Mobile financial services in the developing world

Africa today - Europe Tomorrow?

Deploying the Last Mile of financial services

Simon Cavill

Mi-Pay Ltd

At the forefront of the hottest trends in payments worldwide• Mobile Initiated Payments & Pre-Paid Top-Up Outsourcing

• Domestic & International airtime and person to person payments

• Meter Initiated Payments (Pre-paid Utilities)

• Micro Payments (e-Wallets issuing & Micro-finance Services)

• Mobile & Internet Payments (Service Provider)

• Media Interactive Payments (Mobile Digital Broadcast & TV)

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Mi-Pay – Mobile Payment Veterans?

• Specialists in secure mobile initiated financial services and payment applications

• 4-year track record of deploying mobile applications worldwide

– 18 countries; 5 languages

• Working with– Banks & Core banking software providers

– Payment services providers

– Mobile operators and MVNO’s

• Implementation partners include– Logica, Unisys, Isys Mobile, Masabi, FE Mobile

• Customers include– Cliq Radio - Live music downloads from UK radio stations

– Misys and Temenos – retail banking software suppliers

– Mobile operators across Europe, The Middle East and Africa

– And several projects in course of completion in Sudan, Kuwait,

Tanzania, Ghana, Senegal etc.

Choices, Choices…

The Rich have a wide range of choices – The Poor do

not…

The Rich have immediate access to a wide range of

payment methods and financial services – The Poor use

cash only and have very limited access to financial services

The Rich trade effortlessly – The Poor would like to if they

had the tools and services to do so

There are more Poor people in the world than Rich ones…

Mother is the necessity of invention – There are many interesting and innovative uses of mobile phones across the developing world largely driven by the lack of any

other infrastructure available to the mass of potential consumers.

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This is Our Market…

That Lady in the blue dress on the top right is our key client – She is a pre-pay top up vendor amongst other things and is the focus of our B2V (Business to Vendor)

strategy. We either get her a special SIM or side-load our Java applet onto her

phone supplied either by the operator or distributor she works for. This application enables her to provide a direct electronic top-up channel to her customer base

removing the need for her to sell coupons or scratch-cards, although it does not

actually stop her doing so. The same device also provides basic stock control and enables her to act as a mobile ATM and/or deliverer of financial services to her

local client base.

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And it’s a Large Market…

2.5 Billion

Lots more!!

???

Potential market of 6.3 Billion people

Do not underestimate the millions of consumers across the World that currently share a single handset between them. Bringing financial services to these shared

users is a real technical challenge!

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Some of whom are short on resources…

are

Our challenge is to delivery a wide range of financial services to people like this…. No access to a bank or any other financial infrastructure in daily life as in the

developing World, most bank branches are confined to cities. The only device

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In the most unusual places…

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Where the phone is often the only contact point for financial services…

There are a whole range of drivers impacting the adoption of mobile initiated payments and financial services to both existing and potential mobile phone

consumers around the world.

So what are the Real Challenges?

Bringing a variety of financial services to potential consumersacross the developing World

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OK, So hereOK, So hereOK, So hereOK, So here’’’’s the Technology Slides the Technology Slides the Technology Slides the Technology Slide

Voice (IVR)

Universal but requires careful design

Voice recognition for secure ID only

Simple and effective

Secure Java Applet

Best client experience

Flexible and brandable

Extremely Secure

Multi-factor authentication

3Des encryption locally and in transmission

No sensitive data on handset

USSD

Universal across all GSM devices

Menu driven - easy to use

More secure than SMS and WAP NFC APPLICATIONS

Tying Ad views to payment opportunities

Small retail payments from SVA’s

Ads / promo / service discovery

Instant free content in retail stores

Transport

SMS

Works on 3 Billion handsets

Used almost universally

Less secure

Encrypted SMS adds security

Simon’s Law – There are only three universal delivery platforms for the mobile handset that can reach every mobile phone consumer – SMS text messaging,

Voice and USSD. Everything else is a risk at it relies on the consumer having a

phone that can initiate an IP connection.

Mi-Pay uses Java applications where they can be deployed to “known” groups of

users such as vendors with suitable handsets.

Consumers interact with Mi-Pay’s mobile initiated financial services through SMS or

USSD typically. An IVR system can be supported where appropriate.

The Last Mile of Financial Services

AgentNetworks

R$

AGENT

MOBILE

R$R$

AGENT

MOBILE

Consumers

Banking the Unbanked

Education Fees

Pre-Pay Funeral Fees

Utility Payments

Bill Payments

Micro-Finance

Micro-Insurance

Airtime as Currency

Pension Distribution

Person to Person Payments

Tax Payments

Pre-Pay Phone Top up’s

International Money Transfers

International Airtime Transfers

Financial Services

Java applet, USSD

USSD, SMS, IVR (Voice)

Mi-Pay

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Mobile Money Transfer

Mi-Pay’s strategy is to work with and through mobile operators and financial service providers across the world to build and maintain mobile initiated money transfer

services that combine the simplicity, cost advantages and reach of the Hawala type

schemes with the strengths of a financially compliant service run through the locally trusted brand of the mobile operator or bank as appropriate.

The system has unique advantages as it enables the operators to hold the inbound remittance flow of money offshore and then offset this value against the locally held

vendor cash balances. We then instruct the vendor to issue cash to the recipient

on the production of a SMS containing a one-time PIN plus their national ID card to the vendor.

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Airtime as Currency

In many places, the operator is the trusted brand and has an enormous reach both politically and geographically. We can use this to potentially create a separate

currency based on airtime that can be transferred between consumers or redeemed

for cash at certain pre-pay vendors who in turn hold the airtime minutes and resell them to other customers.

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Our current road map going forwardOur current road map going forwardOur current road map going forwardOur current road map going forward…………

Household

Small Business

Target Clients

Group microloans

Consumer financeremittances

Educational loans/ finance

Housing loans

Life insurance

Health insurance

Pensions

Micro-investment

Individual microloans

Savings

leasing

Crop insurance

Grants and subsidies

Weather insurance

Agricultural finance

Life insurance

Individual microloans

Groupmicroloans

Product Availability Early planning and experiments

Available today

What’s the relevance of all this to Europe?

Making it all workLarge scale deployments will provide working models

Manage fraud, compliance, & dispute management – Indemnified services?

Airtime/Money TransfersFamily / friends can top up / recharge phones of relatives overseas from their own handsets

Transfer small amounts of money instantly to those with or without bank accounts

Airtime recipients can use received airtime as “currency” forwarding to others on a domestic P2P basis

SEPA – P2P TransfersDirect transfer of small amounts between individual using their handsets

Simple Bill presentment and non retail payments

NFC is still a long way from practical deployment

Practical experience gained elsewhere will be key…

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Visit us on: www.mi-pay.com

Or contact us directly

Thank YouThank YouThank YouThank You…………

Simon Cavill - Mi-Pay Ltd

Tel: + 44 1483 794920Mob: + 44 7733 307123Skype: simoncavEmail: [email protected]

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Mobile Money WorldwideMobile Money WorldwideMobile Money WorldwideMobile Money Worldwide

International / Domestic Airtime and Money Transfer

Currently developing & deploying white label systems for operator groups across four continents

Can receive payment requests from over 100 countries

Fully compliant with all appropriate local & international regulations

Can be provided on an indemnified basis - we take on fraud and other risks

Operator centric approach minimizing use of banks and other money transfer services

Airtime Transfers

Family / friends can top up / recharge phones of relatives overseas from their own handsets

Recipients can use received airtime as “currency” forwarding to others on a domestic P2P basis

Money TransfersUnique approach - Offset inbound hard currency transfers held offshore against pre-pay cash already held in local currency

Low cost approach maximizes revenues whilst enabling consumer to use the service for “free”

Cash transfers paid locally to recipients through operators top up/recharge vendors

Includes bill payment and other financial services through agent network

Mi-Pay is extremely active in this space, currently working with

operator groups in Europe, the Middle East, Africa, Asia and the

America’s to deploy a mixture of airtime and money transfer

systems.

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The FutureThe FutureThe FutureThe Future…………????????

International / Domestic Airtime and Money Transfer Already starting to interconnect “Sending” and “Receiving” operators

National Payment Switches

Airtime TransfersCould airtime be the ” Euro” of the developing world?

Direct linking of people’s pre-pay accounts to others overseas – Auto top-up

Financial ServicesUsing existing or parallel agent networks to roll out financial services nationally

Pension Payments

Healthcare survey’s and Insurance schemes

Savings plans

Huge interest in Micro-Finance from overseas development agencies

There are already interesting discussions around the creation of

exchanges between non competing operator groups to enable the

transfer of airtime and/or money across the World.

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Who we areWho we areWho we areWho we are…………

Established in 2003 on the back of a friendly exit from LogicaCMG

UK HQ and secure data centre near London. Other offices in;

Sibiu, Romania - Merchant support, finance & back office

reconciliation

Dubai UAE - Mid/Near East & Africa sales, secure data centre, local

project management and support

Privately owned. Minority shareholders include:

VocaLink (National UK Payment switch owned by Bank of England,

Barclays and Natwest and other UK clearing banks)

Retail Decisions - Global Fraud screening company

Close Brothers Investment Bank

Founder member of GSMA Mobile Money Transfer Vendors Group

Offer indemnified top-up payment services (UK & Europe)

Web, SMS, Java, WAP, USSD & IVR

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What we doWhat we doWhat we doWhat we do…………

Provide secure, white label services on an outsourced basis to mobile

operators, the finance industry and media owners across the World.

Manage direct pre-pay top up services for mobile operators and other pre-paid

account services - from bank accounts, cards, or cash over the counter

Domestic Peer to Peer mobile money transfer services in two major markets

Mobile e-wallet in several markets for utility bill payment, pre pay top up, loan

funding repayments and other services

International mobile cash remittances in five transmission corridors - UK to

India, UAE to Asia, EU to EU, EU to Africa, and USA to Latin America (2009).

Current clients include Vodafone, Orange, Du (Dubai), Mas Vida (Spain

MVNO), KPN/Telfort (Holland), Carphone Warehouse and Tesco Mobile (UK

MVNOs), Cliq (UK Radio), Luup, 6Telecom, and other major operator groups

Offer indemnified top-up payment services (UK & Europe)

Web, SMS, Java, WAP, USSD & IVR