Sunday, April 28, 2013


Is profitable a mobile wallet aimed to banked people in Brazil ?

Content


 

Why choose Brazil ?

§  Is the biggest country on Americas by population 197 M of people, behind of the United States having more than 300 M people.
§  Brazil has the bigger percent of banked population in LATAM, more than 60%.

The question is….. Is it feasible and profitable a Mobile Wallet for banked population in Brazil?
How is the timeline to get ROI for the issuer investor in a Mobile Wallet?

Take a look to this information.
Data up to 2012, Brazil has:

  •     Almost 60% of population banked.
  •     Population approx.  197 M.
  •     Mobile Phones active lines, 262 M.
  •     Pre-Paid lines 211 M.
  •     Smartphones 9%, that means 23.58 M devices.
This data was collected from internet, you can check. Otherwise I can provide specific links. (just need to ask me).

Some myths about Mobile Wallet.

Before start we need break some myths first.
  •  The mobile phone is not so safe. FALSE.
  •  The mobile phone keep my Financial Information, this is very risky. FALSE.


The mobile is not safe. FALSE.
  •  In first term to pay using a Mobile Phone you must know your IdUser and Password, authentication first time.
  • To make transactions the user must know your PIN, authentication, again.
  • In some transactions is required a 2FA (second factor authentication, like a Token or Passcode, sent by other channel, SMS, eMail, Voice Call from IVR).
  • The mobile is much safe than use a Credit Card, a Debit Card or Cash, because has more constraints to be used, and it is faster detected when is lost.
  • The mobile is just a device to connect with a Platform and then you can use your payment instruments, but previously you need to be authenticated by the platform many times, in some cases it depend of cash amount or type operation.
The mobile phone keep my Financial Information, this is very risky. FALSE.
  • The mobile phone never should keep stored financial or personal information about you inside the Mobile Wallet. Just connection information is saved in the mobile phone.
  • The mobile wallet is a program to access your payment instruments hosted in the cloud in a very safe place like a TELCO or Financial Datacenter enabling you to do payments using the mobile phone.

Mobile payments adoption in Brazil. ?

According with the McKinsey Survey “Understanding consumer adoption drivers. Insights from the McKinsey Global Payments Survey”. June 2012. McKinsey on Payments.

Mobile Payment Adoption in Brazil.


35% of population in Brazil it is excited to make mobile payments, according this paper.

Who is better positioned in the market to issue a Mobile Wallet?

Acquirers, currently they are the service providers for Banks, ATMs Networks and Brand Cards like VISA or Mastercard, to route or authorize debit and credit transactions, with a big POS network in different kind of merchants. Usually the Acquirers are property of the Local Banks, they has seniority in systems payments using cards and POS.
The market for mobile payments already exists and is growing, demanding innovation and more power in their mobile phones (NFC, mobile payments, remittances, top up). The technology for Mobile Commerce is mature and it is already running in many complex lands, like Africa or Asia. (See refers to Money Box Africa and other similar initiatives).

The Acquirers has working today the ecosystem needed to make growth the Mobile Commerce, they have painted the scene where the mobile wallet will be protagonist to the born of electronic money (eMoney, today called pre-paid cards). All this information’s are good news, but we need to work hard to reach this dream in LATAM.

Can an Acquirer to be a Mobile Wallet issuer?

An Acquirer has,
·         Connections con ATMs, Networks. That means connection with Bank Accounts (Credit Cards enablement, through ISO8583).
·         Connection with Brands, International like VISA, Mastercard, AMEX, Dinners or Locals.
·         Their own POS networks (Merchants). That means a Merchant Network where cardholders can use their mobile wallets to pay for goods and services.
·         Connection with TELCOS, to sell ON LINE airtime top up, already working today.




Adding the mobile channel, they can transform each mobile phone in a POS to initiate transactions for.
·         P2P, Send and Request Money. Domestic and International Remittances.
·         Airtime Top Up
·         Bill Payments (Taxes, Utilities, Massive Services, etc.).
·         G2C. Government to Consumer, to implement social plans for financial inclusion, pensions and so on.
·         The merchant networks with POS to initiate payment transactions, in the future NFC POS to pay goods and services.
·         Marketing for banks and brands.
·         And so on.

When you sum the ubiquitous feature in a mobile phone (that means Anywhere, Anytime, Always ON) with your devices like Camera, Watch, GPS, NFC, Audio Recording capability, QR Code, Bar Code Reader, and so on, you are allowing to transform the mobile phone in a Mobile Wallet with enhanced features like maps, NFC payments and so on. Don’t forget that an Smartphone is a powerful computer in our hands.

In this moment you has packaged in your mobile phone a Computer, Mail, GPS, Watch, Maps, Search Engine, Communication Center, Photographic Camera, Recorder, Mobile Wallet and thousands applications to simplify our lives like scheduling tools and many more.

So we invite to do some calculations, thinking such as a mWallet issuer, as Acquirer. But “Out of the Box”, because the Acquirers typically think in B2B terms as Merchant providers. And you must open your mind to B2C world through the use of Mobile Channel.

Why? The mobile channel is B2C, the Acquirers typically are B2B providing POS to Merchants, for him the Merchants are their customers, never physical persons. Acquirer must break this paradigm before make their moves to Mobile Commerce.

Mobile Commerce is a B2C scheme, so the Acquirers must see the mobility like a new channel to be more profitable over their existent infrastructure, transforming each mobile in a POS.

They must see the mobile channel, in the same way that they see an ATM network, in practical term is the same thing. Only another channel to do financial transactions.

Mobile Wallet, ROI an example.

Hypothesis. Suppose this level of mobile payment adoption and planning.

You have a plan to reach at least 5% from 60% of 197 M equal to 5.91 M people to adopt mobile payments, in the first year, and each customer spend monthly average:
§  1 Bill Payment per month avg. U$ 17.
§  3 Airtime top up per month avg. U$ 6.
§  2 Send Money per month avg. U$ 30.
§  6 Merchant Payments avg. U$ 15.
§  Monthly payments per mobile, approx. U$ 185.

§  Monthly billed per Transactions U$ 185 * 5.91 M = U$ 1093 M (1.93 billion dollars approx.).
§  Annually billed per Transactions U$ 13 B (13.1 billion dollars approx.).

Now according to cited study from McKinsey, next year would have 35% of mobile payment adoption. If we accept that this survey could has an error margin and only we could expect up to 20% of market adopting mobile payments.

Using again the same parameters that in example above but assuming 20% adoption of mobile payments in place of 5%, the numbers are very exciting.

Monthly Amount in Mobile Transactions U$ 4 B (4 billion dollars approx.). That means a 197 M of population x 60% banked x 20% adopting mobile payments is equal to 23.64 Million peoples making transactions with their mobiles.

Assuming U$ 185 avg. per month per mWallet, the amount monthly billed is 4.37 billon dollars through the mobile channel, empowering to the all actors in the ecosystem.

Annually that means U$ 52.48 M billed (52 billion dollars approx.).

When I see this numbers, I ask me, how much is willing to pay an Acquirer for a Mobile channel in a record time to market, starting in a Saas mode to reduce investment and risks.

Could this Annual revenue cover the amount required for the investment?
In affirmative case the next logical question is.
What are waiting the Acquirers in Brazil to take this opportunity?

Regarding the Mobile Commerce, can move transactions from Merchants or other channel to the mobile channel?
The response is true and is the best news. Doesn’t mean less people in their shops.
Means that merchants will participate in a different way. As tellers for Cash IN and Cash OUT transactions to transform material money in eMoney, as signup agents, as providers of goods and services for customers that pay with their mobile wallets. Capturing customers nearby pushing deals in their mobile wallets.

That means that the move of transactions to more economic and profitable channels is happening. CONGRATULATIONS!!!

The TELCOs are moving now, and going for a piece of cake!!

I appreciate your comments.

The frequency of mobile payments in Brazil is very high for next year. Look this picture.

Bibliography
-          Pictures, source “Understanding consumer adoption drivers. Insights from the McKinsey Global Payments Survey”. June 2012. Authors Dan Ewing, Dan Leberman, James Mendelsonn and James Miller. McKinsey on Payments.

Saturday, April 13, 2013

How To Promote Mobile Wallet In LATAM ?


How To Promote Mobile Wallet In LATAM ?

Latinomerica is very different to Africa and Asia. Here the banked population is almost the 60% of population in countries like Brazil, Chile, Uruguay, Venezuela and Colombia (almost 50% of LATAM population).

From our personal perspective, the Mobile Wallet must be introduced through the early adopter’s people, aimed to banked people, the market share is bigger than unbanked and is more easier and cheap reaching this population, early adopters has the power to diffuse the use of Mobile Wallets as payment instrument on the population.

We can assume that more than 60% of smartphones owners are early adopters. (it is just an hypothesis). Are you agree ?. In affirmative case.

This information is public and you can find searching in Internet.


Basing in our hypothesis, is possible affirm that Young People, Business Men’s, University and College people, Fashion People, and other groups probably they would be the first  adopters of payments using Smartphones.

Imagine....
- Collecting money to pay group Launch or a Party in a pub to pay the invoice.
- A father giving money to their children’s for their expenses daily and getting control regarding expenses over their children’s using Mobile Wallets.
- Payments P2P, Domestic Remittances.
- International Remittances.
- Bill Payments.
- To buy Air Time Top UP.
- Disbursements Government to Consumer (G2C). Social Insurance, government social inclusion plans, Others.
- Paying Taxes (C2G)
- Payments for Goods and Services in Merchants and Web Portals (C2B).
- Marketing aimed to the personal style of each customer, using the shopping’s historical records.
- Using ATMs as CASH in and CASH Out Points as Merchants too.
- And many more ideas to propose, to marketing’s teams in financial institutions, building new products, services and offerings.

From our perspective in LATAM the best players to be successful are Issuers of a Mobile Wallet are the Acquirers Companies, Like Cielo, Getnet and  Redecard in Brazil, Prosa in Mexico, Redeban in Colombia, Transbank in Chile and others strong players like Western Union and Money Gram, the big Players in Remittances worldwide today.

Why acquirers ?
They have the ecosystem running today.
- Have the connections and make authorizations for transactions of Brands like VISA, Master AMEX, Dinners, etc.
- Have the connections with Banks and ATMs networks to route or authorize transactions from ATMs or using Debit Cards in a Merchant.
- Have the Merchant networks, key piece in the ecosystem to be successful.
- Usually are property of a group of Local Banks Entities, and give services for them.
- Just need to break the paradigm of B2B.
- They can see the Mobile Channel like that, just a Channel to transform all mobiles in POS self services to do Payments, Transfers, and other Financial transactions.


Look one of the worse cases in LATAM, Brazil has only 9% of Smartphones, but 9% of 262 M of mobile phones is 23.5 M of persons, it is a big piece of cake to work.

We can do the same calculation for Chile or Colombia with 60% of banked population.

They can try with low levels of investment using the Cloud to pay per use to providers of mCommerce in Saas way.

Take a look.
-          http://www.youtube.com/watch?v=gVkBUT0gEsU  (1.30 mins)

Briefing we think that the successful of a Mobile Wallet is directly proportional to the power to pay and to find that exists many places to use the mobile wallet, and is cooler, easier and safe than the actual media payments as credit cards or cash. Security a complete topic to develop in other note.


Sunday, April 7, 2013

What is Mobile Wallet ?, What is Mobile Banking ?

What is a Mobile Wallet ? What is Mobile Banking ?
Many people confuse Mobile Wallet from Mobile Banking. However they are different kind of financial mobile solutions, with capability to execute in a Mobile Phone a financial transaction and to get access of your bank accounts.

Mobile Banking is when the mobile phone is used by customers as an access channel to financial services over Bank Accounts. Is like On Line banking, but with additional benefits.

 It is ubiquitous access over bank accounts for the customer. That means Anywhere, Anytime, Always connected. (http://en.wikipedia.org/wiki/Ubiquitous_computing).

Mobile banking uses mobile devices (like Camera, GPS, etc.) to create new opportunities. i.e.
§  Remote Check Deposit using camera.
§  Branch & ATM Locator in maps near my.
§  Pay like a debit card, using NFC in a NFC POS.
§  Credit origination.
§  Fix Terms, Origination.
§  Marketing Terminal to receive bank messages, offerings, etc.
§  Alerts and Notifications in your bank accounts.
§  Transfer funds to other accounts.
§  Many others and new to be defined…..

Mobile Wallet is when the mobile phone becomes a carrier for payment instruments like credit cards, banks accounts, stored value accounts (pre paid), ready to use in POS, Cash IN, Cash OUT points, and to make On Line Transactions. i.e.
§  Bill Payments.
§  Remittances, P2P and Request Money.
§  Airtime top up.
§  Stored Value Account Management. (Like pre-paid card, or Saving account).
§  Web Payments, Merchant Payments.
§  Discount Coupons. Loyalty Cards Redemption, etc.
§  Many others and new to be defined…..

Coming soon….
·         What is the cost for a financial institution to implement a new mobile channel?
Saas is an option?
·         How long is needed to implement and integrate the mobile channel?
·         How is the adoption curve for mobile banking and mobile wallets in the population?
·         What is the ROI on Mobile Banking and Mobile Wallet?

Saturday, March 30, 2013


Why a mobile Wallet ?

Approx. 50% of population in LATAM, is unbanked or under banked.
Millons dollars in cash are used daily in commercial transactions like:
- Merchant payments. Goods and Services.
- Bill payment (energy, gas, water, cable TV, etc).
- Personal payments.
- Airtime top Up.
- And many more...In other ocassion we can talk about Mobile B2B, G2C and other possibilities for financial institutions.

But today are the banks looking for to get a share in this market, seriously ?
What happen with TELCOs ? What happen with Brands ?

TELCOs are working this market seriously, becuase they need to increase their ARPU, and they know how to reach these customers trought their POS network, to sale Airtime top up.

Are the banks already prepared to compete with WANDA the Mobile Wallet of Telefonica and Mastercard in 26 countries ? 

VISA it is selling Stored Value Accounts (Pre Paid cards), I means Saving Accounts.
What happen with their tradicional partners, the Banks.? This is competition ?

Then we ask, what should do the Financial Industry ? I means Banks, Acquirers, ACHs, and other players.

They should take advantage of Banked population, they are also target, because mobile payment has tangible benefits to the customer, make sense by
- Security. 2FA, Login, PIN.
- Comfort.
- Fashion. Is cool.
- Improve personal Finance, giving control about expenses.
- As a way to manage your Bank Accounts from your Mobile Phone.

The mobile channel is a perfect way to introduce new business lines and to create an space for new concepts in financial services, for instance:
- Domestic Remittances.
- Person to Person Payments. Collection between friends, Give money to their childs, etc.
- To be defined.....

Mobile phones has the power to move cash money to the virtual world, and to transform each mobile phone in a POS to make financial transactions in a safe way, that means a Payment Instrument, Bank grade.

To be sucessful, the mobile channel should create an ecosystem where Banks, TELCOs, Merchants, and other players can coexist together to provide a financial service to the population.

It is not difficult to see clearly Acquirers as the best positioned players to issue a Mobile Wallet today, they have the infraestructure, banks and brands connections, and the Merchants network already running. Furthermore usually are property of the Banks in each country.

So... welcome to the future, where your mobile phone is the new personal computer and your new wallet for Cards and Virtual Cash, anytime, anywhere, always on and connected, its ubiquity is the trick.


What is a Mobile Wallet ? What is Mobile Banking ?





Next.... 
What is the cost for a financial institution to implement a new mobile channel ?
Saas is a choice ?
How long is needed to implement and integrate the mobile channel ?
How is the adoption curve for mobile banking and mobile wallets in the population ?
What is the ROI on Mobile Banking and Mobile Wallet ?