Abracadabra, here’s Libra Calibra

As Facebook attempts to bounce back from some of the latest setbacks, it is interesting to hear about the launch of Libra and Calibra, in what seems to be more of an offensive, rather than defensive response.

What is Libra?

In describing their mission, Libra starts by touting the banked-unbanked statistics, as have most of the would-be disruptive services for the last couple of decades or so. The question this raised for me is whether all this has really been tailored to those currently shut out of the banking system. With that segment more pre-occupied by bread-and-butter services, schooling, healthcare and local spend, it seemed to me that this product, aimed at global money transfer and payments transactions may turn out to be more attractive to a different tribe. Facebook seems to have received similar feedback already, so perhaps there is more to this than currently meets the eye.

The service is underpinned by the Libra Blockchain, and a currency unit termed, not unexpectedly, Libra (LBR). Adoption has generally been the main sticking point in most of the services that failed to make it over the last decade. Knowing this, their proposed founding members list reads like a “Who’s Who” of the Payments ecosystem. We have though, seen such a line-up in many previous products that are no longer around today. Perhaps this time it will be different. It is still early days. With so much of industry learning available, succeeding this time should hopefully be simpler.

What is Calibra?

Calibra is the digital wallet service from Facebook, meant to be the wallet for Libra. It may be used as a standalone app or through the Facebook Messenger and WhatsApp platforms. A subsidiary of Facebook, it seems to be the main go-between into Libra, which Facebook seems to be keeping more at arm’s length, judging from the “Libra, 2 weeks in” blog from David Marcus.

The Libra Association has been set up as an independent organization in crypto-currency friendly Geneva, Switzerland. Arguably, as just one of the 28 initial Founding Members, Facebook is not the sole influencer. However with a charter yet to be put in place, the trust the market places in Facebook will still be a central issue for the success of this service.

How does all this connect into the Bitcoin ecosystem?

Libra appears to position itself as a peer of Bitcoin. It is built on Blockchain, as is Bitcoin. While Libra claims not to be as open as Bitcoin, it is designed to be open, as it is not restricted purely to members. Where exactly the “openness line” is drawn will probably be clearer in the coming days.

Unsurprisingly this has raised similar concerns for regulators and Central Banks as have crypto-currencies launched before, though given the reach of Facebook and recent events, concerns seem to be stronger. Chris Skinner who spent time looking at what’s been happening at the United Nations shares his views in “The Regulator’s View of Facebook’s Libra Currency”.

Future Outlook

India’s base of tech-savvy consumers became a leading adopter that decided the fate of WhatsApp as a communications platform. An earlier P2P payments service from Facebook termed the WhatsApp payments service recently completed a pilot in India, offered to a million users. It now aims to rollout across the country, and is also being introduced in London. It will be interesting to see how that service pans out, and what the connection is to the new services planned. What is the future direction Facebook has in payments, how will all their acquired products fit in, and whether they will at last make the break through they have sought for so long – these are just some of the many questions that remain unanswered. 

If any company is well aware of the network effect and how to use it, Facebook is. With experienced David Marcus involved there is undoubtedly a high degree of preparedness to be expected. So, they would well know how the closely-knit Indian community around the world could contribute to the success of these new products. At present though, Facebook claims to have ruled out plans for Calibra in India. The chosen markets and corridors will no doubt have an enormous impact on the success of these services.

For more on this, there is an infographic from MrBTC.org that aims to describe the crypto-currency in 5 minutes.

Happy Independence Day India!

 

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Where the mind is without fear and the head is held high
Where knowledge is free

Into that heaven of freedom, my Father, let my country awake

… Tagore 1861-1941

 

 

 

 

As India takes huge strides towards digitising money,

May freedom from cash bring independence to all!

 

 

 

 

 

 

 

 

 

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

 

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

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