Mobile Money Transfer(MMT) within the Financial Structure
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Obopay integrates mobile services into the Finanacial structure. Mobile Banking & Money, Value for Banks, What Banks seek from Partnership, Overarching Payments Opportunity, Cash management , Remittance, Domestic Payment Opportunities are the issues Demystified here.
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Mobile Money Transfer(MMT) within the Financial Structure
- 1. Integrating Mobile Services within the Financial Structure Deepak Chandnani President, Obopay INC. MMT Dubai, 2010
- 2. Agenda Mobile Banking & Money Value for Banks What Banks seek from Partnership Overarching Payments Opportunity Cash management Remittance Domestic Payment Opportunities Corporate Website
- 3. Mobile & Financial Services Universe 1.6 billion bank accounts 1 billion credit cards 4.6 billon mobile phones Underserved 6.6 billon people Gap Narrowing Gap Widening Can financial services follow the mobile phone? Corporate Website
- 8. Over 70% of sellers of goods and services representing over 1/3 of most economies do not accept electronic payments today.
- 9. Family Money: Send money to loved ones or emergencies or scheduled payments instantly across banks.
- 10. Over $400B in payments annually worldwide.
- 11. Extend banking to those that have never had access before by opening up non traditional channels through mobile.
- 12. 5B underserved consumers worldwide.Corporate Website
- 13. Mobile Banking & Money : Emerging Markets Uses mobile banking for greater access and control, balances and account activity Shops for family NREGA, JSY, SSA payments Recharges his wife’s mobile Pays for a ride to work Pays for Pizza delivery Pays MFI loan Sends money home Visits BC to withdraw money Pays bills Visits BC to deposit or withdraw money Pays for daily needs Pays for Groceries Buys movie tickets Corporate Website Buys from mandi
- 14. Mobile Banking & Money : Developed Markets Teen / Young Adults Micro-Merchants Social Payments Working Families
- 16. Costs vis-à-vis branch / ATM
- 17. Support calls from offline customers reduces by 30-40%* (saves call cost of $3.75* in the US)
- 18. SMS balance & transaction alerts convert to large savings on support costs
- 19. Mobile has lowest support channel cost at $0.08*
- 21. Reach offline customer base – segment with largest cost-saving potential
- 22. Increase in CASA deposits – low-cost funds
- 24. Brand control - Out of the box, configurable
- 25. Support for Any Carrier, Any Devices
- 27. Regulatory compliance, Mobile security & anti-fraud controls
- 28. Seamless Support OperationsCorporate Website
- 29. An Overarching Payments Opportunity Retail Payments ~$10 trillion ~$5 trillion Check & Cash Replace E/M Commerce ~$500 billion ~$400 billion X Border P2P Corporate Website
- 30. An Overarching Payments Opportunity Cash Management Remittance DomesticPayments Corporate Website
- 32. Payment ubiquity via Mobile
- 35. MIS alerts
- 38. Liquidity Management1. Payroll 5. B2B 2a. P2P (domestic) Dist. To Manuf. 2b. Cross-border P2P (remittance) Retailer to Dist. 4. P2M 3. Cash in/out Corporate Website
- 39. Cash Management Opportunity Obopay FI Partner Buyer Distributor/ Merchant Increased working capital Improved cash flow Credit history development Access to formal bank credit Low APR credit terms Loyalty Reward programs Elimination of cash & checks Streamlined A/P administration Increased transaction data Elimination of cash & checks Reduced process costs Accelerated settlement Reduced bad debt No stolen/counterfeit funds Reduced bank fees Less time collecting, more time selling Increased Buyer credit Automated reconciliation Typical savings of 1.75% - 2.5% of targeted revenue Powerful market differentiator New revenue channels Low risk, low cost growth expansion of customers Enhancement of corporate customer relationships; fulfills operational needs & adds “stickiness” Increased deposits Cross-sell revenue opportunities Corporate Website
- 41. Commercial banks in most regions are yet to adapt infrastructure for P2P migrant services, which will loser costs
- 42. Reduction of 5 percentage points in the cost of sending remittances, would result in remittance recipients receiving over $16 billion dollars more annuallyCorporate Website
- 43. Remittance Hub Overview Cost Efficiency achieved via the hub due to flexibility of connecting variety of sending & receiving types (cash/ account/ card/ mWallet)
- 44. International Remittance using Cards: US to Mexico Association-led Model: MasterCard MoneySend a person in the USA uses MasterCard MoneySend remittance to send money to customers with MasterCards at participating banks outside the USA
- 46. Good funds on payment initiation
- 47. Ability to issue immediate credit instruction to the bank account, up to bank to make funds available
- 48. Can extend mobile #/debit card mapping to ecommerce and eventually POSCorporate Website
- 49. MMT Integrated with ATM Networks Cash-out via card / card-less: MMT to recipient’s Card, Recipient uses card at ATM Recipient does not have card, does Cardless withdrawal at ATM Card-less Step 1: Initiate via Mobile Card-less Step 2: Provide the Authorization Code at the ATM to get cash Corporate Website
- 50. MMT using Cards: US domestic Unregistered beneficiaries pick up money to a MasterCard or… … a bank account via ACH … or a debit network payment credit
- 52. Get paid from web, social network (e.g. Facebook), phone
- 53. Unregistered user pays with debit card, option to register after payment
- 54. Registered subscriber pays with mobile number/PINRodney Smith requests $100.00. Pay by replying ACC 234569 or at www.obopay.com/p2p234569 Description: Registration fee Corporate Website
- 55. MMT using Cards: US Text to Pay eg: Donations Payment by Accepting (registered) or card (unregistered) Payment deposited to bank or card account Customer/donor texts BOOSTERS to Obopay Text-to-Pay short code. Receives Request for Payment SMS Payee gets keyword: BOOSTERS (example) Consumers and organizations supported Text BOOSTERSto 48510 to donate now!
- 57. Instant sending and receiving
- 58. No risk of ACH reversal
- 60. Backend options
- 61. Focus on how consumers will adopt
- 62. Fully operational platform and service with recognized partners
- 64. The Obopay Edge For customers:Easy to AccessSimple to UseInstant Payment 24x7Secure For partners:Payment Interoperability Multiple Wallet Types Scalable, resilient and Secure PlatformPackaging, Branding Regulatory ComplianceRisk ControlFast to MarketIntegration Flexibility Easy to Deploy Corporate Website
- 65. Catalyzing Mobile Payments Worldwide Thank You
Notas del editor
- Mobile brought the power of communications to billions of people who were previously underserved. Now, it is time for the same community, with some additional partners, to bring the power of financial services to billions. Mobile is the platform that creates a breakthrough in financial services. Lowers costs, expands distribution, opens up whole new models for banking.This is a BIG opportunity, but at the end of the day, it is really all people. Empowering their life and work. There is a big change – and it has started. Now 18 million Africans have mobile banking, and it is growing by 35K a day. This is bringing opportunity to their lives.What I am going to talk about today is mobile money and the financial system – how it works and how to make it work
- Market dynamics shows that the adoption of financial services on mobile phones is underwayConsumers are interested, and want mobile financial services offered through their banksMobile payments are among the top areas in which banks plan to invest in in 2010. And will be “mainstream” and will be one of top ten mobile apps by 2012Sources: Ovum, January 2010 and Gartner, Nov 2009Smart phone’s which already made up 21% of handsets in 2009 will reach nearly 50% by 2011Source: Nielsen, 2009The majority of consumers express interest in mobile money offeringsSource: InStat, January 2010Cash still represents the most common consumer payment options with less than 30% of all small businesses accepting any form of electronic payment Source Nielson Report, 2009 and Payment news, March 2010
- VALUE OF BANKING TO CUSTOMERS:Control and access – balances and account activityEase of spending, no loss of cash / soiled notesConvenience from anytime/anywhere paymentsFeeling of empowerment from using cutting edge technologyINDIA EXAMPLE: CONSUMERS HAVE DIFFERENT NEEDSCompelling Use CasesThe auto driver cashing in his collections for the day, remitting money homeThe village woman paying her MFI loanThe farmer selling grains Beneficiariesdirectly receiving government disbursementsThe call centre executive finishing work and ordering pizzaFamilies sending money to each other The shop keeper or small businesses accepting payments
- Consumer segments that are common to both markets (eg: the connected youth) get to benefit in the same way
- Bank Of America ROI (Oct 2009 data): Mobile banking directly responsible for attracting 150,000 new customers Mobile banking customers have also moved over $9.5 Billion since 2007Wells Fargo offered mobile banking for its commercial treasury services customers iPhone accounts for 30% of mobile access to their treasury services mobile app Majority of access (50%) comes from BlackBerrysAmerican Banker Mobile Banking Summit: Bob Hedges of Mercatus, June 2010:Banks with mobile capture twice their normal share of customers switching banks - 16% vs the typical 8% Attrition is 12% lower for customers that use mobile banking 60% of younger consumers use mobile as a deciding factor when selecting a new bank Approx expense of $70,000 per platformCASA: Current And Savings Account
- Easy, low-cost entry into mobile money transactionsLow deployment costSimple integration30 days to marketBrand controlBank branded and marketedBank sets the price and owns the customer relationshipBank account-centricBank-branded mobile and web applicationsSupport for Any Carrier, Any DevicesSmart phone (iPhone and Blackberry), SMS, WAP and full range of web appsPayment Interoperability & established connection to bank’s existing payment networksEg: ACH, debit network integration, MasterCard MoneySend, or Core integrationInteroperability maximizes use casesRegulatory complianceMoney transfer licenses across US, PCI level 1 compliance, FinCEN registered, multi-factor authentication per FFIEC guidance
- It is going to be a huge business. These are predicted sizings of the opportunity for mobile money from JPMC.
- It is going to be a huge business. These are predicted sizings of the opportunity for mobile money from JPMC.
- Receivables Management – mobilize the supply chain and collections – efficiency, timeliness, risk-reductionPayable Management – bulk remittances & payroll disbursements into mobile walletsLiquidity Management –offer convenient cash management to the field & real time MIS ot the back-officeReceivables Management:A mobile phone commercial payments and collections solution that replaces traditional payment methods used by Buyers to pay their Distributors (B2B) or Merchant-retailers (C2B)Enables the same dramatic efficiency, control and cost reduction to A/R collections operations as traditionally enabled for a company’s payables operationsPayments to employees (banked or unbanked)Person-to-person payments (a)within the community and (b)beyondEasy cash in / cash out solutions through ATMs or agent networksPayments to merchantsPayments between corporate partners at all levels of the supply chain
- (Source: WORLD BANK remittance pricing)In general terms, it is more expensive to send remittances through commercial banks. The global average total cost for sending remittances through commercial banks was 12.38 percent in Q1 2010. On average, Post Offices and Money Transfer Organizations (MTOs) were the cheapest at 6.72 and 7.09 percent respectively – One of the main reasons for the significant variation in the cost structure is because commercial banks in most countries have not established specialized services for person to person migrant remittances. They have been handling mostly trade related cross border payments and have not adequately adapted the available infrastructure for migrant remittances servicesIn countries like the Philippines, Pakistan and India, where commercial banks have established specialized services for remittances, the cost of remittances is even lower than MTOs.RSP = Remittance Sending Point
- LIVE: MasterCard offered US to Mexico remittance is built and operated by Obopay.Obopay’s strategy is to leverage its strategic and merging relationships within Global Banking, Card Associations and Money Transmission to create a world class global remittance Hub which provides the following functionality to its partners: Transactional cost efficiency and consumer choice with regard to delivery methodMobile initiated International remittance, supported by traditional web access“First mile” and “Last mile” connectivity via mobile phones in targeted markets.Full service mWallet and an API for third party mWallets Supports Multiple Sourcing Options:CashIn at Telco and other retail outlets, Prepaid card, Stored value account and Bank accountSupports Multiple Receipt Options:CashOut at ATM, Telco and other retail outlets, Prepaid card, Stored Value Account (“SVA”) and bank accountStandard API for existing MWallets to PlugIn to the HubCross border settlement including FX conversion will be done by the Hub’s bank network , providing consumer confidence, reliability and efficiency Obopay, as the Hub, will monitor transactions and establish network velociities in accordance with the Hub’s operating rules supporting risk mitigation and conformance to Anti–Money Laundering guidelines.
- MasterCard handles the FX and settlement. A sending US bank makes money on the send fee and the FX markup. A beneficiary bank gets an acceptance fee. Beneficiary banks can also acquire customers through a MasterCard prepaid debit card program for beneficiaries without bank accounts.
- Debit network support enables ATM cash withdrawalUse case 1: transfer money to your child’s or another person’s bank account immediatelyUse case 2: Collect card payments with immediate, spendable money on your prepaid card or bank accountUse case 3: Immediate funds transfer between your bank accounts immediatelyUse case 4: cheap and immediate p2p payment funding
- Options:1. CARD: the recipient’s card is credited with the funds transferred by the sender using an Mobile Payment solution. The recipient then uses the card to withdraw funds from an ATM. The card could be prepaid, credit or debit depending on the payment processors linked to this facility.2. CARDLESS: An authorization code is used to withdraw money from an ATMTo facilitate MMT via ATMs: card-less optionSender uses MMT to send money to Recipient’s mobilized account (prepaid /debit) & Recipient uses his Mobile app, as demonstrated here, to withdraw those funds from an ATMOR sender initiates a cash withdrawal, and sends the authorization code to the recipient, who must be in a supported geography. Recipient then uses the code at an ATM to withdraw money: The target market’s local regulations & AML laws must be taken into consideration for this optionTo control risk of fraud in the card-less scenario, the authorization code should have a built-in expiry time
- Developed Markets Case Study:Obopay’s Integration with Debit Networks and new Get Paid functionality has given this ROI:Payment volume has increase 35% since introducing this new capabilityGet paid is showing good signs of virality with 90% of payments coming from users that are new to the serviceCustomer utility: Address consumer needsEase of use: Easy to send money Easy to receive moneyReach: Issuer Value Open systemsUser may link a credit card as a funding sourceUser enters card brand, card number, security code, and expiration date.Obopay sends card details to 3rd party card processor (Cybersource)Cybersource authenticates card details by matching billing address and card security code
- Bank centric approach with easy integration. Options for instant sending and receiving which are expected by users from mobile Front end options: Standalone, SSO or Web services Backend options: ACH, debit network integration, MasterCard MoneySend, or Core integrationFocus on how consumers will adopt Get Paid by Obopay – Accept a card payment from anyone Mobile P2P by Obopay – Access from any mobile phone or web Family Money by Obopay – Instant send to anyone Transfer Money by Obopay – Instant transfers. Managed risk Fully operational platform and service with recognized partnersMaximum device coverage: Web, SMS, WAP, & Client. MasterCard and FIS in market.Regulatory Compliance Money transfer licenses across US, PCI level 1 compliance, FinCEN registered, multi-factor authentication per FFIEC guidance
- Key to success is a underlying user experience that helps the consumer adopt the service Easy to access –Key is accessibility to the service because it runs in a mobile device, it has exponentially greater touch points with consumersIt provides financial inclusion in markets where there is no infrastructure It has the potential to leapfrog traditional financial services tools (cards, ATMs)It is an always connected service Security – Consumers must have confidence on the security of the service/device Securityall accounts are protected to prevent unauthorized access to account holder funds and data. uses advanced security technology . Third party security audits have been performed by leading financial service providers and mobile carriers to verify security solutionsTying into Nokia phone and OS helps to provide protection beyond what anyone else can do