foreign exchange rates of a bank, according to Payoneer.

Once cards are mailed to affiliates, funds can be accessible within two hours after a quick online verification. Payoneer also has an arrangement with MasterCard so with MC approval, a company can place its logo on the physical plastic Debit MasterCard cards that the affiliate sends to its employees and partners.

The New Challenge

Using debit cards to pay instead of writing checks is nothing new. Neither is the idea of using prepaid cards for transactions in stores and online.

However, the idea of using reloadable branded debit cards as a payment option is. So is the notion of handling recurring employee incentives and payment to international workers by debit card.

Several large credit card vendors are offering similar services. So are a number of Internet banking firms.

"There is definitely competition developing in this space domestically," Tal said. "Developing a market for prepaid debit cards was definitely a strategic move by Visa and MasterCard. It was one of their top five things to do."

High Hurdles

Early on, Tal had to solve regulatory and compliance issues that government banking agencies put in place to prevent abuses in handling online money transactions.

"The prepaid space is very new with e-commerce," he said.

Within the e-commerce industry the goal is to replace the use of paper checks, according to Tim Sloane, director of Mercator Advisory Group's Debit and Prepaid Advisory Service.

"There is multiple opportunity in this space. Online payments in 2006 was $11.6 billion, so it is a well-established segment. It is still growing at 60 percent a year, but I expect it to grow faster now," Sloane told the E-Commerce Times.

New Goals

Now that Payoneer's concept of reloadable prepaid payment cards is established, Tal's next goal is to expand this service internationally. He plans to begin this phase in the second quarter of this year.

"The real challenge we face now is moving into the international payment space," he said. "Educating foreigners is a big task."

U.S. workers and businesses have already carried the use of multiple credit cards and debit cards to the extreme, but for workers in other countries, it is common for many to not have a single card, Tal explained.

"For many, this is the first deal. It is a big deal to get a card," he said.

Monday, February 18, 2008

Mobile Wallets developments on 160 Characters

m-Payment: Mobile Wallets Set For Lift Off

Submitted by Mike Grenville on Mon, 18 Feb 2008 11:33

The GSMA says that 2008 will be a seminal year for convergence of mobile and financial services with money transfer and mobile wallet projects taking off. The GSMA has called on government regulation to support these initiatives that can benefit millions of unbanked.

The convergence of mobile communications and financial services will see more than 1.4 billion people worldwide benefiting from mobile financial services by 2015, according to new research by Edgar Dunn, a specialist mobile banking and payments consultancy firm, in partnership with the GSMA, the global trade association for the mobile industry. By 2015, Edgar Dunn envisages that 1.4 billion people could be using mobile wallets – software that enables consumers to manage their money, including making and receiving payments, using their mobile phone - from about 10 million at the end of 2007.

The GSMA has been working for the past year to help catalyse this market with two major initiatives – Mobile Money Transfer focused on international remittances and remote banking/payments and Pay-Buy-Mobile focused on transactions at point of sale. Following an agreement with the GSMA, Western Union has reached agreements to deploy mobile money transfer services with Bharti Airtel in India and Globe and Smart in the Philippines.

To help the take-up of mobile wallets, the GSMA is working with Accenture and Fundamo, a supplier of mobile banking and payments solutions, to establish a hosted mobile wallet platform that will enable mobile operators to pilot financial services rapidly and at low cost.

“Momentum is building behind mobile financial services and we believe 2008 will be a seminal year for this exciting new sector,” said Rob Conway, CEO and member of the board of the GSMA. “With the help of governments, mobile networks have the potential to bring the many social and economic benefits of financial services to hundreds of millions of people who live beyond the reach of the conventional banking network.”

Money Transfer Not Wallets

However not every one is so taken with mobile wallets. Jote Bassi, VP of Global Sales & Marketing at Anam agreed that "Money transfer and mobile commerce is a killer application - much more than mobile advertsing". But he is not so enthusiastic with mobile wallets. "A mobile wallet is all very well but essentially it means the operator becomes a bank and so it is much more dificult to launch a wallet than money transfer. At the back end is an instruction to the existimng banking structre rather than storing money on the phone" said Bassi.

Changes Needed To Government Regulation

The Edgar Dunn research also found that the number one barrier to successful deployment of mobile wallets was government regulation. The GSMA is calling on governments to ensure that regulation governing the deployment and usage of mobile financial services is proportionate to the risks involved.

Balanced regulation can help increase access to financial services for poor people and is one way to fight poverty, according to a new report on regulating mobile banking from CGAP (Consultative Group to Assist the Poor), a global resource center for microfinance. “Mobile telephony promises to radically transform the way people use financial services in rich countries and in poor ones,” said Elizabeth Littlefield, CEO of CGAP. “Wireless may also allow us to reach people conventional business models never could reach, bringing them for the first time the ability to manage their own household finances, safely storing cash, moving it, spending it or investing it when needs or opportunities arise."

“For regulators, it’s not viable to simply do nothing. Current regulation tends to be both over- and under- protective,” says Tim Lyman, CGAP’s Senior Policy Adviser and co-author of the Focus Note. “Being too restrictive can mean fewer people in the formal financial system, and higher costs to access services. But policy makers also need to be aware of potential protection gaps.”

Related Info:

Mobile Money Summit 2008 14-15 May Cairo, Egypt–

Friday, January 11, 2008

Great synopsis of Mobile Banking Biz Cases - BAI

Mobile Banking: Where's the Business Case?


Even as cell phone banking takes off, banks still face the question: How can we make money on this?

| SYNOPSIS | At mid-2007, at least nine U.S. banks had begun to develop or had rolled out a mobile banking service to their customers, either through a proprietary mobile Internet banking site or via an application embedded into the handset. Proponents believe cell phone banking will grow quickly based on ubiquitous cell phone usage and consumers' growing expectation of anywhere/anytime access. Yet, with banks providing the service to customers for free and carriers clamoring for a piece of the action, a business case remains elusive. Banks say they will justify the investment based on strengthening customer relationships, lowering delivery channel costs and paving the way for more sophisticated mobile financial services in future years.

This year, several major institutions began offering their customers the ability to use their cell phones to check account balances, transfer funds and pay bills.

As was the case with online banking, these mobile banking services are being given away to seed the market. Yet "as banks experiment with some of these pilots, they're starting to look more into the business case," says Bob Egan, chief analyst for Needham, Mass.-based TowerGroup Inc.

In a recent survey by Boston-based Aite Group of 22 of the top 100 U.S. financial institutions, 55% identified the lack of a clear business case as an important or very important impediment to adoption of mobile banking (see chart "Security Biggest Impediment"). With direct revenue nonexistent, banks face the issue of justifying their investment, which includes bearing at least some of the cost to create and support the mobile channel. Also, in situations where they are actively working with carriers directly or through an outside vendor, banks pay a fee to the carriers.

Interviews with bankers underscore the uncertainty of this business case. Repeatedly, the similarity with online banking comes to the fore, as many executives say they expect the primary value of mobile banking will come in building stickier relationships with customers. Enhancing customer convenience was the highest ranked motivation for financial institutions responding to Aite Group's March 2007 survey (see chart "Customer Convenience Key Driver").

Other executives theorize that cell phone banking will help move some transactions to the mobile channel, balance inquiries particularly, which will lower usage of more costly channels, such as the branch and call center. Others say the real value comes when mobile users undertake more advanced tasks, such as making expedited payments or remittances, for which the banks can then collect incremental revenues.

And finally, some bankers say they need mobile services for competitive reasons. According to this view, mobile banking will become "table stakes" in the industry, something you've just got to have, similar to online banking.

Mobile Banking 2.0
Mobile banking went through its first iteration in the late 1990s and early 2000s. At that time, Bank of America Corp., Wells Fargo & Co., Citigroup Inc. and Bank of Montreal's U.S. subsidiary, Harris Bank, all launched mobile services. Most ultimately sputtered out in the face of tepid customer acceptance. Now, supporters say, the market has matured enough to support another run at the concept.

"The handsets are far more data-capable, networks are up to speed and there's a user propensity to play with data applications," says Nick Holland, senior analyst for Aite Group.

BancorpSouth, Tupelo, Miss., Bank of America and Wachovia Corp., both of Charlotte, N.C., New York City-based Citigroup and Broadway Bank, San Antonio, Tex., all began offering pilot mobile banking services to retail customers in late 2006. In May, San Francisco-based Wells Fargo took things a step farther by offering a mobile service to its business customers (see sidebar "Mobile Starts Taking Care of Business,"). By mid-year, at least three more institutions-SunTrust Banks Inc., Regions Financial Corp. and Synovus Financial Corp.-had joined the fray.

To be sure, the number of actual customers remains minute. TowerGroup estimates that only 400,000 out of almost 240 million U.S. mobile phone subscribers are conducting banking business over their cell phones. But analyst Egan predicts eight of the country's top 10 banks will offer mobile banking and bill payment by the end of this year and that within five years, a quarter of today's existing Internet banking customers will choose to bank by cell phone. Boston-based Celent LLC forecasts that by 2010 more than one-third of U.S. online banking customers will use mobile banking, up from less than 1% today.

To build some momentum behind the service, banks are offering cell phone banking to their customers for free-at least initially. The rationale behind this strategy is the same as for online banking, i.e., to strengthen relationships with highly desirable customers. Bank of America, for example, markets its mobile service through its Web site specifically to its existing base of 22 million online banking customers.

"Clearly, these people [who bank online] also have a propensity to use their cell phones," says Gayle Wellborn, Bank of America's senior vice president of online products and services. "So it's the online customers we're targeting. The mobile device just takes it to the next level."

Wellborn adds that, for Bank of America, giving away mobile banking service is "very consistent" with the bank's online banking strategy, which is based on the belief that customers "will recognize the value and we will gain their loyalty." Bank of America was one of the first banks in the industry to begin offering its online banking services for free, in 1996, and subsequently bill payment as well.

Tom Llewellyn, chief information officer of $1.7 billion-asset Broadway Bank, notes that 43% of his company's overall customer base banks online, with online banking penetration more than double that (88%) among customers of Broadway Bank's Eisenhower Bank subsidiary, which serves military personnel. Llewellyn says that Eisenhower's customers tend to be younger (18 to 35 of age) and move around frequently based on changes in where they are stationed or deployed. After a "real lightweight marketing effort," Llewellyn says Eisenhower was able to get 1% of its online banking customers to use mobile banking.

For young people in their 20s, "who are so fascinated by and attracted to mobility, having something mobile is compelling," says William McCracken, CEO of Atlanta-based Synergistics Research Corp.

Justifying the Investment
Yet bankers are also becoming aware that the mobile realm is a very different environment from the online space they have come to know so well. Perhaps the most significant difference is that the mobile universe is tightly controlled by a handful of major carriers, or telcos.

"The carriers got caught off-guard by the Internet and became all these big dumb pipes overnight," says Tripp Rackley, CEO of Atlanta-based Firethorn Holdings, LLC, a vendor of mobile banking applications."The carriers will never let that happen again."

Rackley asserts that the only way for banks to succeed in their mobile efforts is to work with the carriers through a middleman, such as his company, which collects from the bank either a per-user or per-transaction fee for the carrier. He adds that it's only fair that carriers should collect a toll since they have funded the development of the wireless networks and also subsidize and support the wireless phones that most customers use. Spencer White, director of mobile financial services for Atlanta, Ga.-based AT&T Wireless, affirms that carriers would be loathe to support applications and field customer questions for services for which they're not being paid.

Nonetheless, several prominent banks have introduced mobile services that circumvent the telcos (see "Web Browser or Carrier Connection?").

Regardless of how banks handle the carrier question, they still face the issue of justifying their investment in cell phone banking. It's largely an insider's debate because the banks are being tight-lipped about the extent of their investment. Both Synovus and BancorpSouth, for example, have agreed to a "per-user model" with partner Firethorn. But neither Garry Hedges, director of payment strategy for Synovus, nor Michael Lindsey, senior vice president and manager of electronic delivery services at BancorpSouth, will quantify the fee or discuss how it might be split between the vendor and the carriers with whom Firethorn partners.

Wachovia embraced a browser-based strategy when it initially launched its mobile offering in September 2006. But in March 2007, the bank announced a partnership with Firethorn. Ilieva Ageenko, senior vice president and director of emerging applications, declined to discuss the Firethorn fee. But she says her bank's upfront investment in its original mobile service was "less than six figures," since the mobile Web site was able to run through the same back-end technology as the bank's online service-and the same security technology as well.

TowerGroup's Egan says bank-to-carrier fees may go up or down based on how the market shakes out and as it becomes more apparent if having an application pre-loaded on the phone and having other support from the carriers will actually encourage greater customer adoption. Both banks and telcos, he adds, recognize that mobile banking per se won't bring in new customers right away.

Instead, the hope is that offering the service will create tighter bonds with existing customers and act as a stepping stone, so that these customers will graduate to using more advanced applications than simply checking account balances. BancorpSouth, for example, reported a substantial up-tick in bill payment activity by its mobile customers during its 2006 pilot.

Banks are also keen to alleviate the transaction burden on their more expensive branch and call center channels, which could be facilitated by increased cell phone banking usage. Celent estimates that by 2010, about 70% of bank call center volume will be coming from cell phones and about half of those calls will be simple balance inquiries.

Lindsey says mobile services enable an institution to "cut customer servicing costs and deliver service to customers when and how they want." Nearly half (49%) of the participants in BancorpSouth's mobile banking pilot reported in a survey that they would decrease the number of calls they made to the call center because of mobile access. Forty-two percent said they would visit the branch less often and 23% said mobile banking was their preferred means for communicating with the bank.

In the long term, supporters see these basic mobile ventures as laying the groundwork for more advanced mobile financial applications, such as expedited or person-to-person payments, international remittances and loyalty and coupon programs, for which banks might be able to collect incremental revenue. "Everyone just wants to get a foot in the door," says Holland of Aite.

Ms. Hoffman is a freelance writer based in Poulsbo, Wash.