M Commerce in Emerging Markets

Meeting # GSMAP 27
Venue : Bali
Date : September 6th , 2007

Restricted to:
For Approval (Information or Action): X
Version

Presented By: Ms. Asma Khan

Warid Telecom © 2007 GSM Association

Notice:
•This document and its contents are confidential to the GSM Association and/or its subsidiaries, who expressly
disclaim any liability for the accuracy or completeness of any information contained herein.
•All GSM Association meetings are conducted in full compliance with the GSM Association’s antitrust policy
Introduction

• M Commerce & Emerging Markets

• Products

• Successful Strategies

• Case Studies

© 2007 Copyright GSM Association

RESTRICTED
Drivers of M Commerce Growth
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 most

entrants.

5. The unique features of the mobile device are user friendly

and customers have been attached to mobile interfaces

6. Attracting players from all economic sectors from

technology, finance, retail, media; all anticipating
significant growth in m-commerce.
© 2007 Copyright GSM Association
RESTRICTED
M Commerce

Banking services are the

essence of M Commerce.

Telecom services are

more accessible than
banking services in
emerging markets.

© 2007 Copyright GSM Association

RESTRICTED
M Commerce

Usage of micro
finance is high in
emerging markets.
Telecom subscription
can be and is a
convenient way for
financial activity.

© 2007 Copyright GSM Association

RESTRICTED
M Commerce

Transfer of Funds to
Emerging Markets
has shown a steep
positive trend

FDI: Foreign Direct Investment

ODA: Official Development Assistance

© 2007 Copyright GSM Association

RESTRICTED
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 prepayment

concept

5. Government policies are geared to support M Commerce

6. Subscribers ease with SMS usage

© 2007 Copyright GSM Association

RESTRICTED
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

© 2007 Copyright GSM Association

RESTRICTED
 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)

© 2007 Copyright GSM Association

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

notification through SMS, Warid/ Pakistan)

6. Monthly Payments/ Employee Payroll (Subscription/ recurring

Payments, Warid Pakistan,©M Pesa/ Safaricom)
2007 Copyright GSM Association
RESTRICTED
Products – Mobile Brokerage

1. Trading (Investments, quotes, statements, e.g. Info

services)

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

Stock market )

3. Portfolio management.

© 2007 Copyright GSM Association

RESTRICTED
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, Wallpapers

etc,.)

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

4. Other Goods and Service

© 2007 Copyright GSM Association

RESTRICTED
Products - Mobile Marketing

1. Advertising Campaigns (New products, Subscription

Services)

2. Charity Campaigns (Shaukat Khanum, Zindagi Trust)

3. Politics (Voting Tool)

© 2007 Copyright GSM Association

RESTRICTED
Products – Mobile Payments

1. Parking meters/ coupons

2. Traffic Tickets
3. Point of Sale

© 2007 Copyright GSM Association

RESTRICTED
Successful Payment Methods

• Charging mobile subscriber’s bill

• Deducting from subscriber’s calling credit.

• Registration of a credit card that is linked to a

SIM card.

• Additional innovative methods can be

introduced depending on the market

© 2007 Copyright GSM Association

RESTRICTED
M Commerce – Successful Initiatives

Pre-launch Planning

• Adequate system testing

• Risk related to banks should be clearly identified (operations, strategic, reputation and
compliance)
• 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

© 2007 Copyright GSM Association

RESTRICTED
M Commerce – Successful Initiatives
Marketing Strategies:

• Aggressive marketing campaigns and customer education initiatives are critical.

M-commerce requires that customer are comfortable and well versed with all key
dynamics of the service. The following activities are strongly recommend:

1. Comprehensive training of front end staff

2. Customer education guides
3. Aggressive media coverage
4. ‘Word of mouth’
5. Know your customer initiatives

© 2007 Copyright GSM Association

RESTRICTED
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 make

backend system more robust and will attract more customers.

• Expiration dates and limits should be strategically aligned with customer

interest 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

© 2007 Copyright GSM Association

RESTRICTED
M Commerce – Successful Initiatives

Operational requirements

• Robust infrastructure and sufficient capacity for network to handle high

volume 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 enhance
operational efficiency
• Place effective triggers and controls to review system performance and
customer complaints
• Accurate and comprehensive reporting options should be available
• Establish business rules, competitive policies, standards and establish
surveillance.

© 2007 Copyright GSM Association

RESTRICTED
Cont’d:

Policies & Procedures

• Fraud and money laundering issues should be acknowledged

• Maximum daily and monthly transaction values along with the balance
thresholds should be standardized. These limits should be reviewed and
analyzed 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 and
risk taking should be enforced.

© 2007 Copyright GSM Association

RESTRICTED
M Commerce – Two Alternatives

Model Advantages Disadvantages

Bank Led 1. Banks already have banking 1. Limited knowledge of target
license market
2. Have access to financial 2. Limited knowledge of telecom
records related issues
3. Specialize in banking 3. Network has limited interest in
operations promoting service
4. Banks will have trouble launching
core telecom services for mobile
commerce (P2P)

Telecom Led 1. Network has knowledge of 1. Requires banking license

target market 2. Network must acquire banking
2. No conflict of interest skills

© 2007 Copyright GSM Association

RESTRICTED
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

© 2007 Copyright GSM Association

(An infoDev report Jan 2006– Micro-Payment systems) RESTRICTED
South Africa – Case Study
MTN Banking is a mobile banking joint venture between MTN (Africa’s largest
mobile telecommunications company) and Standard Bank (Africa’s largest banking
group).

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)

© 2007 Copyright GSM Association

RESTRICTED
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 to
be
under the age of 15. GDP per capita (PPP
basis)
is approximately $1,200 (2006).

Key Usage:

1. Salary and Monthly rent payments

2. Transfer of funds while traveling
3. Taxi Service charging methodology
4. Delivery Services
Source: The transformational potential of m
5. Buying Airtime
commerce
© 2007 Copyright GSM Association
6. Medical Care and other payments RESTRICTED
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 scratch
cards 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 

© 2007 Copyright GSM Association

RESTRICTED
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

© 2007 Copyright GSM Association

RESTRICTED
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 fixed
monthly fees.
• Use a pay-as-you-go pricing model, with charges ranging from US$0.13 to US$ 0.66 per
transaction 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 to
any other bank account holder.
One of the main advantages of the service is that the mobile banking technology works on any handset, and
SIM card and across all the networks.

(Source: www.nextbillion.net)
© 2007 Copyright GSM Association
RESTRICTED
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 environment
7. Low value transactions (example < $ 10)
8. High transaction volumes
9. Decreases Customer Churn

© 2007 Copyright GSM Association

RESTRICTED
Thank You!

Telecom service has penetrated Emerging Markets so

rapidly due to which Mobile Commerce has the potential
to spread just as fast provided that various challenges
are met.

Beyond the need to Security and Convenience, it is

important to highlight that different customers in the
diverse emerging markets will have distinct needs.

© 2007 Copyright GSM Association

RESTRICTED