Mobile Payments World 2007-04

www.mobilepaymentsworld.com ISSUE 98 • April 2007

IN THIS ISSUE

CONTACTLESSNTT offer DCMX GOLD................................................M-PAYMENTSmart SMS Corp. launches mobile Visa card................................................M-POSMobile VPT sue Monitise................................................

NEXT ISSUE: May 17

Momentum builds around GSMA initiative

CONTENTS

www.mobilepaymentsworld.comCONTENTS2 April 27 2007

CONTACTLESS

Momentum builds around GSMA initiative

20% of handsets will include NFC by 2012 Page 4

NTT offer DCMX GOLD

INSIDE and Mobile Distillery team for NFC Java

Page 5

First EMV contactless transaction in Europe

Coca-Cola converts vending machines to contactless Page 6

M-PAYMENT

Smart SMS Corp. launches mobile Visa card

Altair launches prepaid money share gateway

Page 8

paybox and Radius-ED deliver G1 SMS short code

Cyphermint partners with Fidelity Express Page 9

SmartPay partners with China Unicom for m-payment

CPNI selects Computer Sciences to distribute platform Page 10

Telefonica Moviles Launches m-barcodes in Spain PayPoint launch ‘Shop Scan Save’ Page 11

ANALYSIS

Is m-banking the future of global remittance payments? Page 13

Rapid converged billing in emerging growth markets Page 16

M-POS

Mobile VPT sue Monitise

1st Federal Financial chooses Way POS Page 17

OPINION PIECE

Emerging wave of m-payments - a Microsoft view Page 19

VENDOR ZONE

Visa and MasterCard approve QX100 for contactless • mobilkom renews partnership with MACH • GlobalPlatform launches Mobile Task Force 1

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CONTACTLESS

www.mobilepaymentsworld.comCONTACTLESS4

GSMA initiative

Nokia and a further 10 mobile operators have thrown their weight behind a GSM Association initiative to enable the worldwide use of mobile phones for payments at retail outlets (MPW 95).KPN, Maxis Communications Bhd,

mobilkom austria, O2, Orange, SFR, SingTel, SKT, Vodafone and Wind have joined the 14 mobile operators that initiated the project in February. The handset vendors in the programme include Samsung Electronics and LG Electronics, which both plan to par-ticipate in the first trials scheduled to begin in October. MasterCard is also participating in the initiative. The GSMA’s ‘Pay-Buy Mobile’ initia-

tive seeks to define a common global approach to using NFC technology to link mobile devices with payment and contactless systems. Together with a SIM/Universal Integrated Circuit Card (UICC) card in a mobile handset, NFC can be used to enable a wide range of secure, interoperable and transpar-ent services, such as credit and debit payments. “After several fragmented initiatives,

the mobile phone industry is now uniting around a single approach to enabling the mobile phone to be used, instead of cash or plastic credit card, at point of sale,” says Rob Conway, CEO of the GSMA, the global trade association for mobile phone operators. “The support of the world’s leading

mobile operators and handset manu-facturers should ensure that Pay-Buy Mobile is adopted worldwide, enabling vendors to achieve economies of scale and consumers to eventually use their mobile phones to pay for goods and services wherever they travel.” Mr. Conway is in Seoul this week to dis-cuss the initiative with Dr. Young-Chu Cho, CEO of KTF, which is leading

the ‘Pay-Buy Mobile’ initiative.The Pay-Buy Mobile initiative will

build on the work of the major credit card companies, which have devel-oped specifications to ensure global interoperability between chip cards and point of sale terminals, regardless of manufacturer, the financial institu-tion and location of transaction. The GSMA intends to work closely with leading financial intermediaries to pro-vide the transaction solutions. “The combination of NFC and

UICC is an excellent choice to en-able the development of secure and interoperable mobile payment systems worldwide. Nokia is committed to the specification, implementation and in-troduction of NFC handsets support-ing the standardized UICC-based NFC secure element,” comments Dieter May, VP and head of Nokia emerging business unit. “Nokia looks forward to participating with the GSMA and the operator community in trials of this exciting technology.” �

Momentum building

April 27 2007

20% of handsets will include NFC by 2012

In its latest analysis of the NFC market, ABI Research forecasts that by 2012, some 292m handsets - just over 20% of the global mobile handset market - will ship with built in NFC capabilities. 2007 will be critical for NFC technology as key standards and operator trials complete the foundations for the first real deployments. “NFC in mobile phones promises a quicker and easier way to execute a host of key tasks by just waving the phone,” says senior analyst Jonathan Collins. “Making payments, unlocking doors, downloading content, even setting up wireless networks and many other applications, can all be enabled from an NFC handset.” But early enthusiasm for NFC adoption in handsets, fuelled by its functionality and flexibility, has been tempered by the complexity of the ecosystem required to support multiple, revenue-generating NFC applications. ABI Research believes that NFC will not become widely available in the handset market until wireless operators are confident they will see a clear return from specifying NFC in their latest handsets. “As the dominant mobile handset purchasers in the world, mobile operators stand as the gatekeepers of NFC’s entry into new handsets,” notes Collins, “and until they are comfortable with getting a return on the investment in those handsets, NFC will not reach a mass market.” While the simplicity of NFC use reflects its lineage in already-deployed contactless payment, ticketing and access control technologies, the multiple applications NFC facilitates bring a host of complexities and interoperability issues when it comes to creating the business relationships required to enable and manage NFC applications on each handset. Success in developing NFC relationships, primarily between card issuers, contactless transportation ticketing providers and mobile operators, will determine the speed and shape of deployment and consumer availability of NFC in handsets. �

CONTACTLESS


NTT DoCoMo

NTT DoCoMo and its eight regional subsidiaries have introduced the premium DCMX GOLD mobile credit card. DCMX GOLD is the latest offering from DoCoMo’s mobile credit card service, joining DCMX mini and the standard DCMX, which was announced in April 2006.Like the DCMX mini and standard

DCMX cards, DCMX GOLD is com-patible with iD, DoCoMo’s branded platform for mobile credit cards.Rewards and benefits accruing to

DCMX GOLD members include an exclusive line-up of gifts redeemable with the DoCoMo Points; preferred

treatment under the Premier Club program; and a compensation plan covering handset damage or loss as well as international and domestic traveller’s insurance.

DoCoMo, as a mobile phone op-erator, offers unique advantages to card members, such as priority ser-vice at selected DoCoMo Shops, and

a DCMX GOLD desk where members only can pre-reserve the latest hand-sets for free delivery to their homes or inquire about general information related to mobile phone services and products.Users of “Osaifu-Keitai” mobile wal-

let-capable handsets are eligible to apply for DCMX GOLD membership. The annual fee for the card is 15,759 yen (incl. tax).Members will be issued a Visa or

MasterCard magnetic card for use when making purchases overseas or at shops in Japan that do not have iD readers/writers. �

DCMX GOLD

April 27 2007

INSIDE Contactless has partnered with Mobile Distillery to develop an in-teroperable Java ME solution for NFC developers. INSIDE and Mobile Distillery’s part-

nership project aims to design soft-ware for the development of portable NFC/Java Mobile Applications across multiple NFC phones. Based on Mo-bile Distillery’s Celsius architecture, the solution is dedicated to Mobile Software developers who will need to cope with multiple implementations of NFC technologies, which adds yet another complexity to the develop-ment of Java ME applications across multiple handsets. By using the NFC Celsius mod-

ule developers will work on the NFC/Java ME application once, and run it across all NFC phones without any further modifications. Accelerated time-to-market, reduction of costs and an easy transfer to upcoming NFC phones will be the great advan-

INSIDE and Mobile Distillery team for NFC Java

tages of NFC Celsius module, which will enable easier and faster adoption of NFC technology. The partnership is divided into two

phases: firstly in the short term – the two companies will be developing a Celsius NFC prototype within the Q3 2007 timeframe. The second step, planned for Q1 2008, will consist of the joint development of NFC Celsius module, a complete set of Java ME NFC tools covering the commercially available NFC handsets and ones for the near future. “The NFC Developers Summit

shows that there are great expecta-tions from developers, content and service providers to supply mobile users with innovative applications based on NFC,” explains Philippe Martineau, EVP of the NFC business line, INSIDE. “As a reference mobile execution

platform, Java ME enjoyed a tre-mendous success over the past five

years, it is widely recognised by the mobile developer’s community, but it also undergoes an irresistible trend to fragmentation, with significantly differ-ent implementations in handsets from various vendors. INSIDE believes that interoperability is a key success factor in delivering NFC-based services. We have a role to play and the proper expertise to bring the full benefits of the NFC standard to the NFC devel-oper’s community.” “By combining both leading edge

expertise, a typical mobile applica-tion developer won’t have to adapt his application weekly to cover Eu-rope and the US, since one new NFC phone is expected every week in 2008,” comments Vincent Berge, general manager, Mobile Distillery.” “With this turn-key Celsius NFC solu-tion, mobile developers will focus on their added value, while accessing a new range of mobile applications in a few clicks.” �

CONTACTLESS


first EMV contactless transaction in Europe

On Track Innovations, Hypercom and Hypercom’s Swiss partner, Commtrain Card Solutions, have announced that their contactless payments system performed what is considered the first EMV (JCB, MasterCard Worldwide and Visa International standard) contactless transaction in Europe, according to Swiss technology standards and rules. The transaction was believed to be

the fastest secured transaction to-date, taking less than 0.5 seconds. The mar-ket launch of contactless card payment technology in Switzerland is projected

to commence this year, following pilots in Zurich, Lausanne and Lugano.The transaction was initiated on

March 29 by MasterCard Europe and the Swiss Bank Aduno Group, in col-laboration with McDonald’s restaurant, in Stadelhofen, Zurich (MPW 97). The transaction was conducted utilizing OTI’s Saturn 6000 and Hypercom’s T2100.Kazem Aminaee, senior vice presi-

dent of Hypercom EMEA comments: “Commtrain’s integration of Hyper-com and OTI’s high security contact-less payment products is a win-win for merchants and consumers who want the speed and security of faster

check-out lines throughout Europe.” Aminaee says the pilot is a sign that contactless EMV cards “will be the next big shift after countries shift to EMV.” He estimates that Europeans will see a “massive deployment” of contactless EMV cards within the next two years.The Saturn 6000 supports contact-

less payments programs from other major financial institutions, including Visa contactless program, ExpressPay from American Express and Discover Zip as well as programs for mass transit ticketing, MIFARE, loyalty, third party applications, and more. �

OTI and Hypercom

April 27 2007

MasterCard and USA Technologies say that Coca-Cola Bottling Compa-ny United, the third largest bottler in America, is installing cashless payment technology in vending machines. The two companies reported that

Coca-Cola United has begun equip-ping its vending machines with USA Technologies’ e-Port G6 to accept MasterCard PayPass contactless pay-ments as well as traditional magnetic stripe credit card payments.“Our mission at Coca-Cola United

is to provide customers with top qual-ity products in the most convenient way,” explains Thacher Worthen, VP, Marketing, Coca-Cola United. “We are excited about the benefits that credit card payment options will bring to our customers. The United States is rap-idly becoming a ‘plastic nation’ with fast food restaurants and convenience stores accepting credit and debit cards, and we feel the time is right to begin providing these same payment options to our customers.”

Coca-Cola converts vending machinesThe cashless vending machines will

be deployed by Coca-Cola United in multiple markets in the Coca-Cola Company’s home market, reaching consumers from Atlanta, Georgia, to Baton Rouge, Louisiana. The installa-tions are part of a nationwide deploy-ment of cashless vending machines and POS terminals by MasterCard and USA Technologies, and repre-sent the largest rollout of contactless technology in these markets. To pay, consumers tap their PayPass card or device on the terminal, the terminal flash-es a light and produces a tone to signal the completion of the trans-action in sec-onds. “More and

more consum-ers are telling

us they want to use payment cards for small purchases from vending ma-chines, and together with USA Tech-nologies and Coca-Cola United, Mas-terCard is responding to this demand,” says T.J. Sharkey, group head, US commerce development, MasterCard Worldwide. “PayPass provides greater speed and convenience for consum-ers making purchases from vending machines, while helping vending op-erators improve efficiencies and drive increased revenues.” �

M-PAYMENTS

www.mobilepaymentsworld.comM-PAYMENTS8

Smart SMS Corp.

Smart SMS Corp says that MP3NY, the boutique brand engineering firm founded by Kevin Watson, T-Weed on VH-1’s ‘I Love New York’, is launching mobile banking through Columbia Card Services Mobile Visa Debit Card.The T-Weed Wireless Visa allows

consumers the convenience of wire-less banking as the card is designed to be accessible from a mobile phone, PDA, computer or landline telephone. T-Weed’s Wireless Visa Card intends

to give unbanked Americans, small business owners, immigrants, and families the freedom of a bank debit card that can be used in coordination with a current bank account, pow-

ered by employment direct deposits or deposits made at Money Gram or Safeway locations. New Wireless Visa customers do not need to have a previous bank account or credit his-tory, only a mobile phone and a US address. “This system creates an opportu-

nity for underprivileged adolescents to have an independent bank account and the ability to make purchases online,” explains a T-Weed spokes-person. “It saves the small business owner banking fees by giving them the ability to pay their employees and vendors instantly regardless of loca-tion. Cardholders can send money to children in college or relatives in dis-

tant locations without the fees.” “Allowing the unbanked the abil-

ity to rent a car, use an ATM, pay their bills over the phone or web, and cash their employment checks without paying exorbitant fees, gives me something to be proud of,” con-tinues the T-Weed spokesperson. “It is important to give people the tools to be successful. If the US Treasury Department’s estimates are true, that 70m Americans lack access to bank-ing services, then this card is right on time.” The card allows consumers the

option to receive instant notifications by text message to their phone on any account transaction in real time. Supplying additional cards to family members or company employees and vendors allows the primary card hold-er the ability to transfer funds to con-nected Visa members by text mes-sage or computer, avoiding the need to go to a physical location to send or receive money. This FDIC insured card offers the added convenience of an ‘on’ and ‘off’ feature which pro-vides a major security benefit against identity theft, etc. The card carrier can make pur-

chases or use ATMs with the Star or Visa logos worldwide. The account-to-account transfer feature allows customers to transfer money instantly by phone, by texting the recipient’s phone or card account number. Card-holders can also receive funds by simply providing their phone number to the sender. With an initial $5.95 start up fee and a monthly $2.95 fee, this card can save a frequent check cashing service, money transfer or money order customer hundreds of dollars annually by eliminating check cashing, money transfer, order, and wire fees. �

Mobile Visa card

April 27 2007

Altair launches prepaid money share gateway

Altair Financial Services International Plc has launched an addition to Altair’s Prepaid Card services that makes use of SMS on mobile phones. The Altair Mobile Payment System (AMPS) enables cardholders to use text to better control and use their Prepaid cards. This includes a means of transferring funds globally – instantly and safely. “We have designed AMPS for users who require maximum flexibility and accessibility to their funds,” says Lee Britton, CEO, Altair. “Cardholders can have easy access to a number of self-service account management functions simply by sending a SMS to a dedicated number along with the appropriate function request. Significantly, AMPS also ensures end-to-end security throughout the process.” The Altair Global Money Share SMS gateway has been in development for the past three years and is now at a stage where the system is fully tested and able to handle large-scale card programs with ease. “Transaction processing solutions are changing rapidly as the markets for traditional payments processing, electronic commerce and prepaid processing expand, converge and evolve,” continues Britton “This is hugely important and will have a significant impact on the money remittance (Money Share) segment of the Prepaid Card industry and this will be the biggest growth area for the next three to five years,” predicts Britton. “It’s our view that we will increasingly be working with telecommunications companies, assisting them to expand their offering to customers and take on more quasi financial services. �

M-PAYMENTS


paybox and Radius-ED short code

paybox and Radius-ED have partnered to spearhead the delivery of innovative global mobile Services. Through the partnership, paybox and Radius-ED will provide business customers the mobile service delivery platform ‘Mobile Wizard’ which gives businesses access to Worldwide SMS connectivity and allows them to offer mobile services through one single global SMS short code – the Radius-ED G1 number.paybox’s Mobile Wizard offers a

comprehensive, integrated portfolio of best practice solutions. It turns a prospective customer into a loyal cus-tomer, as efficiently as possible, to increase profitability along each phase of the customer development lifecycle. With Mobile Wizard, Service Provid-ers can:• raise awareness through inter-

active, multi-step, multi-channel, and personalized campaign management,• stimulate the trial of services through

promotions with any kind of coupon, voucher or discount mechanisms,

• motivate interaction through com-pelling mobile services such as con-tent services, subscription services and customizable application services for mobile Commerce or mobile con-tests, and• enhance repeated interaction

through reward profiles such as loy-alty points, game ranking and players lists.Radius-ED’s Global 1 number (G1)

is a universal messaging number that allows access to the same informa-tion or content anywhere around the world. G1 is a mobile two-way com-munication channel for businesses to interact with their customer base via an access number unique to the business. Amongst other uses, this facilitates national and multinational marketing initiatives, CRM, m-com-merce and interactive services.Today, a typical mobile operator

uses more than 50 short codes to market all its mobile services. A brand owner must use multiple short codes to run a multi-country marketing cam-paign. A typical bank is just able to

send out messages, but not to pro-cess any replies. “By teaming up, we can offer ev-

ery service provider to consolidate its communication with end customers - maximising their lifestyle while reducing internal complexities, and operational costs at the same time,” explains Eckhard Ortwein, CEO paybox. Philip Davis, Radius-ED’s gener-

al manager adds: “Imagine a TV show that is broadcasted around the globe - and the viewers from around the world can make their vote count via one number globally. As Partners, we can address the global mobile community with one universal SMS short code - with one single platform connected to more than 100 countries worldwide - enabling really innovative global mobile services.” �

Deliver G1 SMS short code

April 27 2007

Cyphermint have signed an agree-ment with Fidelity Express, a full ser-vice financial services company, to provide mobile bill payment services using Cyphermint’s PayCash Mobile technology.By registering consumers will be

able to either initiate a payment from their mobile phones or schedule mo-bile alert notifications to process a payment in one click. When a pay-ment is due, the customer can re-ceive an alert and with a single click, they can pay the bill and receive

Cyphermint partners with Fidelity Expressconfirmation without having to enter or store any personal information on their phone. Fidelity Express will process the bill

payment transactions on the same reliable, robust and secure financial services platform, Fidelity XPressPay, which currently processes millions of payment transactions annually.Fidelity Mobile XPressPay, pow-

ered by PayCash, will also include a stored value card and electronic wallet account that will be tied to the phone so that bills can be paid from

pre-loaded funds on the account. Customers can load funds to their accounts at any one of the Fidel-ity XPresspay or Cyphermint funding locations. Other options for funding include direct deposit, credit card and ACH transfer loading.“Mobile payments are a remarkable

new application for wireless custom-ers and we are convinced that Cy-phermint’s PayCash system is abso-lutely the right approach,” comments Pat Odom, division manager, Fidelity Express. �

M-PAYMENTS


SmartPay partners with China Unicom

SmartPay Jieyin (SmartPay) has launched a payment services in partnership with China Unicom for Shandong Province. These services include airline ticketing, lottery payment, utility bills and certain kinds of digital card retail.SmartPay and Unicom also an-

nounced the launch of ‘Agent Toll Stations’, beginning in Jinan, which will create a network of recharging and retail sales points for payment services using SmartPay’s m-payment technologies.SmartPay’s services in Shandong

have been in their trial phase since June of 2005 (MPW 75, 86). These

services include SMS, web and IVR based top-up services. The expan-sion of services and the branching

out of network agents is critical for launching advanced offerings such

as airline ticketing, the need for which SmartPay and Unicom be-lieves will increase as the use of 3rd generation mobile networks be-comes a reality.In addition, Agent Toll Stations

help expand mobile usage to areas without convenient transportation or extensive retailers. These stations will allow agents to add money to any Unicom user’s mobile using SmartPay’s technology and bank relationships. Agent Toll Stations provide a rapid, infrastructure-light method for mobile carriers to rap-idly deploy marketing channels and collection points. �

China to develop m-payment

April 27 2007

currency and on any carrier’s net-work. Under the agreement, PAT will be offered to CSC banking clients through a ‘Software as a Service’ (SaaS) arrangement, enabling very rapid time to market and known, low costs of operation.“Our relationship with CSC is ideal

for us in this market space,” com-ments Patrick Bird, president and CEO of CPNI. “CSC has the reach, necessary integration skills and bank-ing knowledge to help bring PAT to the banking community and make m-payments of this nature a reality for millions of people.” There are numerous applications

enabled by this service, such as mi-grants sending money back home or parents sending money to their children. In addition, consumers can pay for small business services such

CPNI selects Computer Sciences to distribute m-payments platformCPNI has completed an agreement with Computer Sciences Corporation which gives CSC the right to market, implement and support CPNI’s Phone Authorized Transfer (PAT) mobile pay-ments solution to banks throughout Europe and Africa. PAT is a software solution that al-

lows a bank’s customers to transfer money to any individual or purchase goods or services from any organi-zation via a mobile. The consumer only requires their personal identifica-tion number (PIN) and the recipient’s telephone number. Payments can be made quickly, securely and cost ef-fectively regardless of time or loca-tion. Recipients receive the funds directly into their accounts or use a variety of methods to access their money. PAT can work in any language or

as plumbers, vets and dentists and also take advantage of quick and convenient payment services such as prepaid mobile top-up, utility pay-ments and lottery purchases, as well as a variety of m-commerce pur-chases such as entertainment and travel tickets.“The global remittance market is

forecast to grow to more than $300 billion by 2008, and undocumented money transfers are currently es-timated at around the same level globally,” explains Steve Mitchener, president of CSC’s Financial Services Group in Europe, the Middle East and Africa (EMEA). “Banks are keen to reclaim ground lost in this market to the alternative money transfer and payment organisations, and PAT of-fers an innovative response to this challenge.” �

M-PAYMENTS


M-barcode launches

Scanbuy has completed its mobile barcode platform created for Telefonica Moviles Espana (TME). The platform is the first of its kind in Europe to combine multiple uses of barcodes on mobile handsets.Scanbuy’s platform supports TME’s

strategy to facilitate access to mobile content and use of the handset as a transaction device for its 21.5m sub-scribers and will be the first integrated platform combining couponing/ticketing and print-to-mobile. Atos Origin has been selected to provide systems inte-gration and project management ser-

vices to bring the solution to market. “Thanks to this new integrated so-

lution from Scanbuy, TME subscribers will be able to access mobile content and services using the easiest and latest print-to-mobile technology in the market,” comments Miguel Bravo, global account director, Atos Origin.TME will use the platform to of-

fer its Movistar subscribers access to content by simply pointing their camera phone at a two-dimensional barcode, to be found in advertising, on TV, business cards or websites. Scanbuy’s client application ensures

access to online data and multimedia services from a wide range of hand-sets and allows content providers to create, manage, and monitor their barcodes and to launch couponing and ticketing campaigns by sending barcodes within SMS or MMS.“Being selected by Telefonica Mo-

viles Espana, the leading mobile op-erator in Spain, is not only proof of Scanbuy’s best of breed mobile barcode technology but it also posi-tions Scanbuy as the global industry leader,” says Jonathan Bulkeley, CEO, Scanbuy. “Scanbuy provides mobile operators and content providers with more complete utility than any other vendor. Scanbuy will continue to add functionality to its platform and work with handset manufacturers to provide Telefonica Moviles Espana subscribers the best user experience possible.” �

Telefonica Moviles

April 27 2007

Shoppers sign up by texting “JOIN” to a standard rate SMS shortcode. Following the simple registration pro-cess, a unique barcode ID is sent to their mobile phone. Subsequently members receive regular, personalised SMS offers entitling them to discounts on popular items. When redeem-ing coupons, customers simply pres-ent their barcode ID, which is then scanned at the till along with the quali-fying items to automatically receive the discounts they are entitled to.The company claims that removing

the paper based claim process will massively simplify coupon handling for retailers, who also face lengthy delays before being reimbursed for shopping discounts. With Shop Scan Save the claim process is automatically handled by PayPoint and shopping discounts are returned to retailers within a mat-ter of a few days.PayPoint’s involvement with the

scheme and planned national rollout follows a successful trial at Sains-bury’s at Jackson’s in Hull. The trial

PayPoint launch ‘Shop Scan Save’This summer, Shop Scan Save will launch in participating PayPoint stores across the UK. The unique mobile-based loyalty scheme will enable retail-ers to benefit from coupon schemes without the hassle of collecting pa-per coupons or having to wait weeks to re-coup their money. The scheme also enables the consumer to save on their shopping bills.Shop Scan Save is a retail so-

lution that binds together mobile technology and EPOS payment systems, so consumers can receive and request money saving deals by SMS, as an alternative to tearing out paper coupons.“Linking with PayPoint is a land-

mark partnership for us,” says Marc Lewis, founder and chairman, The Light Agency who created Shop Scan Save. “We’ve already seen great suc-cess in local trials, so now by having our technology installed nationwide in up to over 16,000 PayPoint stores we’ve a huge potential to change the way the UK shops.”

delivered an average 20% coupon redemption rate: sometimes up to 90% because members were able to request specific offers tailored to their shopping list. Therefore, retailers can expect to see instant benefits in-store. Brands already working with Shop Scan Save include P&G, Nestle, Mars, Unilever and Red Bull.Commenting on the deal, PayPoint’s

CEO, Dominic Taylor says: “We are very excited about our partnership with The Light Agency, which repre-sents an entirely new and innovative proposition for our retailers and their shoppers. With Shop Scan Save, val-ue flows from the brand owner to the consumer, rather than the other way around. In all other respects, Shop Scan Save delivers traditional Pay-Point values to our retailers by driv-ing footfall in to stores and increasing sales. PayPoint is proud to be be-hind the UK’s first nationwide scheme that uses mobile barcode technology to deliver targeted shopping discounts to consumers.” �

ANALYSIS

www.mobilepaymentsworld.comANALYSIS13

The future of mobile banking:

Ever since it was highlighted by the World Bank in its annual Global Economic Prospects report for 2006, the exponential growth of the global remittance market has attracted widespread attention. The report emphasized that official global remittances had doubled within five years to $230bn in 2005, a sum that exceeded international aid flows for that year by twofold � despite excluding the established and vibrant informal global remittance market.Conservative estimates suggest that

the market reached around $286bn last year and that as much as $200bn of that was received by de-veloping countries. Moreover, experts also agree that the market’s stagger-ing growth is unlikely to abate in the near future.“When you consider that the num-

ber of migrants worldwide is already more than 200m and that companies like MasterCard estimate that over 60% of the world’s 6.5bn people do not have access to banking services near home, the potential is enor-mous,” says Hannes van Rensburg, CEO of Fundamo.Tackling global povertyMost migrant workers support their

families back in their home countries and numerous surveys suggest that remittances can constitute as much as half the income of supported fami-lies in developing countries.“Measuring the effect of a huge,

predominantly informal phenomenon like this is, obviously not easy, but all the evidence suggests that remit-tances have become an extremely important way of tackling global pov-erty,” argues van Rensburg. “Some-thing that makes it even more vi-tal that we continue to find migrant

workers cheaper and more secure ways of sending money back to their communities.”The size and scope of informal

remittance services, like Hawala (In the most basic variant of the hawala system, money is transferred via a network of hawala brokers, or ha-waladars. A customer approaches a hawala broker in one city and gives a sum of money to be transferred to a recipient in another, usually foreign, city. The hawala broker calls another hawala broker in the recipient’s city, gives disposition instructions of the funds (usually minus a small com-mission), and promises to settle the debt at a later date), highlight the fact that the vast majority of migrant work-ers need to send money to areas with poor infrastructure and in which banks have little or no presence. “Wiring money

home to loved ones is a big challenge for migrant workers,” confirms van Rens-burg, “formal services can be expensive and inconvenient and the alternative of using unregulated, informal services leaves the transaction open to negligence and theft.”Indisputable benefitsVan Rensburg be-

lieves that the so-lution is to use in-novative technology to distribute money electronically. “The electronic trans-fer of funds is first prize,” he maintains. “It gives the sender

and receiver peace-of-mind because they know the funds will be available immediately, safely and at a lower cost. It also allows the monies to be earmarked electronically for essen-tials such as doctors, housing and schooling.”Citing the incredible boom in mobile

phone use in most emerging markets, van Rensburg argues that tapping into existing mobile networks is the most cost-effective way of providing key fi-nancial services electronically to the billions of people beyond the reach of the conventional banking infrastruc-ture. “The benefits for everyone in-volved are indisputable,” he asserts, “lower running costs, time-saving, lower transaction costs, convenience and higher security.”Continued on p.14

Global remittance

April 27 2007

Mobile transfersglobal hub

www.mobilepaymentsworld.com MOBILE PAYMENTS • Q2 2007

ANALYSIS


The future of mobile banking:

Global remittance

April 27 2007

Continued from p.13Big challenges and big rewardsVan Rensburg acknowledges that only

a handful of banks and mobile phone operators currently allow customers to make financial transactions by phone and agrees that there are challenges facing organisations that wish to allow customers such facilities.One major consideration is to find

the right technology partner - one that has both the technology and experi-ence to deliver on such projects.“There are, of course, other chal-

lenges to be dealt with, including regulation, incumbent and vested in-terests and the lack of coordinated standards,” van Rensburg observes, “but service providers that establish themselves in the lucrative remittance market will benefit from the lower costs and margins on potential ad-ditional services.”Van Rensburg also notes that the

recent announcement by the GSM Association, 19 participating mobile operators and MasterCard is a move in the right direction and should be supported by other operators, solution

providers and vendors in the industry.“It stands to reason that only by

working together will solutions that benefit all of the players in the indus-try be developed,” he explains. “The challenges are only surmountable if all stakeholders work together towards a common goal and for the benefit of consumers in general.”The currency of the futureIn fact, van Rensburg believes that

a major focus for money repatriation operators needs to be the consumer themselves - to convince develop-ing world users that currently have a ‘cash-in-hand’ mentality, rather than an electronic wallet mentality, to adopt electronic money as their new currency.“Cash transfers will remain in vogue

for a few more years, but it is in-evitable that ‘electronic money’ will become the currency of the future since it is far safer, cheaper and more convenient than current systems,” ex-plains van Rensburg. “It will take a little while for people unfamiliar with the concept to accept that electron-ic wallets are a viable alternative to

cash, but once they do the market will open up immeasurably.”It’s an opinion encouraged by the

growing number of large-scale de-ployments across a variety of mar-kets that prove consumers will accept the concept and adopt new systems within a fairly short space of time. “It really proves the point that consum-ers will embrace any service that is viable and convenient,” van Rensburg maintains.Beneficial outcomes for everyoneAmidst the general market excite-

ment about the opportunities and massive potential that mobile remit-tance transfers offers, van Rensburg echoes the sentiments of Francois Bourguignon, senior vice-president for development economics and chief economist of the World Bank, cau-tioning that the challenge facing the industry is not how best to capture ‘a piece of the action’, but how to create solutions that are beneficial for everyone involved - the host coun-tries, the home countries and, most importantly, the migrant workers and their families. �

ANALYSIS


By, Jeff Popoff, vice president of marketing, Redknee

With the arrival of turnkey billing systems, converged real-time billing is now a strategic differentiator for mobile operators in emerging markets, enjoyed today by subscribers in regions such as Africa, the Middle East, Pacific Islands, Caribbean and Latin America. The deployment of converged real-time billing in emerging markets can be attributed to several factors: • ICT telecom deregulation policyto promote economic development• Awarding of wireless 3G andfixed-mobile licences • Immediacy of cash-based anbarter societies

Data ServicesWith a range of data services such

as mobile video and MMS in place, the richness of subscriber bundles increases, which creates demand for converging the billing for both voice and messaging services. In emerging markets, converged real-time billing is essential because the majority of sub-scribers are prepaid, which necessitates real-time authorization, usage, and bal-ance monitoring of data services.Converged real-time billing offers

mobile operators rapid deployment of a single customer care and provi-sioning system with immediate sup-port for voice, messaging, and data across all account types - prepaid, postpaid, and hybrid – and all rate plans - individual, corporate or group. In competitive emerging markets, both incumbent networks and Greenfield operators gain time-to-market advan-tages by being the first to deploy advanced end-to-end, converged real-time billing systems. Cost AdvantagesConverged real-time billing can de-

liver operational expenditure (OPEX)

savings of 42% to 77% for mobile op-erators in emerging markets. A single platform is simply easier to administer, maintain, and operate than multiple platforms for voice, messaging, data, m-commerce, prepaid, and postpaid. In addition, a single converged plat-form also greatly streamlines cus-tomer-care training and support and makes the provisioning of bundles and hybrid accounts much less com-plicated. Furthermore, by virtue of its centralized rating rules that take effect immediately, a converged real-time system reduces and mitigates revenue leakage and fraud losses otherwise associated with complex mediation and correlation of CDRs and IPDRs.

Churn ReductionA major challenge faced by opera-

tors in emerging markets is churn. In order to address this challenge, mobile operators differentiate their services to compete on more than just price. Converged real-time billing helps create differentiation and loy-alty among subscribers, and reduces churn by:• Complementing social relatioshipsin the form of group rate planbased on friends, family, or affinitygroups• Enabling hybrid plans for familiesthat allow for transfers betweenmembers and overseas remittances• Delivering personalization wher-

by subscribers can select or chan-ge their tariff plans• Adding mobile commerce services, international remittances, andpeer-to-peer micro-credit transfers• Reducing subscriber acquisitioncosts due to lower converged bill-ing OPEX• Real-time or top-up promotionsthat alert subscribers to new services or information• Implementing loyalty programswhereby subscribers earn “frequentuser” points for future rewardsThere are several examples within

emerging markets of how a con-verged real-time billing approach can significantly reduce churn. In Indo-nesia, turnkey billing has resulted in reducing churn to under 5%, down from a regional average of 8 – 11%. An African operator launched a loy-alty program called ‘Bonga’ which rewards points based on subscriber usage and lifetime on the network. Points can later be redeemed to win various prizes including airtime and merchandise. In the Caribbean, a rate-plan promotion increased average call duration by 10%. Emerging Market LeadershipThe impact of converged real-time

billing can be felt in all areas of the globe, but especially in emerging markets. This is a watershed decade, marking the start of a sea-change that will see mobile innovations within emerging markets occurring more rap-idly and frequently, ultimately resulting in closer parity to Western Europe or North America. With the introduction of advanced data and real-time billing services, emerging markets no lon-ger lag behind the rest of the world but instead boast portfolios that have achieved successful and globally-note-worthy results. �

Billing in emerging markets

April 27 2007

M-POS

www.mobilepaymentsworld.comM-POS17

Patent dispute

Mobile VPT the m-payments outfit who invented V-SIM, a patented m-payments architecture has issued its first law suits in the UK. The first of four claims were issued to Monilink, Monitise, Morse and Link Interchange Network Ltd who run the UK’s ATM/cash machine network. Monitise is wholly owned by the two other parties, Morse and Link.On September 9 2006, the Euro-

pean Patent Office granted application No. 99 957 131.8, more commonly known as the ‘V-SIM patent,’ which has now been granted in more than 12 different jurisdictions, including all the EU, the US, China, Mexico and South Africa, covering territory with more than 2bn GSM users.Before the invention of V-SIM, it was

assumed that operators controlled ac-cess to mobile users through the SIM card. V-SIM introduced a new con-cept with significant commercial impli-cations: third party applications could

now be provided to the mobile hand-set without authentication through the network operator’s SIM card.Keith Benson, who has formed Mo-

bile VPT Europe plc to own the pat-ent, says: “Any GSM or 3G mobile device with a central signal processor that receives interrogation signals for user authentication that are directed other than to the network operators’ SIM card is an embodiment of the invention claimed in the patent.”What makes this case especially

interesting is that Monilink has had recent commercial roll-out success in the UK with First Direct, HSBC, Alli-ance and Leicester, The Royal Bank of Scotland Group as well as with each of the five major mobile networks and more recently with Metavante, the banking and payments technology subsidiary of Wisconsin-based finan-cial services group Marshall & Ilsley in the US. “This is likely to be the first of many

(law suits),” explains Benson in a re-

cent MPW interview. “The many will come when this becomes publicly seen. We are just putting all of our lawyers in place as we expect them to come back and fight very hard, and because of who some of their licensees are they will be pushing very hard to make this go away.”In the original interview six month

ago Benson insisted that anyone that went to court would be stripped of any licence and face until 2019 before they would be able to do business again. However, in this instance: “We would be happy to license to Morse and Link, but effectively we will be shutting down Monitise. The best deal that they would get out of us is that they would have to hand the keys over. This would mean that they would still make money and they would still have a licence but they would not get the capital value out of Monitise because that is our business.”Preliminary hearings begin on 10th May �

Mobile VPT sue Monitise

April 27 2007

directly from the box. “We are ex-cited to offer WAY’s mobile terminals to our customers,” says Ron Gamm, VP of national sales, 1st Federal Fi-nancial. “Unlike other POS makers in the industry who claim to have mo-bile terminals, WAY has a truly mo-bile product that is extremely viable to merchants who want to process transactions anywhere at any time.”The common goal at 1st Finan-

cial and WAY is to bring affordable, easy-to-use systems to the public. In an effort to expand customer service efforts even further and reach un-

1st Federal Financial chooses Way POSWAY Systems says that 1st Federal Financial will offer WAY products to their customers as the chosen wire-less POS solution. Beginning in May, 1st Federal will offer WAY Systems’ popular MTT1510 and MTT1556 ter-minals. Both companies are commit-ted to delivering unparalleled prod-ucts and customer support to the marketplace. Mobile merchants who require a

wireless POS terminal from 1st Fed-eral Financial can choose from WAY’s rapidly growing line of innovative sys-tems, which are fully ready to use

touched markets, both companies are collaborating to develop user materials in Spanish for the large population of Latin mobile terminal users across the US. �

OPINION PIECE

www.mobilepaymentsworld.comOPINION PIECE19

Mobile phones are evolving rapidly and have become almost as powerful as personal computers of some years back. They are everywhere and they are connecting people like never before. According to a recent analyst

report, India and China combined will soon have 400+ million mobile phone users. This mass proliferation of mobile technology across the globe opens up huge opportunities. Mobile phones can serve not only as devices for communication but also for many other applications, such as identity, payment, loyalty, access control, transportation, service and information discovery, health care, and many more. Here, I share my opinion of where I think the industry is heading and what the mobile world will look like in near future.Credit cards have remained the

same since their creation in the ‘40s and ‘50s. Fifty years back when the first credit cards came into circula-tion they had magnetic swipe strips, and to this day they continue to be in the same format. However, there are new driving forces that are bound to make significant impact on how the card looks, gets provi-sioned, and completes the transac-tion. We also have many new ways in which to shop and acquire goods. In addition, changes in society and the emerging technologies have the potential to change the payment landscape permanentlyBusiness ModelThe availability of broadband ev-

erywhere and proliferation of wireless signals are rapidly changing consumer behavior. Starting from how consum-ers get their news to how they shop

is undergoing tremendous change.In a recent survey by MasterCard,

it was found that nearly 40% of US adults say they carry less cash today compared with five years ago, and nearly half carry $20 or less. Additionally, 86% say they want to use cash less often than they cur-rently do. This trend is clearly lead-ing towards an increased use of electronic payments for goods and services. I personally don’t think we will ever get rid of cash, however its use will continue to decline in the coming years. All of these changes are disrupting

the business landscape. Old style retailers are going out of business and new opportunities are popping up for anyone to grab. For example, traditional paper-based newspapers have seen their revenue shares drop significantly and are being replaced by electronic news readers, web based news providers and opportu-

nities for independent journalist via blogging. Shopping is another area with huge changes. Traditionally re-tailers were used to only one chan-nel to reach customers and that was brick and mortar. However, now brick and mortar is just one of many channels to reach customers. Inter-net-based shopping (e-commerce), media center–based shopping, cata-log ordering via phones, and mobile shopping are the new channels that retailers are being forced to adopt quickly or see their revenues fall. Social ChangesThere is a social change that will

play a significant role in disruption in this space. The current and next gen-erations of consumers are a major factor in this disruption. This generation, is growing up in a

different world, their exposure to plas-tic money, gadgets, computers, and TV is making them very different,Continued on p.20

April 27 2007

Emerging wave of m-paymentsBy, Moin Moinuddin, industry architect, Microsoft

Vendor Zone style article heading

OPINION PIECE

www.mobilepaymentsworld.comOPINION PIECE20

Continued from p.19so their expectations are different from the market, they want a different user experience. In my opinion, this will be single biggest factor that will change the payment landscape. The 18-34 age group (generation Y) is more technology savvy and clearly uses the mobile devices more often for playing games, accessing information and for instant communication. Their level of comfort with technology and their ea-gerness to adopt new technology will be key factors in disrupting the pay-ment landscape in years to come.ConvergenceWhere is all of this taking us? We

have highly developed technology, a Hydra of retail channels, and con-stantly growing consumer expecta-tions. In the recently concluded CTIA Wireless conference, the CEO of Visa summarized this as, “Convergence of payments and mobile communications is inevitable.” He also called for a closer collaboration between the pay-ment card and mobile industries to realize the full potential for conver-gence between the two markets. Most consumers have some sort

of loyalty card, it could be the loyalty card of the local grocery store or the hotel they stay at or the airline they travel frequently on. In addition, con-sumers have gift cards, stored value cards, and identification cards. So, consumers either need a briefcase to carry all of these cards or they just carry a subset of them. I have seen wallets that were as thick as a hardcover book and as heavy as half a pound. In addition, I have seen consumers stuffing receipts into them, increasing the thickness and weight even more.With recent changes in rules around

signature requirements, where a signa-

ture is no longer required for amounts less than $25, there has been an increase in the usage and volume of electronic transactions. So what is the solution, especially considering this ever-increasing electronic form of payments? Simply put “NFC-enabled Mobile Wallet” is the solution that can solve this problem. Imagine a world where consumers can store all their cards (credit, debit, stored value, gift, loyalty, etc) on a NFC-enabled mobile phone. Technology is mature enough to provide the necessary security to protect from theft. Cards can be eas-ily encrypted with either a key or bio-metric identification. Consumers select the card on their phone and wave it to pay for their goods and services. In return the receipt gets downloaded on the phone, to be printed when needed. This also enhances overall security of the transaction in the case of e-commerce. Online purchases can be paid via the NFC-based mobile phone by waving the phone in front of a NFC reader attached to the per-sonal computer or laptop. So the question I often get asked

is, “If the technology is already there, why isn’t this happening in the mar-ket place yet?” In my opinion there are mainly two fundamental reasons for the slow adoption of this in the market place.Consumer education: There is a crit-

ical need to educate the lay person. Most of the folks who deal with tech-nology understand that NFC-based mobile phones are secure. However, folks who are not in the technology space do not, and they need to be educated to make sure they feel com-fortable with this before mass adop-tion can happen. Of course, there is no such thing as 100% secure. However, at least achieving the level

of security offered by the leather wal-let is possible with current technol-ogy. The challenge is who would do this work? Is it the device makers, mobile service providers, banks, card associations, or who? So unless the industry comes together to embark on this path of consumer education we will continue to be behind Japan and Korea in mobile wallet adoption. These countries are ahead of us due to few advantages they enjoy such as mobile service providers also own-ing financial institutions, one big player taking the first step (risk) and the technology loving consumers.Business model: There is urgent

need for the participating entities to come together and formulate a busi-ness model. The fundamental issue is who owns the mobile wallet cus-tomer, is it the service provider or the bank? There is no easy answer to this nor will there be. The solu-tion lies in collaboration and working together on an industry-wide level – launching isolated trials will not re-sult in mass adoption. Consumers will not go for NFC-enabled phones unless there are merchants that are ready to accept them and merchants will not install NFC readers unless there is sufficient demand from con-sumers. This will not happen unless mobile service providers and banks come together to push this technol-ogy through incentives and benefits. An alternative is some large organi-zation taking the risk of being first to market.So in summary, I think the next

five years are crucial for the payment space. There are many challenges and opportunities ahead of us, those who are willing to collaborate will win the market and those who are not willing to will become obsolete. �

April 27 2007

Emerging wave of m-paymentsBy, Moin Moinuddin, industry architect, Microsoft

VENDOR ZONE

www.mobilepaymentsworld.comVENDOR ZONE21

VeriFone says its first external con-tactless card acceptance device, the QX100, has been certified by Visa and MasterCard as conforming with their respective contactless payment systems, Visa PayWave and Master-Card PayPass.The QX100 attaches to VeriFone’s

Vx Solutions, Omni 3700 and NURIT payment solutions, as well as any stand-alone payment device or POS system for quick merchant upgrades. It provides merchants with a cost-effective migration to accept the in-creasingly popular ‘tap and pay’ pay-ment cards now being offered by major banks.“The QX100 sets a new standard

in contactless payment convenience,” says Paul Rasori, vice president of global product marketing, VeriFone. “Contactless payment is ideal for speeding up checkout lines and we’ve designed a system that is ideal for merchants in a range of venues, from quick service restaurants and conve-nience stores, to retail outlets, movie theatres and sports arenas.”With over 100,000 contactless in-

stallations across the globe, the QX100 can be used on the counter-top or wall-mounted to reduce clutter and enhance ease of use. The QX100 is capable of high speed encryption using modern encryption algorithms and utilizes downloadable software to meet evolving contactless card pay-ment security specifications. �

services with the company.mobilkom austria group has signed

a new contract with MACH for the reliable and timely exchange of billing and settlement information across all companies in the mobilkom austria group. This includes mobile commu-nications provider’s mobilkom austria and its subsidiaries: Mobiltel in Bul-garia, Vipnet in Croatia, Si.mobil in Slovenia mobilkom liechtenstein and mobile communication providers cur-rently being established in Serbia and Macedonia.Wolfgang Partsch, IT quality man-

ager at mobilkom austria comments, “MACH has vast experience in the Data Clearing market and having worked with them for over several years, we have developed a strong partnership. The decision to renew the contract for Data Clearing services was easy to make, based on MACH’s continued effort to provide us with world-class customer service and an extremely effective solution.” �

ogy developments related to securing and dynamically managing Over-The-Air (OTA) multi-application handsets, USIM / SIM cards and other secure elements. Marc Kekicheff, vice president of

product technology at Visa Interna-tional, vice chair of GlobalPlatform and leader of the Mobile Task Force, com-ments: “The mobile industry is looking to establish standardized solutions to ensure the mobile handset, which has become a universal multi-functional device, reaches its true potential. As a secure multi-application smart card specification provider, representing payment systems, government bodies and telecom operators, we believe it is important that GlobalPlatform con-tributes to this activity from an inde-pendent, cross-industry perspective.“The work undertaken by Global-

Platform’s Mobile Task Force will ulti-mately facilitate new business oppor-tunities between the mobile sector and other industries,” continues Kekicheff. “Through its activities the group will highlight that service / product dif-ferentiation can be achieved through multiple-applications, how various business models can be applied within one implementation and why a neutral and scalable infrastructure can protect current investments relative to future technology evolutions.”Although the Mobile Task Force for-

malizes GlobalPlatform’s activity within the sector, GlobalPlatform has worked closely with the European Telecom-munications Standards Institute (ETSI) since its inception in 1999, to stan-dardize OTA application download and management of smart card ap-plications. This has resulted in over 1 billion USIM/SIM cards leveraging Glo-balPlatform technology. More recently, GlobalPlatform has actively engaged the Open Mobile Terminal Platform (OMTP) to standardize mobile device application provisioning and security and is now in the process of estab-lishing a formal liaison with the Open Mobile Alliance (OMA) and the Near Field Communication (NFC) Forum. �

Visa and MasterCard approve QX100

April 27 2007

mobilkom renews partnership with MACH

MACH, a clearing and settlement partner for mobile based transactions, says that mobilkom austria has re-newed its contract for Data Clearing

mobilkom renews partnership with MACH

Smart card international specifications body, GlobalPlatform, has launched a Mobile Task Force to actively con-tribute to the development of mobile telecommunications standards by en-hancing and aligning GlobalPlatform’s card, device and systems technology offering within this sector. With 23 GlobalPlatform member

companies committed to participating in the activity, the group will educate the market on the benefits and added value of GlobalPlatform’s interoperable technology, while expanding Global-Platform Card, Device and Systems Specifications to address specific re-quirements highlighted by the mobile industry. The group has already begun work

to align aspects of its Card and Device Specifications with current technol-

Mobile Payments World 2007-04

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