E-print | from Paybefore Update | November 2012

• The industry resource for prepaid and emerging markets •

©2012 Paybefore. All rights reserved. Forwarding or reproduction of any kind is strictly forbidden without the prior consent of Paybefore.

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I f mobile payments success stories—and a familiar refrain from pay-ments conferences, including last

week’s gathering in Miami—are any indication, the winners in mobile payments are going to be those that find a way to provide value. And, that value may be easier to see in developing markets, where the mobile phone is not competing with existing payments infrastructure that already works well.

“[Mobile payments has] never been about technology … it hasn’t been about banks cooperating with the telcos—it’s always been about the consumer,” Jojo Malolos, former president and CEO of Smart Money, told attendees at the Social Mobile Payments: Americas conference in Miami last week. “Segmenting the market is the No. 1 tool,” he said, adding that educating the consumers you’re trying to reach with your mobile commerce initiatives will continue to be one of the most important and greatest costs of operation and deploy-ment for any mobile money provider.

Malolos—who helped lead Smart Money, a project of the Philippine Long Distance Telephone Company—said despite 140 deployments of mobile money across the world, there’s been limited success in terms of transaction volumes.

“Africa is becoming a model even for developed countries in engaging the unbanked,” he continued. “Improving

lives and providing economic uplift should be everyone’s intent playing in this space,” he noted, citing the stan-dard example of M-PESA, which now processes the equivalent of 30 percent of Kenya’s GDP through its mobile money network. Seventy percent of Kenyans have used the service, which enables P2P and bill payments. (On Nov. 8, Vodafone and ICICI Bank announced they were bringing M-PESA to India.)

Tom Holmes, executive vice president and chief information officer at 3Cinter-active, a cloud-based mobile software company, explained that in today’s environment, information trumps the transaction. 3Cinteractive provides corporate clients with payment solutions that solve specific problems. For example, Holmes described a retail pharmacy client that sends mobile communications via IVR and text to encourage customers to pick up prescriptions. About 20 percent of all prescriptions are never picked up, resulting in hundreds of millions of dollars in lost revenue industry-wide, according to Holmes.

“It’s about the exchange of informa-tion, not just the exchange of money,” Holmes noted. Rather than the typical marketing 101 principles of product, price, placement and promotion, Holmes says the focus should now be on the four Es: experience, exchange, every place (i.e., being every place your consumers are) and engagement.

When asked whether mobile payments or “everything else” in addition to the payment is the more significant opportunity in mobile commerce, Holmes responded, “I personally believe—and where we are focused is on—everything else. We’re doing a lot of payments—we process more than a billion dollars a year—but what we’re seeing over the next 12 to 18 months is that it’s the exchange of information and how you engage the customer to provide more value [that is key].”

Holmes added that SMS is an effective channel for reaching consum-ers since 90 percent of SMS messages are opened within two minutes.

Wallet Wars: NFC versus the CloudNo mobile commerce conference would be complete without the debate over whether NFC or the cloud will dominate at the point of sale, and SMP: Americas was no exception.

New statistics on NFC-enabled mobile handset and POS terminal penetration in the United States released on the first day of the confer-ence challenged a prevalent view that mass adoption of NFC mobile pay-ments is still years away. Every 10 seconds, 100 NFC-enabled phones are being sold, according to Einar Rosen-berg, chief technology officer of Narian Technologies.

SMP: Americas: The Fight for Relevance By Loraine DeBonis, Editor-in-Chief

E-print | from Paybefore Update | November 2012

• The industry resource for prepaid and emerging markets •

©2012 Paybefore, 655 Boston Road, Unit 4a, Billerica, MA 01821 USA, Email: info@paybefore.com. All rights reserved. Copyrighted material. All material contained in Paybefore publications is the property of Paybefore. Forwarding or reproduction of any kind is strictly forbidden without the express prior written consent of Paybefore. Paybefore™, Paybefore.com™, Paybefore Update™, Paybefore Legal™, Paybefore News™, Paybefore News International™, Paybefore MobileTM, Paybefore Magazine™, Paybefore Buyer’s Guide™, Paybefore Awards® and Paybefore Awards Europe™ are the property of Paybefore. All other product and service names may be trademarks of their respective companies.

“NFC is the fastest-growing tech-nology in history,” said Rosenberg, whose company focuses on NFC services and applications, adding that by Q1 2013 at least 50 percent of smartphones in the U.S. will have NFC. Rosenberg also said that one in six POS terminals in the U.S. already is NFC-enabled, although not all of them have the functionality turned on. “Anyone who underestimates NFC, it’s their mistake.”

But Rosenberg also noted that payments would not be the most important function of NFC. “The real key for retail is not payments; it’s the ability to use NFC from the moment you enter the store until you get to the cash register,” Rosenberg said, citing the information-discovery capabilities of NFC tags—which he said are less likely to be tampered with than 2D barcodes and can provide retailers with more control over the information shared. Instead of a 2D barcode, Rosen-berg explained that more retailers and marketers will shift to NFC tags consumers—with NFC-enabled phones—will be able to “tap” for more information, a promotion, coupon, etc.

Not everyone is convinced, however. Other speakers touted the benefits of the cloud and cited the pushback from merchants on investing in NFC terminals. “Our view is that m-com-merce should be inclusive and not restrictive,” said Robert D. Martin, senior vice president and general manager of attended merchant solu-tions, Apriva, a wireless transaction and information solutions provider. “We want to be evolutionary, not revolutionary,” he said. “If you go in and tell a merchant ‘You have to do this,’ you’re not going to cross the chasm. You’re not even going to approach the chasm. . . . The only way [forward] is through the cloud,” which Martin said enables merchants to experiment with mobile payments without a big investment risk.

Don’t Forget Consumer ExperienceDuring a presentation entitled “One Wallet or 100?,” Barbara Ballard, vice president of customer experience in marketing for C-SAM, the company that provides the mobile wallet plat-form for Isis, challenged the audience to stop asking the typical questions. “What technology will win? What is the future of NFC in the secure ele-ment? What is the killer app for the wallet? Those are all good questions, but they are all beside the point,” said Ballard. “We are in the early days. We don’t have mass adoption.” The question industry (and journalists) should be asking, accord-ing to Ballard, is: How do we encourage adoption?

For consumers to begin using mobile wallets, she noted, perceived security and value are critical. But the solution also must increase simplicity, convenience and efficiency. A solution that requires unlocking a phone, opening an app, entering a PIN and selecting the payment method within the wallet before making a purchase, probably doesn’t improve the consumer experience of pulling a card from a physical wallet, she noted.

During a panel on “What Really Matters in Mobile Payments: The Consumer,” experts discussed the importance of loyalty and marketing for mobile payments as well as focusing on what the consumer really needs, not just what technology can provide.

In developed markets, mobile payments compete with traditional payments, said Miguel Cintron, vice president of business development for payments processor i2c Inc. “In more industrialized markets, you have to

find a way to enhance both the con-sumer experience and convince the merchant that it’s worthwhile.” He cited an example of vending machines, which could benefit from a mobile payment solution since more and more consumers leave home without cash.

And, the phone provides loyalty and marketing capabilities that a card by itself cannot, Cintron said. “It took us 40 years to get here [to current pay-ments infrastructure], we aren’t going to get out of it in two to five years,” he added. “In the meantime, we can start with loyalty and couponing, initially linking them to the card and over time linking them to mobile payments.”

Jim Sullivan, partner at marketing and loyalty research and publishing firm COLLOQUY, said the mobile phone is a perfect device for mobile marketing. “There are a lot of unmet needs there, and I think you’ve got a superior solution in mobile [because of relevant targeting opportunities], but who wants to be walking around with a spam machine in their pockets? … A lot of brain power needs to be put to work on what does the consumer really need.”

When asked about which technol-ogy will win, Cintron concluded: “Something is going to dominate, but honestly I don’t think we know. … The consumer is the one that cares the least [about which technology wins]. They don’t want to have to think about it. They just want it to work. If they have to think about it, then we haven’t done our job.”

“It’s about the exchange

of information, not just

the exchange of money.”—Tom Holmes, 3Cinteractive