Mobile money has helped provide banking services to those that previously had no access to them, for ten years

The mobile financial services community is celebrating the tenth anniversary of mobile money. The first ever mobile financial service was launched in Zambia in 2002. It was launched by Celpay, and powered by Visa-owned Fundamo. The service was the first in a movement that has fundamentally transformed the way unbanked and under-banked people in developing nations use financial services.

The service was launched in partnership with six major banks to provide a secure and convenient method to transfer money. Celpay enabled instantaneous payments via the mobile phone, and in doing so, removed the risks associated with cash and cheque payments in Zambia.

“The launch of the Celpay service ten years ago was the beginning of a community that has had a profound social, economic and technological impact in Africa and beyond,” said Hannes van Rensburg, CEO at Fundamo.

“Implementations such as the one we started in Zambia have ignited the imagination of our community and the wider world. As we look to the future, we are certain that mobile will continue to play a critical role as a driver of financial inclusion worldwide”.

Celpay Zambia was instrumental in the growth of mobile money, processing funds equal to 10 per cent of the Zambian GDP between 2005 and 2010. Today, Celpay Zambia partners with 15 banks, has extended into new geographical markets and has processed in excess of $2bn in mobile payments, with global brands such as SABMiller, Total and BP joining as customers.

“When we launched Celpay in Zambia, we had no idea that we were pioneers. We just found a solution to a business problem using mobile technology,” added Lazarus Muchenje, chief executive of Celpay International. “The Zambian deployment was a runaway success and gave a glimpse of the potential mobile financial services had to offer.”

In ten years, 100 million people have been newly ‘banked’ using mobile technology, although mobile financial services are far from reaching their potential. According to the GSMA, 2.5 billion adults still lack access to formal financial services, such as savings, payments, loans and insurance. Juniper Research has forecast that the number of newly ‘banked’ people will double to 200 million by 2013.

The wallet will ultimately act as a container for multiple payment technologies

Financial services firm Visa Europe has said it will launch the V.me digital wallet on a controlled basis in the UK, France and Spain in the autumn of 2012.

The service will be made available through Visa’s member banks and will initially be accessed through the web browser on a PC, laptop, tablet or smartphone. The wallet will ultimately act as a container for multiple payment technologies, including virtual credit cards. Consumers will be able to put multiple cards into the wallet as well as technologies to make payments face-to-face, online or in a mobile environment.

Payments processor WorldPay has also been signed up as a key development partner in the delivery of the V.me service in the UK, to provide commercial and propositional insights to meet retailer needs and expectations.

Mariano Dima, executive VP of product and marketing solutions at Visa Europe, said: “V.me sits at the heart of Visa’s future of payments. For the first time, consumers and retailers will have a streamlined online checkout experience through an acceptance mark that offers industry-leading security and, when a Visa card is used in a V.me wallet, the same protection and rights that come with any Visa card transaction.

E-commerce currently represents 22 per cent of Visa Europe’s transactions and grew 44 per cent between 2009 and 2011.

Telecoms.com recently interviewed Visa’s global head of mobile, Bill Gajda, who spoke about how the mobile industry is looking to use the existing global, scalable, interoperable, secure rails that Visa, Mastercard and a few other companies supply, to extend the reach of mobile financial services.

Last week UK operator O2 launched its own mobile wallet offering.

Bill Gajda, Visa's head of mobile

When we last spoke to Bill Gajda, Visa’s head of mobile, in June 2011, the payments provider had just acquired emerging markets mobile banking specialist Fundamo. At the time, the main topic of conversation was banking the unbanked. In a market where two billion people had a mobile phone but no relationship with a financial institution, the opportunities were clear and the outcome the same as that in mature markets—you had to bank the people before you could get them to transact. This year, mobile financial services (MFS) have moved into the mature market mainstream—addressing opportunities in more sophisticated economies, where purchasing behaviour can be mobilised to tie in with loyalty, analytics and social commerce.

Gajda believes the acquisition landgrab he spoke about ten months ago is still in full swing. Visa recently took a 15 per cent stake in the Mobile Money Network (MMN)—a joint venture between Monitise, Best Buy Europe and Carphone Warehouse, and telecoms entrepreneur Charles Dunstone, who is present as a private investor. MMN aims to bring a platform for bank-grade mobile shopping to the mass market with a mobile checkout offering, Simply Tap, which allows customers to identify and purchase a product on their mobile via advertising, in-store or online channels, and have it delivered.

Today, In Europe alone, there are 445 million Visa debit, credit and commercial cards, with €1 in every €3 spent on a Visa card. By 2020 the company predicts that more than half of all its transactions worldwide will be carried out on a mobile device. The endgame is about more than mobile payments or mobile banking, it’s a combination of the two, where the frontiers between m-commerce and e-commerce are blurring.

“We will see further expansion of the number of small companies innovating in this area before we start seeing consolidation,” Gajda says. “And this is a good thing because it is still early days. There’s a lot of innovation going on at the edge of the network, a lot being built on the existing global infrastructure for mobile payments. A couple of years ago there was talk about how the mobile industry could create yet another global payments network—or somehow disintermediate the global payments ecosystem—but I don’t hear anyone talking about that now.”

According to Gajda, the mobile industry has now moved on and is looking at how to use the existing global, scalable, interoperable, secure rails that Visa, Mastercard and a few other companies supply, to extend the reach of mobile financial services.

“There’s a lot of theorising, especially about what role the operators will play. And in my view the operators are absolutely key to distribution with their marketing presence, brand presence, and retail presence,” he says. “They subsidise the handsets, configure the handsets and are able to open up access to secure elements, so they have a key role to play.

“But there are two factors that require a level of cooperation with financial institutions. First, mobile operators don’t want to extend their business to accept risk issues and privacy issues, chargebacks, and dispute resolution, all of the things that finance institutions are experienced in doing on behalf of the industry.  There’s a competency, a risk threshold at play here. Then there’s the regulatory environment. With a few exceptions, most regulatory environments are putting financial institutions at the centre in terms of mobile commerce initiatives,” Gajda says.

With a long history in the mobile sector, first at Ericsson, then at GSMA, where he served seven years as chief commercial officer, Gadja is well placed to draw parallels between the two industries. To open up the value chain to the biggest number of players, you first need to open the MFS sector up to a broader ecosystem, he says. “It’s like starting with voice connections on one network only, then interconnecting between networks. SMS in the US didn’t explode until we had inter-standard roaming. We’ve seen the same in the payments industry and will see the same in mobile payments,” Gajda says.

He identifies the development of several entry points into a “mobile commerce experience”. The card issuers and financial institutions are going to be a major entry point because of their existing relationships with customers, and this will see the extension of mobile banking into commerce.

But some consumers will want to come in through a social channel like Facebook, or a search channel like Google and its m-wallet, while others will want an Isis-type model that is operator-led and supported by financial institutions. “So ultimately, we’ll see five or six key distribution plays for m-wallets appear and then we’ll see consolidation,” Gajda says. “Consumers will probably want one or two different wallets that appeal to different demographics or uses cases. And some kind of social commerce application like Facebook will be one of them, because people of a younger demographic will draw strong links between that service and commerce.”

Social commerce is an interesting notion, and one that has already seen significant success. Amazon could arguably be described as a social network that happens to sell various goods, while the success of eBay can be attributed to the social ranking capabilities of its user base. An entire generation of young consumers are growing up with Facebook and other social media accounts, and Gajda believes we will see lots of innovation linking commerce and social networking.

“We’re just seeing the start of what will be possible now,” he says. “You could enter a restaurant and tap a card reader which checks you into that restaurant for loyalty points. Then on the way out you tap the reader several times to offer a rating of that restaurant which is automatically updated to your Facebook page. Mobile and commerce and social networking are all converging and we’re just at the beginning of innovation in that space.”

So far, relatively small companies have led the pioneering movements in this space. Whether it’s Square, iZettle, Paypal, or Intuit using the mobile to create new ways to authenticate transactions, location based services and unique IMEIs, or the use of data to drive loyalty and offers in a more relevant and timely way, the dynamism is clear to see, Gajda says.

He predicts the emergence of two types of core mobile financial service, one targeted at emerging markets, and one at sophisticated markets, but both serving the same ends. While MFS in developing markets have become a core service offered by many mobile operators and financial institutions, they are often limited in scalability and reach, so the aim for Visa is to have m-banking and the m-wallet to co-exist.

To reach these millions, potentially billions, of people a roadmap is required that is scalable and reliable with added features and benefits including interoperability and a standards-based approach, Gajda says. So Visa is approaching existing mobile money scheme operators and offering a Visa overlay to open up their system and allow for new kinds of transactions and interconnectivity between these closed loops.

In mature markets, he suggests, a mobile wallet will centre on an application that allows people to virtualise their payment and loyalty cards on their mobile device to enable a broad range of payments, whether its via NFC at the point of sale, ‘one click’ payments championed by Amazon online or the ‘frictionless’ virtual currency system backed by Facebook. “We think of the mobile wallet as a simple application that uses USSD in emerging markets, or as a rich application that uses a smartphone OS, but really it’s just an application that securely allows an individual to virtualise a payment or loyalty card on to a phone to enable commerce,” Gajda says. “It incorporates what Isis and Google are doing and what Visa is doing with V.Me and Paywave.”

On both fronts, cash is the common enemy, and this is an issue all players in the ecosystem are trying to solve. Fundamo is tackling a market where more than 90 per cent of payments are made with cash, and very few people have access to any kind of banking facilities. That is very different to what Visa is doing.

“Payments are already very easy, the infrastructure is pretty much ubiquitous. But if all we do with mobile wallets is replace tapping or swiping a card with the same action on a phone, they we’re not doing enough. That’s not where the value is, it’s using all the other elements of an application linking location or loyalty cards or keeping track of all your coupons. It’s context time and location and putting control in the hands of the consumer with real time alerts, to help users manage their spending. The actual payments part is already easy,” he says.

Through its agreements with Monitise and the MMN, as well as virtualising existing Visa accounts on mobile phones, Visa is offering a new array of payment types for things like mobile top-up, utility payments, and transit ticketing—all applications that can be pitched to today’s developing markets at some point in the future.

There is much debate within the industry as to the readiness of NFC and the timescale by which it will become a mass-market technology for mobile payments. Gadja is on the optimistic side; in fact, Visa has a lot riding on its adoption. “NFC is one of the core pillars of our mobile strategy and a key focus in sophisticated markets,” he says. “There are a number of elements driving the adoption of NFC. It may not happen in US first but were seeing it adopted in Singapore, in Hong Kong, Japan, Korea, Australia and Canada, and every major manufacturer is coming out with devices that are NFC enabled. It’s this consumer demand that will convince the merchants to invest. So probably in two or three years it will take off in the US, but that’s because of the size of the market.”

But Gajda stresses that the elimination of cash will also drive merchant enthusiasm for NFC, particularly among smaller, or occasional merchants. “These guys experience everyday the real costs associated with dealing in cash. It’s expensive. I’ve spoken to Square merchants who say many more transactions are happening digitally because they can take alternative payment. People don’t carry so much cash around. This is the opportunity cost of cash.”

The Mobile Money Network (MMN) is a JV between Monitise, Best Buy Europe and Carphone Warehouse and Visa Europe

Financial services provider Visa Europe said Wednesday that it intends to take a 15 per cent stake in the Mobile Money Network (MMN) – a joint venture between Monitise, Best Buy Europe and Carphone Warehouse, and telecoms entrepreneur Charles Dunstone (as a private investor).

During MWC last week, telecoms.com spent some time with Bill Gajda, Visa’s head of global mobile, and Alastair Lukies, CEO of mobile money enabler Monitise, where we heard that Visa Europe and MMN will implement a number of m-commerce initiatives in the UK in 2012. The main thrust here is to bring a platform for bank-grade mobile shopping to the mass market.

The organisation’s mobile checkout offering, Simply Tap, allows customers to identify and purchase a product on their mobile via advertising, in-store or online channels, and have it delivered.

According to Visa, in Europe, there are 445 million Visa debit, credit and commercial cards and There are 130 million in circulation in the UK, with £1 in every £3 spent on a Visa card.

Peter Ayliffe, CEO of Visa Europe said that by 2020, the company predicts that more than half of all its transactions will be carried out on a mobile device. MMN is already working with a number of retailers and has already launched services with HMV, Goldsmiths and Thorntons.

As part of the agreement Visa Europe will also take a seat on the MMN board.

Telecoms.com is doing a major feature on mobile money in April. Watch this space.

Visa launches mobile services

Payment provider Visa has announced the launch of mobile services that allow financial institutions to offer their account holders the ability to monitor account history and balances, transfer funds between accounts, and receive near real time transaction alerts on their mobile devices.

The firm has made enhancements to its issuer processing platform, Visa DPS, to offer mobile services that are fully managed by Visa and can be accessed with any mobile device, any mobile channel, and with any eligible debit, credit or prepaid account.

It is also developing additional services such as mobile cheque deposit, NFC payments, mobile offers and support for V.me, Visa’s digital wallet service.

“The services offered by Visa DPS are a one-stop solution for Visa clients who want to serve their customers through the mobile channel without making significant investments in hardware, software or mobile expertise,” said John Partridge, Visa president.

“Through our ongoing investments in Visa DPS, our clients can not only take advantage of Visa’s scale and expertise in payments processing, but also have the opportunity to easily implement Visa’s extensive roadmap of mobile innovations – from mobile banking, to NFC payments, and to our digital wallet, V.me.”

Look out for the April of issue of Mobile Communications International (MCI), where we will be focusing on the opportunities and challenges presented by the rise in mobile payment services.

Visa has launched an 'open loop' mobile money product

Payment processor Visa has launched a mobile banking product to serve consumers in developing nations. The company said that its Prepaid Mobile offering will provide an open platform for existing mobile money systems.

The product development was led by South African mobile money platform provider Fundamo, which Visa acquired in June 2011. It provides a platform for “closed loop” mobile money services provided by financial institutions and mobile operators, which are confined to their local markets.

“Visa is the largest payment processor in the world, so it’s got a vast global network that connects the financial systems of the world together, and that allows financial firms to process payment transactions across that network seamlessly,” said Aletha Ling, COO at Fundamo.

“Similarly, Visa Prepaid Mobile is an “open loop” system. This product provides a connection between local mobile money services into the Visa network, in order to bring global interoperability and new features into play, and that makes it fundamentally unique to what is being offered locally in these markets.”

She added that the product is aimed at banks and mobile operators that currently work with Fundamo, financial institutions that work with Visa, and other mobile money service providers that want to join the open loop system. Consumers of existing mobile money services will be able to use more features if their mobile money providers sign up to the product, such as withdrawing money from a Visa ATM, transferring funds internationally and performing e-commerce transactions over the web.

African and Middle East mobile operator MTN plans to offer the new Visa product to MTN Mobile Money customers across its markets. As part of the launch, the new product will be available to customers in Nigeria and Uganda.

The product aims to bring financial services to the 2.5 billion people in the world today who are underbanked or unbanked.

“This is the next generation of openness when it comes to mobile money systems,” said Ling. “Mobile money is the one way that we can see that we will be able to serve all of the unbanked and underbanked people in the world.”

Visa is focusing on an m-payment strategy

Financial services provider Visa Europe has invested £24.7m in mobile payments platform Monitise, giving the latter a greater European presence. Monitise is also consolidating its position in the US by buying out its partner in its US operation.

The acquisition of a 51 per cent stake in Monitise Americas, currently held by Metavante Corporation, a subsidiary of Fidelity National Information Services (FIS), will result in Metavante being issued with a 3.3 per cent stake in parent company Monitise plc.

Following the Visa Europe investment and the issue of shares to FIS, Visa Europe’s and FIS’s respective shareholdings in Monitise will be 8.8 per cent and 3.3 per cent. Visa Europe president and chief executive Peter Ayliffe, will join Monitise’s board of directors.

Ayliffe said of the investment, that the growth of mobile phone services and e-commerce, together with the evolution of the mobile handset into the smartphone, present two of the most significant opportunities for the payments technology industry. “We have made a significant investment in Monitise, our mobile payment technology strategic partner, as a demonstration of our belief in the crucial role that mobile has to play in the further development of the payments industry and also of our commitment to delivering the future of payments across Europe.”

Ayliffe said that mobile payments are one of the key pillars of Visa’s future strategy, adding that “We are already investing extensively in NFC, embedding the Visa mobile payment application into the SIM and core chip set in the mobile handset, as well as introducing bridging technologies like the iCarte application, recognising that it will take time for all mobile handsets to have NFC embedded within them.”

In September, Visa Europe announced the launch of Visa Mobile Person-to-Person payments and Visa Alerts, two services designed to help consumers manage their money and make payments using their mobile phones. Monitise was involved in both initiatives.

What's your wallet in?

It’s hard to escape the mobile money land grab at the moment. In the last few weeks I’ve written the word ‘m-wallet’ more than ever before in such a short time. But while the players involved say there’s enough pie to go around, it might not be to everyone’s taste.

In an interview with an Australian paper this week, Scott Thompson, PayPal’s global president, nodded toward the “massive opportunity” around points of sale in retail stores. PayPal, he said, “can now be a tender type, an option for payment at point of sale because that device is essentially a computer when it’s connected to a network.”

Thompson revealed that PayPal is working on three options for retail store payments, including one via mobile phone. It’s all part of the fanfare, since PayPal and parent eBay’s big bust up with Google, but it’s a tune everyone’s singing along to.

At the end of last week I spoke to Bill Gajda, Visa’s head of mobile, following the company’s $110m acquisition of mobile banking specialist Fundamo. Fundamo focuses on the emerging markets, where more than two billion people have a mobile phone but no relationship with a financial institution. This, says Gajda, represents a tremendous opportunity to provide basic and then more advanced financial services to the unbanked, by virtualising a Visa account on a mobile phone.

Visa argues that while mobile financial services in developing markets have become a core service offered by many mobile operators and financial institutions, these services are often limited in scalability and reach and are not interoperable with other regional payment services or global payments networks. Fundamo’s strategy is for m-banking and m-wallet to co-exist. Where the m-wallet offers a full accounting system and is far more cost effective way to reach emerging markets where bank accounts are not commonplace, while m-banking offers more advanced and connects to an existing bank account. The idea is to build up a user base with one service and expand it with the other in the future by expanding the utility of closed-loop systems.

Visa is taking advantage of the fair amount of fragmentation that still exists within this sector. “Relatively small companies have led the pioneering technology in this space. But as banks and operators move out to reach millions of people you need a roadmap that’s scalable and reliable with added features and benefits like a standards based approach with interoperability,” Gajda says. “The land grab started years ago but now accelerating and we are participating in land grab. We’re going to existing mobile money schemes and offering a Visa overlay to open up their system and allow for new kinds of transactions and interconnectivity between these closed loops.

“What we want to do in medium term is create a mobile payments ecosystem the same way we created a physical payments ecosystem,” he says.

With his long history at the GSMA, where he served seven years as chief commercial officer, Gadja sees a lot of similarities in his new role. To open up the value for everybody, you need to open the m-finance sector up to a broader ecosystem. “It’s like starting with voice connections on one network only, then interconnecting between networks. SMS in the US didn’t explode until we had inter-standard roaming. We’ve seen the same in the payments industry and will see the same in mobile payments,” Gajda said.

And his relationship with the operator community should help Visa out, as the finance firm sees operators as a key method of distribution and customer facing trusted brands.

But as we’ve seen with the launch of Orange’s mobile payments service, Quick Tap,, the business model for an m-wallet is an indicator of a radical change in the mobile operators’ positioning in the value chain. The operators are taking a step aside in order to remain relevant. There’s nothing to stop a company developing services running on top the connectivity provided by the operators. So they have to be smart to remain relevant.

As Gajda puts it: “There’s always a bank in the background, but many customers view operators as the issuer of an account. So it might not be that they play a diminished role in the future, it’s just that there’s more players coming in, and it may be a bigger ecosystem. So we intend to work with banks and carriers to make it an inclusive ecosystem.”

For a firm like Visa, this means tying its portfolio together across different markets. While on one hand it’s targeting the unbanked with a mobile wallet platform, via a new agreement with mobile money provider Monitise it is virtualising existing Visa accounts on mobile phones and offering a new array of payment types for things like mobile top-up, utility payments, and transit ticketing – all applications that can be pitched to what are less developed markets now, in the future.

The endgame is about much more than mobile payments or mobile banking. It’s a combination of the two, where the frontiers between m-commerce and e-commerce are blurring. “It’s the start of a digital money society,” says Gajda. “Closed loops cannot do the transactions we all take for granted if we have a card and computer. But by linking a Visa card with all these closed loops you enable people to perform other e-commerce transactions. You accomplish convergence. It’s the start of the mobile digital money society.”

O2UK will be launching its new m-payment service in the second half of 2011

UK carrier O2 has announced the companies it will be partnering with to deploy its mobile wallet service in the second half of 2011. O2, the UK arm of Spanish incumbent Telefónica, said it would be working with Wave Crest, FIS, Intelligent Environments and Visa Europe on the payments and processing systems for the next state of its financial offering, which will enable m-commerce, over the air top-ups, contactless payment and peer to peer transactions.

The UK operator, which had 22.3 million customers at the end of Q1 this year, according to data from Informa’s WCIS Plus, will also be relaunching the prepaid cash card it offers in conjunction with Visa, with the addition of contactless technology.

O2 said that Wave Crest will supply and operate the core banking platform, FIS the transaction processing element, Intelligent Environments will develop the m-wallet app, which O2 said will be compatible with a range of devices and Visa Europe. will provide access to its payment network.

“These partnerships take us another step closer to the launch of commercial mobile wallet services,” said James Le Brocq, managing director of Financial Services at O2. “We are working with the best partners in their respective fields to bring a high quality service to market under the O2 Money banner. We look forward to unveiling additional partners in the coming months.”