GSMAP 27_ 013 - M-Commerce in Emerging Markets

8/14/2019 GSMAP 27_ 013 - M-Commerce in Emerging Markets

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Introduction

M Commerce & Emerging Markets

Products

Successful Strategies

Case Studies


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1. Tremendous growth in telecom and consumer banking

Industry.

2. Efficient transfer of data over 2.5G and 3G networks.

3. The evolution of the handheld devices incorporating WAP

and now GPRS.

4. Cost of entry into mobile commerce is low for mostentrants.

5. The unique features of the mobile device are user friendlyand customers have been attached to mobile interfaces

6. Attracting players from all economic sectors fromtechnology, finance, retail, media; all anticipatingsignificant growth in m-commerce.

Drivers of M Commerce Growth


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M Commerce

Banking services are theessence of M Commerce.

Telecom services aremore accessible thanbanking services inemerging markets.


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M Commerce

Usage of microfinance is high inemerging markets.

Telecom subscriptioncan be and is aconvenient way forfinancial activity.


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M Commerce

Transfer of Funds toEmerging Marketshas shown a steeppositive trend

FDI: Foreign Direct Investment

ODA: Official Development Assistance


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Emerging Markets

Key Characteristics of Emerging Markets:

1. Lower Average Income

2. Major segment of people have no interaction with Banks

3. Users prefer anonymity

4. Subscribers more comfortable with the prepaymentconcept

5. Government policies are geared to support M Commerce

6. Subscribers ease with SMS usage


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Products

Mobile Commerce is mostly applied in the following

categories:

1. Mobile Ticketing

2. Mobile Banking

3. Mobile Brokerage

4. Mobile Purchase

5. Mobile Marketing

6. Mobile Parking Meters


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Products - Mobile Ticketing

1. Ticketing

(Events, facilities, transportation e.g. , O2 UK & Ticketmaster)

1. Coupons/Vouchers

(Gift vouchers, discounts, meal plans. e.g. Sainsbury Europe& Mac Donald in Pakistan)

1. Mass Transit

(Buses, airlines, subway e.g. Telia, Tele2, Telenor in Sweden/

Mobile ticketing)

1. Loyalty Cards

(Air miles, Usage, Mobilink Pakistan)

e:www.mobilegolive.com/casestudies.htm, http://www.thelightagency.com/what4.html, www.mobilink.com, http://www.plusdial.fi/index.php?tid


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Products- Mobile Banking

1. Cash Deposits/ Withdrawals (Consumer Banking e.g.

Warid Pakistan)

2. Remittance (International/ Local transfer of money,

smart padala / Philippines)

3. Account Balance (Balance Inquiry, Mini statement, Warid Pakistan)

4. Cash management / Credit transfer (P2P transfer of money, Warid/Pakistan, M Pesa/ Safaricom)

5. Credit Card/ Debit Card (Cash Transactions, Credit card chargenotification through SMS, Warid/ Pakistan)

6. Monthly Payments/ Employee Payroll (Subscription/ recurringPayments, Warid Pakistan, M Pesa/ Safaricom)


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Products Mobile Brokerage

1. Trading (Investments, quotes, statements, e.g. Infoservices)

2. Stock and Shares (Investments, quotes, statements, e.g.Stock market )

3. Portfolio management.


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Products - Mobile Purchase

1. Retail of low price products (Groceries, Tickets etc, e.g.McDonalds & Warid - SMS based purchases)

2. Mobile phone applications (Ring tones, Wallpapersetc,.)

3. Delivery Service (Gifts, food and beverages, groceries)

4. Other Goods and Service


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Products - Mobile Marketing

1. Advertising Campaigns (New products, Subscription

Services)

2. Charity Campaigns (Shaukat Khanum, Zindagi Trust)

3. Politics (Voting Tool)


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Products Mobile Payments

1. Parking meters/ coupons

2. Traffic Tickets

3. Point of Sale


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Successful Payment Methods

Charging mobile subscribers bill

Deducting from subscribers calling credit.

Registration of a credit card that is linked to aSIM card.

Additional innovative methods can beintroduced depending on the market


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Pre-launch Planning

Adequate system testing

Risk related to banks should be clearly identified (operations, strategic, reputation andcompliance)

Joint project management groups should be set up before launching

Types of services (e.g. informational or transactional) should be standardized and

comprehensively defined.

Security & Integrity

Data integrity should be maintained with the use of encryption for all transactions

Every transaction should have a PIN; Account debit and credit occurs on receipt of PIN.

Customer receives text confirmation with every transaction, even ATM, POS and Credit cards. All accounts operate as debit accounts

M Commerce Successful Initiatives


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Marketing Strategies:

Aggressive marketing campaigns and customer education initiatives are critical.M-commerce requires that customer are comfortable and well versed with all keydynamics of the service. The following activities are strongly recommend:

1. Comprehensive training of front end staff2. Customer education guides

3. Aggressive media coverage

4. Word of mouth

5. Know your customer initiatives



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Marketing Strategies:

Mechanisms to develop consumer confidence.

1. Branding the service

2. Customer Loyalty Programs

3. Customer Complaint resolution

4. Clarity & Visibility

Customer acquisition should be simple and convenient. This will makebackend system more robust and will attract more customers.

Expiration dates and limits should be strategically aligned with customerinterest and revenue gains (e.g. lower top up has lower timeline)

Low value transactions are recommended (< $10).

Low charges are recommended to encourage high volume usage


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Operational requirements

Robust infrastructure and sufficient capacity for network to handle highvolume SMS

Process should be compliant to telecom and financial regulatory organizations Simple process for depositing and withdrawing cash has been identified by

many experts as one of the key requirements for success of mobile commerce Efficient communication of operators with banks and retailers will enhanceoperational efficiency

Place effective triggers and controls to review system performance andcustomer complaints

Accurate and comprehensive reporting options should be available

Establish business rules, competitive policies, standards and establishsurveillance.



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Contd:

Policies & Procedures

Fraud and money laundering issues should be acknowledged

Maximum daily and monthly transaction values along with the balancethresholds should be standardized. These limits should be reviewed andanalyzed periodically.

Liability ownership should be transparent amongst Bank, Customer,Operator, Retailer and third party solution provider

To establish stability in the banking and telecom sectors limits on entry andrisk taking should be enforced.


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M Commerce Two Alternatives

Model Advantages Disadvantages

Bank Led 1. Banks already have bankinglicense

2. Have access to financialrecords

3. Specialize in bankingoperations

1. Limited knowledge of targetmarket

2. Limited knowledge of telecomrelated issues

3. Network has limited interest inpromoting service

4. Banks will have trouble launching

core telecom services for mobilecommerce (P2P)

Telecom Led 1. Network has knowledge of target market

2. No conflict of interest

1. Requires banking license

2. Network must acquire bankingskills


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Philippines Case Study

The key success factors in the Philippines model include

1. The ability for users to load prepaid airtime credits

2. Transfer both cash and airtime credits between customers

3. Low values set by the operator for prepaid top-ups or credit transfers

Users:

An opportunity to become engaged in the formal banking sector, to facilitate and reduce the costs of

remittances, and to enable financial transactions without the costs and risks associated with the use of

cash, including theft and travel to pay in person;

Operators:

A significant increase in text messaging revenues and a large drop in customer churn

Consumers:

M-commerce is more secure and flexible than cash, allowing consumers to make payments remotely

Banks:An increase in their customer reach and the added cash flows available to the bank

Retailers:

Added business opportunities through the sale of prepaid account credits

(An infoDev report Jan 2006 Micro-Payment systems)


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South Africa Case Study

MTN Banking is a mobile banking joint venture between MTN (Africas largest

mobile telecommunications company) and Standard Bank (Africas largest bankinggroup).

The Mobile applications include

prepaid airtime

electricity purchases

bill payments

person-to-person

mobile card management.

Revenue model:

MTN Mobile Money earns revenue through traditional banking and payment transaction

fees. Commissions are also earned from prepaid airtime purchases, bill payments and

Prepaid electricity.

(Source: MTN Website)


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Kenya Case Study

Safaricom and Vodafone launched M-PESA

Commercial Launch : March 2007

Kenya has a total population of 36 million(2007

estimate) of which 42% are estimated tobe

under the age of 15. GDP per capita (PPPbasis)

is approximately $1,200 (2006).

Key Usage:

1. Salary and Monthly rent payments2. Transfer of funds while traveling3. Taxi Service charging methodology4. Delivery Services5. Buying Airtime

6. Medical Care and other payments

Source: The transformational potential of mcommerce


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Pakistan Case Study

Pakistanis government prefers to launch M Commerce with bank-led models

rather than telecom-led model

Orion (UBL)

Orion is one of the pioneering M Commerce initiatives in Pakistan.

1. Orion is smart, convenient and easy to use.

2. You can buy your prepaid talk time minutes over SMS instead of purchasing scratchcards from the stores.

3. You can view your utility bills and can even pay them over SMS.

4. 24x7 on any GSM network anywhere in Pakistan.

5. Customers can open Orion account via their mobile phone.

6. Anyone with NIC can use Orion Account


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Pakistan Case Study

Orion (UBL) Details:Service Silver

Account Activation Free

Subscription fee Rs. 390 for 6 months

Prepaid card Free

Pay 1% - Rs. 3 minimum

ViewBill Free

Bill payment Rs. 5 per transaction

Cash Deposit Rs. 10 per transaction

Cash Debit Rs. 10 per transaction

Load - At Branch Rs. 25 per transaction

Unload - At Branch Rs. 25 per transaction

Balance Inquiry Free

Balance 30,000

Debit (Daily/Monthly) 10,000/30,000

Credit (Daily/Monthly) 10,000/30,000
https://www.ubl.com.pk/orion/default.aspx


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South Africa Case Study

Wizzit is a virtual bank launched in South Africa in 2005. It has support from all the major

operators in South Africa.

Wizzit customers:

Are charged US$5.26 to sign up

Receive Maestro-branded debit card that enables them to make purchases

Get cash-back at retail outlets

Withdraw money at any South-African or Maestro-labelled ATM anywhere in the world.

Customers do not have a minimum balance requirement and are not charge fixedmonthly fees.

Use a pay-as-you-go pricing model, with charges ranging from US$0.13 to US$ 0.66 pertransaction depending on the type.

Have the ability to transact with any mobile user regardless of the identity of their network operator

To open an account, a Wizzit agent is sent to the applicant's home or workplace.

The account can be used to send money to any other Wizzit account holder in South Africa, and overnight toany other bank account holder.

One of the main advantages of the service is that the mobile banking technology works on any handset, andSIM card and across all the networks.

(Source: www.nextbillion.net)


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M Commerce Key Benefits

1. Lower costs

2. Quicker and easier delivery

3. Targeted marketing

4. Monitoring of consumer behavior

5. Lower environmental impact

6. Drives economic system towards cashless environment7. Low value transactions (example < $ 10)

8. High transaction volumes

9. Decreases Customer Churn


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Thank You!

Telecom service has penetrated Emerging Markets sorapidly due to which Mobile Commerce has the potentialto spread just as fast provided that various challengesare met.

Beyond the need to Security and Convenience, it isimportant to highlight that different customers in thediverse emerging markets will have distinct needs.

GSMAP 27_ 013 - M-Commerce in Emerging Markets

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Transcript of GSMAP 27_ 013 - M-Commerce in Emerging Markets