Category Archives: Mobile Money

The MMPL Story: Innovating through the Assisted Model for e-commerce in India

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Today I am joined by Shashank Joshi, serial entrepreneur and Managing Director of My Mobile Payments Ltd (MMPL), which he set up in 2010. Today MMPL is one of the companies that are driving the war on cash in India. They make it easier for consumers to keep their cash and cards away and just carry their mobile phones.

 

Through an extensive network of 225,000 small stores and a multi-lingual app that supports 10 languages and a proposed first support for payments through WhatsApp, MMPL today provides 24 X 7 mobile payment services to subscribers and merchants under their ‘MoneyOnMobile’ brand.

It was great to hear of the multiple innovations and the insights that Shashank had that led to his innovations that bring the uniquely Indian ‘Assisted Model’ of service to use in serving the needs of the unbanked, while also creating profitable transactions for merchants.

Shashank, thanks very much for your time today. Could we begin by understanding your main motivation for getting into the mobile money business in India?

I’ve been a serial entrepreneur for 22 years, having started my first company before leaving college. From 2003 to 2010 I was heavily involved in payments in the US, managing the whole merchant acquiring process from card swipe to settlement and underwriting. My first plan was to start a POS solution in India. However when I did my feasibility study in 2009 it was the exponential growth of the use of mobile services that set our direction and this led to my embarking on money on mobile in June 2010.

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How did things evolve from SMS based payments to the mobile wallet app you support today?

At first we started with text messaging. As you know, India is a highly price sensitive market and back then we could expect zero Capex when starting our business. We planned for something that needed no change of handset, was not operator led and worked on all networks and I’m glad to say we got some great numbers in our first 3 years.

Today we provide a mobile app and our customers are the small retail stores. Consumers go to these outlets to recharge mobile phones, pay bills and buy tickets and more.

 

Please give us a bit of context on the Indian payments scene (especially the PPI business) and share some of your key learnings in bringing services to market

The Indian payments market is indeed pretty unique. I’ll share three of our key learnings to put some colour on this.

 

Key Learning 1: To succeed in India, Apps must be multi-lingual

India skipped the desktop generation, going direct to mobile. So mobile apps are important, but English only on an app is a deterrent as every state speaks a different language. We modified the app we’d launched last year and now support top 9 regional languages + English. (Ed: Did you know there are 1,683 mother tongue languages in India, with 780 different languages in use today?)

We support Android as that’s a more realistic $65 price point as compared to Apple/ BlackBerry. The unbanked is our primary segment and they have been taking to cheaper smartphones with data plans, to avail of WhatsApp messaging. In fact, MMPL expects to be the first company in India to launch on WhatsApp in the near future. We are also the first to have launched a multilingual app of this kind.

 

Key Learning 2: Ability to convert cash to digital currency is a game-changer

 

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We have focussed on building our key asset in terms of cash network. We already have the ability to convert cash to digital currency at 225,000 “Mom & Pop” outlets in every state across India barring J&K. Going forward we are aiming to increase this to a million by end 2015 (we estimate approximately 4 million small stores exist in India just now).

 

Key Learning 3: Move from COD to CBD

You know how India has developed this unique Cash on Delivery (COD) model. Well the thing is, as many as 8 of 10 cases may be impulse buys – satisfying wants rather than needs. By the time the delivery is on your doorstep in 4 days, quite often that impulse has faded.

 

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E-Commerce cannot be profitably built on a COD model alone: it needs to be a payment first model. At MMPL we are building a Cash Before Delivery (CBD) model. This is a payment method in which an order is processed when received, but is shipped only upon receipt of full payment. Consumers pay from money on mobile wallet to the e-commerce provider, who gets a settlement as he gets from Visa and MasterCard. His payment is now in the bank before the goods are shipped.

 

That is fascinating, thanks Shashank. But I’m still a bit confused about B2B v/s B2C. As you mention that your customers are the stores, could you tell us how this unique model works in India?

In India the B2C model is protected by RBI who must protect consumers. On the other hand the B2B model, where we are talking to the stores is not directly regulated by RBI. In India the B2C model is not seeing so much traction due to the current RBI restrictions on Cash Out. It is rather the B2B model that is growing fast. If you put  ₹ 10,000 on your phone, you can only use it to pay for services, not extract any of it back if you need it.

 

Please tell us a bit about the unique “Assisted Model” of service unique to Indians, and how you innovate to serve the payment needs of the people with this model

People have the tendency to come into the store and ask someone to do the transaction. At first I thought this may be a language issue, but it goes deeper. The self-serve model that is popular in the Western world simply does not work here, is not in the Indian DNA. Look at hotels – there is no such thing as a self-check in hotel here. There is not a card on file concept.

The B2B model really facilitates this assisted model. The outlets are not branded; they are small convenience stores which people visit daily. These retailers have a prepaid arrangement with MMPL – I give them a consolidated balance from which they can then do bill payments, top-up recharge and other functions on behalf of consumers. They hang a small sign outside their shop to let people know the walk-in services they offer, as a footfall driver.

 

Shashank, how do you see regulations evolving in India in the near future?

We are currently involved in a pilot with RBI using Aadhaar card authentication. In another 3 months we should heva the results of the pilot. The pilot has seven participating companies and began two and a half months ago. It’s quite low key for now, on RBI’s stipulation – we can’t do a lot of advertising about it. In fact RBI has been very helpful in evolving these new regulations, and certainly the new government and the highly progressive RBI Governor’s vision greatly helps in evolving services in a way that will help the cashless models of the future.

 

Shashank, it has been fascinating to talk to you and to understand your story. Although I am only just back from our detailed market study for creating our “Digital Money in India 2014”, speaking with you has added more dimensions already, and it just shows how fast the market is evolving and growing. Wish you the very best for the rest of the year, and for your ambitious goals for 2015!

 

POST BLOG UPDATE:

Subsequent to this interview MML won the ‘Best Wallet’ award at The Emerging Payments Awards held in London on October 23, 2014, withstanding stiff competition from major international m-wallet brands such as Starbucks Mobile Wallet UK, EE Cash on Tap and JustYoyo. Congratulations to Ashank Joshi and the MMPL team!

 

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Shashank Joshi is the Managing Director of My Mobile Payments Ltd, a leading mobile payments solutions company based in Mumbai, India, which owns the "Money-on-Mobile" brand. A serial entrepreneur, Shashank has over 22 years of professional experience of leading companies in the areas of IT and ITES, Outsourcing, Transition, Management consulting and Mobile Solutions. He pioneered the successful execution of Merchant Cash Advance and Merchant Processing businesses through the offshore route. Shashank studied Mechanical Engineering from MIT.

 

Charmaine Oak is Practice Lead of Shift Thought

Author of The Digital Money Game, co-author Virtual Currencies – From Secrecy to Safety

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http://www.linkedin.com/in/charmaineoak

Join us to explore ideas at The Digital Money Group on LinkedIn

Write to us at contact@shiftthought.com to share about how YOU are innovating ways for people to pay

Why don’t we let our youth manage bank accounts?

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In my recent interview of Brian Richardson, co-founder of WIZZIT in South Africa, he asked a question: Why should a 16 year old be expected to look after a family, but not have access to a bank account?

I have been unable to forget that question – hence this post. I thought I should check with you – is it that we are underestimating both the capabilities and the needs of our youth, who must cope with the tremendous fallout of the world financial crisis (not of their making, I should add), and who are the architects of the world’s future.

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Take what is happening in India, Indonesia, Vietnam and elsewhere in Asia. I was recently in some Asian countries to conduct research on the way people pay and was pretty amazed at what I saw. It is the youth who are leading trends in paying online. Who orders on Flipkart in India, to cover the needs of the whole family – for their grandparents and parents alike? Who buys pizzas from Domino Pizzas using their iPads? In fact, I found it was often the teenager in the household who was actually in charge of the families new payments card and trusted to buy on behalf of everyone. As they also manage the families Wi-Fi and are the most computer literate, little wonder this is the case.

 

This got me thinking. Was this just an emerging country phenomenon? Is it confined to urban areas? I’m concluding it is not. I see similar behaviour in households here in the UK. Across the world, and across income groups, there is a section of trusted young people who need access to financial services of all kinds, indeed it is fairly critical to consider their needs, not as exceptions but as well-designed, mainstream services.

Remember, a 50 year-old saw the Internet invented in their lifetime, as also mobile phones. Our kids on the other hand grow up taking these things for granted. As money goes digital, digital wallets and mobile phones offer new capabilities to design in checks and balances, while more effectively supporting what young people need.

So what would happen if we ignore this issue? Could we be driving the youth into the fast growing informal digital economy and could this create problems for the future? Unregulated digital financial services have little or no restrictions – surely using these would be worse, not better.

 

Business-savvy youngsters are not a new phenomenon, but the technology revolution of the past years has greatly empowered their ambitions. The recent BBC show Million Dollar Intern, which I much enjoyed, had Rich Martell, Gary Martin, Ross Bailey, Juliette Brindak, Suleman Sacranie and Fraser Doherty who run million dollar enterprises to go in and give some pointers to established, struggling businesses. Fraser Doherty started age 14 and made a million before the age of 20. Each of the others has a similarly inspiring story. Do we really feel that at age 16 these entrepreneurs were incapable of managing their own bank account?

 

You might argue that the million dollar interns are the exception and not the norm. Left to themselves youth may have less control over themselves than adults do. Or they may earn small amounts that are unprofitable for banks to support. Or they are not accountable for their actions. However many trends are creating valuable market segments: international students studying abroad, music and gaming users and more.

 

Today however, in the new branchless banking and mobile money scenarios there are ways to address each one of these concerns. Yet the new services invariably continue to have the same restrictions: You must be 18 and over to be entitled to use them.

 

In the absence of mainstream financial services a variety of prepaid cards are offered. However the cost and inconvenience (limits, difficulty of topping up), restrict their use as a way to manage business or household needs.

I believe this may be an idea whose time has come. Why don’t we investigate the great new features digital money services offer - Double sign off to protect youth from using illegal substances or falling for scams (though I may add, some adults may need to have a similar sign-off from a youngster as well!).

 

Similarly the retail industry needs to consider some changes. Secure certification systems and better universal and global standards for classification for products online can restrict purchase of certain products rather than remove capability to buy.

 

Just as there is a fortune at the bottom of the pyramid, there is a goldmine of the architects of tomorrow, waiting to climb the banking ladder – or a non-banking ladder. Our decisions and actions will determine which it will be.

If Bitcoin becomes “too big to fail”, who will be at the rescue table?

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As we continue to experience regular occurrences of Bitcoin volatility, I wonder if and when Bitcoin might become too big too fail. As it continues to go mainstream if its Achilles Heel of Volatility gets further exposed, and the worst happens, who will care? If we visualise the rescue meeting, who is likely to accept a seat at the table?

 

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Bitcoin, together with Altcoins and alternative currencies continues to excite interest across multiple segments around the world. In spite of warnings from CFPB, FATF, EBA and other regulators, news of Bitcoin related conquests continue to come thick and fast.

One thing that experts seem to agree about is that this is not going away any time soon. But as the movement gathers momentum and becomes increasingly entwined with mainstream ecosystems, a lot more businesses and consumers could potentially stand to lose if the services were to fail.

Reportedly Bitcoin is making strides in Australia. Living Room of Satoshi reports that Australian residents have paid $150,000 toward BPAY-enabled utility bills, electricity bills, school fees and tax payments through their service. BPAY is an important bill-payment system in Australia and supports innovative ways to pay through digital banking, QR Codes and more.

 

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Bitcoin bill payments is also happening in Canada, and elsewhere in the world too, Bitcoin is becoming a part of everyday life. Overstock plans to launch International Bitcoin Payments on September 1st. Yet, more bill payment and more retail payment may not necessarily translate to Happy Days. Retailers need fiat currency, and the more the mainstream services, the more the potential exposure to currency quirks.

As prices declined this week, and Bitcoin experienced one of the most volatile periods this year, reportedly going into a 38% free fall in some areas yesterday, I wonder whether the industry is already showing signs of age. Still in the first flush of growth, the industry must nevertheless go through all the growth phases of its predecessors, however different they may seem. But when teenage angst gives way to middle age worries, who will take care of Bitcoin?

Studying trends in Digital Money as we do, it seems as if each wave of new entrants and services seems indomitable at first, but may be brought down by some of the very factors that at first made it successful. Mobile money services can find it hard to support the very high volume low value transactions that are their reason for being.  Money transfer operators feel the heavy burden of compliance due to the highly specialised nature of their business and their sprawling agent networks that made them successful for so long. And we all know what happens when banks become too big to fail: every one gets roped in to take care of them. But more importantly processes exist for detection and correction in these industries, and remedial action can proceed along well understood lines.

As the Cryptocurrency industry enters it’s sixth year, some of the processes have already been streamlined for efficiency. However this very maturity is exposing its Achilles heel of Volatility in new ways. The fact  that it is possible to attack a pool more easily than the same number of independent miners, for instance, raises new possibilities for attacks as we saw recently. At the start of the month one hacker was revealed to have stolen $83,000 over four months by targeting a mining pool and using a vulnerability in the border gateway protocol.

A number of incidents, such as Mt. Gox have brought home the vulnerabilities of doing business involving Bitcoin. When traditional businesses fail, there are fall backs typically at the country or economic zone level. If the industry is to grow out of adolescence is it possible to put trusted guardians and a protection mechanism in place?

Cui Bono? Although it is clear that everyone stands to benefit from their being such a mechanism, it is not clear who stands to benefit from being such a mechanism.

Yet this will be vital for when cryptocentric systemically critical services such as Bitcoin need to be stabilised or bailed out. Otherwise the knock-on effect to other parts of the ecosystem will increasingly translate the shock onward, not just to Litecoin, Darkcoin and other cryptocurrencies as recently happened, but even to external entities that may seem totally disconnected at present.

Why I wrote The Digital Money Game

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Thanks for the outpouring of support to me, on the publishing of my first book, The Digital Money Game, now available on Amazon sites around the world. After I last shared about it, A number of you asked me what made me want to write this book, so I’d like to say a bit about this today.

DMGCoverWhen I strayed into the world of payments, after being in Telecoms for many years, it opened my eyes to so many new possibilities. This was around 2005 and it seemed to be a no-brainer for a telecoms operator to build new revenue streams from payments.

This proved elusive though. Firstly it was a personal challenge to try to understand so many new areas all at once, and then be able to position the business case to top management in a way that communicated both opportunities and risks. All of us had spent our lives in Telecoms, IT and non-Payments functions, and we had to rapidly understand Payments, E-Money, Regulations, Prepaid, Cash Networks and all this across multiple geographies.

Regulations did not help. At the time I blamed myself, thinking there was something more I could do. Ten years later, having worked with a world leading bank and the largest money transfer operator in the world, I got to understand regulations so much better. Now I KNOW there was little else I could do: One depends on regulators, who themselves have such a difficult time coping with the large number of changes, with a heavy burden of responsibility on their shoulders.

The truth is, this is all new. We are all learning. But that doesn’t take away the stress of not knowing, as so many of you across the world would agree! I wish I had had someone to tell me what was happening, how it would affect me and what I needed to know to stay ahead. I wanted practical cases I could learn from, and reassurance that this was an exciting space to build a new career.

This is my chance to make that wish a reality for others, by sharing the lessons I learnt and offering some tips from over 10 years I have spent launching services of the different kinds discussed in this book. I hope it will help you in some small way, to reinforce decisions you have to make, to help you to put your case forward to management and most of all to feel good about yourself and what you are achieving in this highly competitive and changing space.

I would love to hear your feedback. Did this book help you? What further questions did it raise?

Click here to go to the Amazon site. To your right you will see a green panel suggesting the most convenient online store for you. Do let me know if you face any difficulty getting access.

The Digital Money Game– a multi-trillion dollar industry emerges

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DMGCover

I have great pleasure in announcing the launch of my new book, The Digital Money Game. I describe the multi-trillion dollar emerging industry I term “Digital Money” from the perspective of very many different industries. It is not just meant for payment experts in large organisations, but for anyone who wants to understand how people pay, and how this is changing in each part of the world.

 

The penetration of mobile phones and smartphones is transforming the way in which consumers interact with brands and greatly facilitates a move towards non-cash payments around the world. To play the game properly though, one needs to understand the changes in a much wider set of fundamentals - identity, security, authentication, regulations, technologies and more, so as to create appropriate vision that goes across channels, services and market segments. That way you have a more effective roadmap with respect to new entrants, and a better chance that what you plan now will still be relevant when your projects go live. I share more about why I wrote The Digital Money Game here.

 

The book is based on Shift Thought research in markets around the world, and my interviews with experts from all the different industries that now participate in payments and financial services. I did my first set of interviews in July 2011. Four years later, the wisdom that they, and countless others shared with me has helped to shape this book. This is the first book in The Digital Money Series and we are currently working on others in the series.

Since then I have learnt so much from so many conversations that unfortunately it is impossible to thank each one of you by name – I hope you will recognize your contributions when you read the book!

 

The book is designed to help you to spot opportunities and gain confidence and insights to channel your work in a way that benefits you, and the markets you serve. It addresses multiple functional areas and levels: Chief Executives, Technologists, Business Development, Market Development and Product Development executives from Banking, Cards, Money Transfer, Telecoms, Payments, Technology, Retail, and Venture Financing Industries.

The digital money approach described in this book can help you create products and services that are secure, convenient and empowering to a whole range of consumers and merchants, across a variety of channels. The goal is to create a shift in thinking – from merely addressing the new opportunity provided by mobile phones, to launching holistic services that build solid brands.

 

My book is available on Amazon stores around the world, priced in local currency and immediately accessible as an  Amazon Kindle download that works across Kindle for PC and a host of commonly used devices. In case it says “Pricing information not available” just look to the right of the screen to select the Amazon site in your country.

In the first 2 days that the book has been available I am delighted to say that it has already been bought from many countries around the world. Thank you so very much for your support and kind words.

 

Have you bought my book? I would love to have your feedback and can direct you to further resources that may be of interest. Do drop me a line at contact@shiftthought.com.

Nurturing Mobile Money ecosystems to scale

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For a service to reach scale one needs to create a healthy ecosystem in which all the key stakeholders can thrive. While it is vitally important that consumers get services at the right price, we should not lose sight of the requirements across the entire ecosystem.

While mobile money ecosystems have grown and reached scale in many African countries, the model has proved hard to replicate outside of Africa. Indeed, for a while it was hard to get the model to work beyond M-Pesa in  Kenya. This month I took stock on the services we monitor on the Shift Thought knowledge base, and I depict below some of the key services now available in Africa.

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As of today the GSMA registers over 242 deployments, with over 13 deployments having more than a million active accounts.

 

In “Can Mobile Money be 'Free'?” the last of an excellent series of posts of business models for mobile money, CGAP authors Kabir Kumar and Toru Mino discuss whether and how mobile money can be “free”. They argue that “free” could lead to greater profits as offering everyday transactions could drive adoption. Indirect benefits of mobile money – cost savings on airtime or retained ARPU from churn reduction — become significant drivers of profitability only at greater levels of adoption.

Unfortunately as every mobile operator in a country offers their own service, the argument regarding churn (customers changing operator) tends to lose it’s charm. We get a different perspective from GSMA in their “Insights into mobile money agent networks” . That report quotes a manager of a successful mobile money service :

“If I could have done just one thing differently,

I would have gone to market with higher tariffs”

 

As substantial amounts move through mobile money platforms, another key stakeholder, the government, starts to be concerned about what providers charge. In Uganda with an estimated 5 million active mobile money users, people opting for bank accounts continues to drop. The Uganda Revenue Authority (URA) continues it’s campaign to get more mobile money agents to register and pay tax (See: Mobile money agents set to enter tax net).

As more of the money flows through the new systems, the expectation of taxes from these systems begins to move higher on the agenda. Indeed there have been cases in the recent past where governments have intervened as price wars reached a crescendo, in one case actually forbidding a provider from pricing that involved scrapping certain fees.

In my view it is critical that such timely interventions do take place to help to maintain the balance in these ecosystems. This week a survey by MicroSave and The Helix Institute of Digital Finance reports that Kenyan agents are finding it hard to survive, with 17% not profitable, and close to half anticipating to exit the business, in this, the largest mobile money market in the world today.

If prices are to remain low enough to keep the services accessible, yet high enough to sustain agents and keep the systems secure and scalable, we at Shift Thought see only one real way forward. That is to introduce shared processes, services and infrastructure, certainly within the countries but also across countries. We see other such models developing in markets we’ve recently studied, and visualise rich possibilities from interoperability. We therefore welcome the GSMA Interoperability initiative in which over 9 high profile telecoms companies already participate. The signing of the first interoperability agreement between Tigo, Airtel and Zantel in Tanzania this month opens the possibility of further co-operation, that we hope will help to create equations that add up for every major stakeholder, as only then can these systems thrive and grow.

Come join us on the new Digital Money Group on Linked In where we regularly share the latest Shift Thought research. We welcome all our readers to post interesting discussions, to make payments “come alive” for all of us.