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 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.
