Mobile Money

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An overview of Mobile Money or Cash

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Mobile Money Mobile payment, also referred to as mobile money, mobile money transfer, and mobile wallet generally refer to payment services operated under financial regulation and performed from or via a mobile device. Financial institutions and credit card companies as well as Internet companies such as Google and a number of mobile communication companies, such as mobile network operators and major telecommunications infrastructure such as w-HA from Orange and handset multinationals such as Ericsson have implemented mobile payment solutions. Features Mobile payment is an alternative payment method. Instead of paying with cash, check, or credit cards, a consumer can use a mobile phone to pay for a wide range of services and digital or hard goods such as:
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Music, videos, ringtones, online game subscription or items, wallpapers and other digital goods. Transportation fare (bus, subway or train), parking meters and other services Books, magazines, tickets and other hard goods.

Definitions
Consumer Control point A person who is acting for purposes other than his/her trade, business or profession. An essential component of mobile wallet operation that enables a mobile wallet stakeholder to control how a part of the ecosystem operates. Areas of the ecosystem that influence the usage and acceptance of the mobile wallet, but where mobile wallet stakeholders have no direct control. The acceptor for payment of the goods or services purchased by the consumer. The merchant is a customer for its acquirer. Systems which serve the remote and proximity commerce business of a merchant like stock level information, customer relationship management (CRM), enterprise resource planning (ERP), payment services and cash register systems. It is also connected to the point of interaction (POI) and the value added services (VAS) infrastructure. The functionality on a mobile device that can interact securely with digitised valuables.

Environmental control point

Merchant

Merchant back end

Mobile wallet

Mobile wallet content

Mobile wallet stakeholder

Point of interaction (POI)

Service provider

Super agent

Trusted service manager

Value added services (VAS)

Digital content residing within the mobile device and on secure servers that provides value, or is of value, to the consumer and one or more stakeholders.The mobile wallet could contain different tradable value including currency and as well as coupons, loyalty points, credits or virtual currencies. Any organisation or individual that provides, provisions, or uses mobile wallets and their associated content and ecosystem.4 The POI enables a consumer to use a mobile device to initiate, confirm or authorise a transaction, but not only in means of payment An entity which provides content and other services relevant to the use and acceptance of the mobile wallet, including but not limited to, consumers with offerings (services) such as payment service providers, VAS providers, transport service providers and ticketing service providers. Typically found in branchless banking networks where agents provide face-to-face branch-type services to users, e.g. customer registration, cash deposits and withdrawals, assisted transactions. Super agents are often retail distributors that pick up additional roles and provide services such as balancing the cash liquidity pool of agents, picking up registration forms and delivering new collateral. An independent and trusted third party coordinates the technical and business relationships of multiple stakeholders to deliver and maintain services on mobile devices. Features and services beyond the core offerings of the mobile wallet which are included to increase revenue or make the wallet offering more compelling to consumers. The core function of the mobile wallet is considered to be the execution of mobile payments, while services such as coupons, loyalty schemes and other offers are considered to be value added services.

Functionality There are four primary models for mobile payments:
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Premium SMS based transactional payments Direct Mobile Billing Mobile web payments (WAP) Contactless NFC (Near Field Communication)

Additionally there is a new emerging model from Haiti: direct carrier/bank co-operation. Mobile payment is being adopted all over the world in different ways. Combined market for all types of mobile payments is expected to reach more than $600B globally by 2013, which would be double the figure as of February, 2011, while mobile payment market for goods and services, excluding contactless NFC transactions and money transfers, is expected to exceed $300B globally by 2013. In developing countries mobile payment solutions have been deployed as a means of extending financial services to the community known as the unbanked or under-banked, which is estimated to be as much as 50% of the world's adult population, according to Financial Access' 2009 Report "Half the World is Unbanked". These payment networks are often used for micropayments. The use of mobile payments for Financial Inclusion has attracted the interest and funding of international aid foundations like the Bill and Melinda Gates Foundation, USAID and MercyCorps. Merchants will draw consumers into their physical or digital stores based on profiling data collected from consumers. Merchant systems can pair this data and experience with the consumer’s physical location and tailor its promotional offerings accordingly. Moreover, loyalty programme and coupon providers will be able to maximise the relevance of their offers based not merely on the preferences of the consumer, but also their location, the date, time and a whole host of other aspects.

Implementation Models
The four potential mobile payment models are: 1. Operator-Centric Model: The mobile operator acts independently to deploy mobile payment service. The operator could provide an independent mobile wallet from the user mobile account(airtime). A large deployment of the Operator-Centric Model is severely challenged by the lack of connection to existing payment networks. Mobile network operator should handle the interfacing with the banking network to provide advanced

mobile payment service in banked and under banked environment. Pilots using this model have been launched in emerging countries but they did not cover most of the mobile payment service use cases. Payments were limited to remittance and airtime top up. 2. Bank-Centric Model: A bank deploys mobile payment applications or devices to customers and ensures merchants have the required point-of-sale (POS) acceptance capability. Mobile network operator are used as a simple carrier, they bring their experience to provide Quality of service (QOS) assurance. 3. Collaboration Model: This model involves collaboration among banks, mobile operators and a trusted third party. 4. Peer-to-Peer Model: The mobile payment service provider acts independently from financial institutions and mobile network operators to provide mobile payment. For example the MHITS SMS payment service uses a peer-to-peer model.

Challenges
The development of mobile wallet technology is being held back by a number of ‘hidden controls’ which remain largely unexplored in the public domain, asserts Mobey Forum, the global bank-driven industry association whose aim is to encourage a sustainable and mobile financial services ecosystem. Mobey Forum’s latest white paper takes a step into the future and considers the external forces that will dictate how consumers and merchants engage with mobile wallet technology during their day-to-day activities. The paper defines and analyses a series of control points which map the commercial battlegrounds where stakeholders will vie to influence both acceptance and adoption of mobile wallet technology. Full commitment from a variety of stakeholder groups which have little experience of working together will be required. Investment in infrastructure will be needed. Privacy issues will need to be addressed. Across a number of areas in the mobile wallet ecosystem, rivals will need to set aside their differences and work together to develop commonalities. If this is not achieved the mobile wallet ecosystem will fail to generate solutions with sufficient appeal to warrant mass acceptance by merchants and widespread adoption by consumers.

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