(Mobile) Money Makes the World Go Around

Posted on October 22, 2012

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Attended a lunch event that forms a part of the Mobile London week.

Here are my notes taken during the panel session, here is the blurb from the amazing Helen Keegan who organised the session,  and who is a very experienced marketeer for  all types of mobile product and service.
Tim Green will be your host for this session. Formerly Executive Editor of Mobile Entertainment Magazine, he’s about to launch his new site, Mobile Money Revolution covering m-money, m-payments, m-commerce and more. Join Tim and his panel for a lively debate on whether mobile money will indeed make the world go around. He will be joined by entrepreneur and mobile payments specialist, Roy Vella, industry veteran, Martin Harris from Bango, Matt Dicks from BlueVia and John Maynard from m-Pesa.
[ohhh and notes in [] are just my observations]
It’s a panel session in Mozillas London space,  which as you might expect is full of bean bags, table football and free food.  [The food was nice, thank you for asking]
#hotmf was the tag for the sesh,  so go look it up if you want.  By the way it stands for Heroes of the Mobile Fringe, and there is a link to another person’s review of the session.
This is a precursor to the heroes of the mobile fringe in Barcelona, and there are a series of other events,  so watch that tag, it might do you well.
Chaired by Tim Green is the Editor in Chief for Mobile Money Revolution.
Martin an svp at Bangor.  They collect money from around the world
Mat was from flirts antic, and bluevia working with Telefonica
John from Vodafone and mPesa
Roy ex PayPal and RBS, now indie
Q: What is mobile money
Answers were based on:
  • Mobile wallets,
  • commerce
  • vouchers and coupons
  • Phone bill payments
  • Mobile money transfer
Roy: mobile money the wave of the future.  Everyone is connected to each other,  and the mobile part means we are all chipped,  all connected. Mobile has a wider reach than electricity [I guess he means this will make it important]
Emerging markets will lead the growth as they do not have the incumbents holding things back. [This is a theme to which he returns again,  and seems pertinent,  because the regulators and incumbents, eg banks, operators, credit card issuers and clearing houses, all have worries about loosing biz to the new mobile ecosystem that may come our way]
He makes the point that for all intents and purposes mPesa is unregulated which is why it is so able to grow so quickly [the mPesa chap nodded]
So here, in the USA, and Europe development will be slower. [as the current system’s inertia holds things back]
John:
mPesa was not the first there were others in Korea and Philippines.  In Tanzania mPesa is now larger on a number of users.
Other East African counties have rival systems.
This growth in Kenya and East Arica in general is down to the lack of regulation,  however in the other countries, that are following on, the regulators are now stepping in,  for example with India it takes 10 days to get signed up,  in Kenya it’s 10 minutes.  [He makes it clear that the rules required by the regulators are what cause this long delay, he does not make it clear if this is a good thing or not,  other than it will stifle growth as people don’t get the instant gratification of an immediate sign up]
In Kenya a huge percentage of the GDP goes through the system, and soon a 10% tax going to be applied to all transactions.  It’s too early to know what effect this will have on the usage.  [seems to me that such a tax will kill off a lot of usage, as if this is income being transferred farmers et al could not afford a 10% tax to be levied.]
Tim asked what lessons can be drawn from the experience of mPesa
The system would work in Western economies for the situations where one needs to make subscriptions, eg scouts subs etc, or to replace small cheques, which are such a pain.  For these mobile money transfer would be a brilliant service, [if fast, secure and reliable]
Tim comments: Just use ping it, even if your not Barclays. [this did not go down too well not sure why,  it seems like a good answer to me.]
Some retailers are looking to bring back their clearing of payments within their own control by using a carrier or similar non-card based solution.  Visa and MasterCard were setup to clear, and this can be taken out by square and similar, where the payments are close to person to person.  He went on to say that the Visa and Mastercard were for the unusual cases where a normal store card would not be used,  eg traveling (hence the name Visa) or to be the card for all cards (Mastercard),  they grew out of this in the 80s and now the rise of mobile payments and p2p payments,  may well put them back in these original situations.
Bluevia is a Telefonica Digital group. Had a wide range of APIs such as advertising, SMS and billing was there but not focused upon.  Now however bluevia are focusing on payments.
The announcement with telenor and they will provide a single API for all their services in all their countries.  The thrust is on simplicity, good UI and not on coverage,  in other words this only works with users using a Telefonica or Telenor network.  The reason they are not driving for full coverage [that is usable by everyone, in case you hadn’t cottoned on] is because you cannot use visa and MasterCard everywhere, and therefore they do not need full coverage for themselves.
[Bango is a company that provides a range of services that they connect to all the operators they can.  so for example if you want an API to send SMSs to lots of peole then they can provide you a single API for all their operators.  These types of companies are called aggregators,  and some others, not Bango, have been the cause of some of the greatest abuses of mobile services, such as the ringtone services that were in fact not a download but a subscription.  Again not Bango,  who thrive because they are not in this type – disclosure: I have used bango in the past, and when I was at Vodafone,  worked with their techies.]
Bango provide a payments service for billing in 11 countries, and bluevia helps them for the Tef and telenor countries [because it provides a single API for all their operators].  Bango are in competition with the directs (like Blue Via),  however because they are indie,  they can connect to all the telcos to get 100% coverage,  and this is their key competitive point.
Will Isis [an American group of operators looking to provide a common shared money transfer service for users and merchants alike] ever take off ?  especially with the NFC adoption that is gaining ground in the market, based on new device sales.
The intermediataries are being removed as the mobile gives the possibility for service providers and retailers to connect directly and to clear funds via the opcos directly.  This means you do not need a Visa of a Matercard in order to move funds around.  [An important question for which I do not know the answer is: what are the rates and costs that the Isis operators will charge ?  and can the Isis members stay in JV with each other ?]
Thus this disintermediation will put the banks and the credit card companies under threat, but Roy Vella does not see that the opcos and cable companies will be able to compete in the OTT services.
Does the ways mobile work mean that large central clearing houses are at risk. ? and will the fragmentation between apple and Samsung or google delay or stop the take off of mobile payments.
Roy thinks that the merchants and most customers do not care about the fact that NFC is touch less, because in his view there is little difference between sticking your card in a slot, and waving it in front of a reader.  The only merchants that will care are the very high throughput vendors,  such as Macdonnalds etc.  Instead he thinks that the tie-in to the SIM is a way to  by pass the visas and mastercards.  [The SIM is the ID,  but I am not sure how this provides the key to success ?]
Shell  target, best by Walmart are looking into the merchant customer exchange, in other words running their services, often bypassing the standard intermediaries. Roy points out that a coffee shop chain has the largest mobile payments system in the USA,  and this is because the Starbucks service just works,  makes ordering a coffee easier and better, and so is taking off. [this fact was blogged / tweeted quite a lot,  I think folks are surprised,  however Starbucks is a very large and popular chain,  so I can see how they would have a lead for some time to come,  I presume Isis will knock them off their place in a couple of years time]
So what did I take away from the hour ?
Well i took away that the credit card companies run a risk here,  that if P2P payments and carrier services take off.  However I am unconvinced that this will be a real damage for many years.  We will not have an mPesa here, even with Barclay’s Ping-it.  Perhaps there will be a growth from the so called mobile natives,  who are not wedded to the idea of credit cards, like wot us old’ans are.
I would also say that the current costs of carrier billing are so high that they are not supportable for retailers of physical goods,  and this as backed up by Flirtamatic,  who had to give up.  These rates (20% i believe) are only sustainable by those selling digital goods.
Thank you to Helen for organising such an interesting sesh,  and to Netscape for providing the space, and some grub.
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Posted in: Mobile Payments