The Florin Awards Europe 2017

 

 

I am just back from chairing the Florin Award Jury at The European Payment Summit 2017.

 

We were pleased to see some highly innovative products and services from the finalists.

ThreatMetrix was the winner of the Florin Award in the category “Architecture for Secure Transactions”.

ThreatMetrix eCommerce protection provides real-time fraud prevention tools to online merchants worldwide, while also offering the potential for a less-intrusive consumer experience. The jury was impressed with the innovation demonstrated by the ThreatMetrix Digital Identity Network, claimed to be the world first Digital Identity Graph. This maps associations between people and their devices, locations, account credentials and behaviour. Such a mapping of anonymized user identities could play a key role in fighting cybercrime while also respecting consumer privacy. The strong European orientation is helpful for the roll-out of PSD2. Their Cybercrime Threat map provides a live stream of fraud attempts that was also something the jury found credit-worthy.

Iredeto was the winner of the Florin Award in the category “Omni-channel Payments Security“.

The jury was impressed by the way that Irdeto has transformed itself over the years with the visionary leadership of founder Pieter den Tooner who established the company back in 1969. Today the company continues to play an important role in Europe while boasting a client base that includes customers worldwide. The jury especially valued the breadth of security solutions that spanned multiple industries including media & entertainment, automotive and payments. Their solutions in the area of cloakware and whitebox cryptography have a key role to play thanks to the importance of protecting Open APIs and the critical need for security across multiple devices.

 

Photo-Winners

 

Do read more about it, and check out all the finalists at http://europeanpaymentsummit.com/florin-awards/.

The conference, held at the historic Louwman Museum was very interesting.

I shall share highlights from the conference as well as our latest research on Cyber Security and Payments over the next month.

 

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Could new regulatory guidelines in Bangladesh turn MFS into “nobody’s baby”?

With the recent release of new draft guidelines for mobile financial services (MFS) in Bangladesh, I caught up with payments expert Raihan to get his views on the state of play of the market, possible outcomes from the guidelines and how we may see Bangladesh consumer financial needs better addressed over the next 5 years.

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Raihan, to set the scene could you please share a bit about your role in the Bangladesh payments scene?

When I joined Grameenphone in 2006 on completing my studies in the US, these were early days for mCommerce in Bangladesh. We designed it all from scratch - processes for financial operations, reconciliation, the channel commission, payments, fund management and more. Seeing our BillPay service so popular in Bangladesh made it all worthwhile. I then moved to airtel where even in a bank led model we have built an award-winning mCommerce portfolio with specialized products such as micro credit disbursement together DBBL, our banking partner and 13 MFS partners including bKash.

What is the current state of play of the Bangladesh MFS market?

Bangladesh MFS market is now 5 years old. The top 2 operators bKash and DBBL together accounts for an estimated 74% of the market, with bKash leading since launch in 2011. A recent cGAP study estimates that 30% of Bangladeshi adults have used bKash while 4% have used the DBBL service. bKash users are more likely to be active, with 81% account holders active, compared with 67% for DBBL users. DBBL users are more likely to be registered users with 44% registered as compared to 23% for bKash.

As of June 2016, there are 36.2 million mobile banking registered accounts but only 13.3 million are active users. However, this data does not represent the number of unique users of MFS.

What’s behind this success of bKash?

I think this is due to the awareness that bKash was able to create ever since their launch and also their extensive retail reach. In terms of transactions, bKash still leads with over 80% market share although their annual growth in revenue has come down to 50% in 2015 from 81% in 2014.

What challenges do you face regarding user identification, AML and KYC?

OTC (Over-the-counter) continues to be hugely popular in Bangladesh, with 2.5 times more users than registered mobile wallet users. Retailers often transact on behalf of customers and this could create AML/KYC issues.

In 2016 we have started National ID verification process for mobile subscribers as Instructed by our regulators. Fortunately, as 90% or more of the active users of Telecom Services registered their SIMs, this may not impact the revenue and transaction volume of MFS.

Regarding usage pattern, I notice that unregistered users are more likely to use basic money transfer services while registered users also use advanced services including bill payment and mobile top-up. Today an estimated 8% to 15% of mobile top-up is done through MFS.

How is sticking with OTC a drawback to poorer users who only need basic services?

Today almost everyone has access to a mobile phone. Hence a poor person living in the remotest corner of the country can get registered through MFS and enjoy proper financial inclusion with the kind of services that are normally only available over a banking counter. Transacting through someone else’s wallet rather than your own is almost like a “Digital Hundi” or Sending money through the courier service which was actually one of the ways to send money in Bangladesh prior to the launch of MFS.

What was the motivation for new regulatory guidelines for MFS in Bangladesh?

MFS has always been a key focus for the regulators, specially Bangladesh Bank. Despite the rapid development of MFS and the huge potential to grow and reach the remotest corners of Bangladesh to boost financial inclusion, complete financial inclusion via mobile banking has yet to reach its full potential. OTC or unregistered use of MFS is one of the biggest drawbacks of the service.

This is why the Bangladesh Bank has been working towards a revised guideline that can encourage appropriate business models that help the market reach its potential and create a win-win situation for all the entities in terms of equity shareholding. I believe that with a few minor changes, this new guideline could help boost MFS growth and ensure financial inclusion in Bangladesh

So what are the new guidelines, and do they help address the issues?

Here I’d like to discuss two of the major clauses included in the new Draft Guideline:

 

Clause 4.1

BB shall permit delivery of the following broad categories of financial services by scheduled commercial bank-led Mobile phone based Financial Service (MFS) platforms in Bangladesh.

Clause-5.2

The scheduled commercial bank-led MFS platforms may have both banks and non-bank entities including Mobile Network Operators (MNOs) as equity holders, subject to banks holding majority beneficial ownership in total equity, no bank or non-bank entity holding more than fifteen percent beneficial ownership in equity, and Beneficial ownership of MNOs in an MFS platform not exceeding thirty percent of its total equity.

 

In Clause 4.1 we see that it remains a bank-led model as specified by the previous guidelines published in 2011. However, Clause 5.2 requires that no bank or non-bank entity hold equity share more than 15% individually. Banks must have majority ownership and Telcos may not collectively hold more than 30%. This means MFS projects will become nobody’s baby! This potentially creates a huge issue in regards to ownership.

What is the alternative you recommend?

In my view, we should first study what’s happening worldwide and learn from that. We should deploy a model which will be beneficial for the people of the country and will be owned by both Telecom and Banks. Telcos are good at things like branding, marketing campaigns, product management, agent management. Banks are expected to safeguard funds. Hence a model in which each of these players can execute to the best of their capability will be a successful one. My proposal would be that there should not be any restriction on the ownership of MNOs or any other equity holders. We should follow the good examples available across the globe.

Apart from equity participation, in what other ways are Telcos held back due to the guidelines?

There are several other areas where Telcos are not allowed to participate in the current MFS services. For example, Telcos are not allowed to promote the product, brand the product or launch different campaigns to promote MFS services. Telcos are only allowed to offer Telecom Data or talk time) for MFS promotions.

How do you see the market developing as we move towards 2020?

In the next 5 years, I expect the MFS market to be more mature and more compliant. SIM verification and re-registration will be imposed on MFS as well which will eventually limit the OTC usage and encourage use of mobile wallets. More advanced services will be launched so that people start to use MFS for services other than the basic money transfer.

Government already disburses payments (G2P) through MFS. In 5 years from now, I expect P2G to increase in a big way, so that payments including fees and taxes reach the government through MFS. Mobile Top Up usage will increase even more and may reach approximately 50% of total Telecom Top Up value.

MFS providers will further pursue Omni channel strategies, with some already providing the service through apps and the web. MFS services will be offered through other mediums such as NFC and it will not be only limited to USSD, apps or web and launch of 4G services will further boost usage.

Mobile Number Portability will be introduced in the country and, the need of having more than one MFS account with different Telecom operators will gradually decrease.

As stated by Bangladesh Bank, over the last couple of years, we have found that people at the “bottom of the pyramid” have been able to greatly increase their economic activities and that volume is increasing significantly each day. This contribution directly impacts the transactions volume in mobile banking.

Overall I look forward to MFS playing a major role in the growth of GDP of our country.

 raihan

 

Ruhullah Raihan Alhusain is a payments professional with over 12 years of work experience in Mobile Banking Field. He graduated from the University of Texas at Arlington with Honors as Bachelor in Business Administration and led the Grameenphone mCommerce Operation Finance team before moving to airtel where he is Head of mCommerce Operations

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Payments and Remittances Industries meld further into Digital Money as PayPal acquires Xoom

 

When I first entered the remittances industry the separation of these two industries was seen to be one of the laws of the universe, just as mobile was seen to be a desirable channel for which new silos were being built.

paypal   xoom

I wrote The Digital Money Game to address the issues I foresaw with the convergence of industries and services into a multi-trillion dollar space we at Shift Thought continue to map out as Digital Money through our research in each country, as it transforms industries we have so far taken for granted.

 

While the remittances industry is alone worth over $580billion, when you consider the melding of industries into Digital Money the prize increases exponentially as I prove in my book. Why would a consumer care to sign up  to a new service (with perceived security, identity and operational inconveniences) for executing what is likely to be at most a single transaction a month? Would the consumers who choose to stay with cash as an economy goes digital really be the segment the brand wishes to deepen relationships with?

 

So it is no surprise that PayPal announced a few hours ago that it acquired Xoom for $890 million, as it prepares to leave eBay. As I see it, there was no option. When viewed from the Western perspective PayPal seems like a market leader, but as I studied each Asian country in depth, many challengers came to light as far back as 2011, when we announced that Alipay was claiming to have way more digital wallet users than PayPal. Since then Alibaba has grown substantially and Ant Financial Services has become a comprehensive digital money brand, as we report in our China analysis.

 

In our recent analysis of PayPal versus Alibaba’s ANT Financial Group we discovered that while PayPal, Paydiant and Venmo together form a strong capability this leaves a big gap to fill. To what extent will Xoom help fill this gap? This will depend on how soundly it goes international with PayPal’s help.

Xoom founded in 2001 today operates only to send money from the US, with 1.3 million active customers who send $7 billion to 37 countries, and this will have to change rapidly. Xoom has been recently entering emerging markets such as Mexico, India, Philippines, China and Brazil, but this has been in terms of receiving money electronically. What Xoom has capitalised on is the real-time payment infrastructure beginning to be established around the world, and this is how it entered India for instance. What is has yet to do is to establish Send operations from other markets.

 

So for me the success of this venture hinges on the question of whether with Xoom, PayPal has better success in the last mile in India and China, and other key emerging markets. To achieve the ubiquity of Western Union and MoneyGram PayPal will need to address remittance corridors in 200+ countries and territories, and do this rapidly.

 

As I’ve said before, brands are being built and broken by the trend towards Digital Money and we’ve entered the age of mega-groups, but it will not be easy to get this right. There are substantial differences between the market segments, as I’ve learnt through numerous studies, focus groups, interviews and research we carry out in each part of the world. However it is well worth attempting, and indeed as I repeat, I see no other option.

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As Health meets Wealth, can Wisdom be far behind?

Today as fitbit prepares to float on the New York Stock exchange, after which it could reportedly be worth an estimated $4.1bn, I thought I’d reflect on the further convergence happening between the health and wealth markets and the need for greater wisdom that these trends entail.

I first started monitoring the convergence of Health and Wealth back in 2010, when we added Mobile Health to our Digital Money knowledge fabric, as the two industries showed important signs of pulling together. This year an estimated 500 million people could be using smartphone apps that are health related.

 

fitbit

 

Of course health-related functionality need not be delivered on a smartphone alone. As fitbit goes public, the wearables market has grown by 200% from last year and is currently an area that connects people of all ages and income groups. The recent darling of this industry is of course the Apple Watch, which brings together health and wealth applications with a potential and scale that I don’t recall seeing ever before. Convergence is the name of the game, as it has been for the last decade and more, as multiple functionalities converge around connected and increasingly mobile devices and the Internet of Things becomes a reality.

 

As regards Wealth, another thing that connects all of us is the need to save and spend, an area we at Shift Thought have scoped out at great depth under the term “Digital Money”, a tapestry that connects up digital banking, digital wallets, digital networks, digital payments, digital services and digital technologies. As 15 billion connected devices grow to 50 billion over the next 5 years this brings a host of new opportunities, but also risks. The cyber security potential data loss could jump from $113 billion to $3 trillion by 2019, according to a report just out.

 

However making sense of transactions from different areas relating to Health and Wealth works only when it is possible to link it all in Big Data and create profiles, to piece together data points so as to put knowledge to use in marketing and offer creation. In 2011, the Google Wallet launched with a radically new business model that leveraged customer data to create appropriate offers that could be delivered to our mobile devices in real time, rather than relying on charges to customers or even fees to merchants. As the Great Recession continues to bite, trading of data for goods and services has seemed to be an increasingly acceptable thing to do for consumers, especially Millenials.

 

I start to wonder about all the implications this could have. Can we be complacent about giving out our mobile numbers and email addresses as we’ve done in the past? A mobile number is a well-respected “handle” for communication today, and both the joys and consequences of this are generally speaking properly appreciated by people of all ages. However there could be unintended consequences that could rise from the use of our mobile number as a handle to financial services, although I hasten to add that this in no way detracts from the important role I appreciate it must continue to play in this.

 

Our mobile number continues to become increasingly important in our lives today, and also starts to become a surrogate for use with regards to financial services. It seems to me that this piece of information about us could become as precious, if not more, than our bank account number. Should we then get more concerned about who knows this commonly shared detail about each of us? And of course, our email addresses are also highly important “hooks” to us that raise similar questions.

 

Both these forms of identification have captured the imagination when it comes to reducing friction in payments. A payments expert I was recently speaking to mentioned that after the introduction of IBAN, it’s even harder to remember our bank account, so people greatly welcome sending money to a mobile number. This ultimately boils down to sending money to a name in the phone book, that we believe is associated with the person or company associated with the money transfer or digital payment.

 

This for me raises the question of assumptions we make regarding data that needs to be kept secure and currently regarded as candidates for the “secure element”, whether on SIM or embedded Secure Element (eSE) or on the cloud with HCE (Host Card Emulation). When we divide up “secure and inaccessible” areas on our smartphone from “accessible” areas, and design our mobile apps and functionality, we need to build in and test for additional security in all stages of the life cycle of connected bits of data. For instance, could someone substitute the mobile number of the person I know as “Mum” for that belonging to a criminal at some stage between my device and the cloud, in one of the myriads of incarnations of our now highly backed-up, transferred and accessible phone book?

 

The convergence that technology is making possible has wide implications and potential for Retail and Marketing, to grow more mature in their use of data about us. However this may need to be matched by greater sophistication and wisdom in the design and testing in the growing FinTech area, as well as a more integrated approach from regulators and a heightened consumer awareness that guides what we share about ourselves, at each stage and in different areas of our lives.

 

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

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A deep dive into China’s innovations in Mobile Payments, Internet Finance and Banking

It is easy to write-off what is happening in a market far away from you, and to believe that somehow your services are not affected. After working on our latest in-depth study of the People’s Republic of China (PRC), I believe this would be a fallacy. If you are offering or intend to offer digital money services of any kind, you really need to be aware of what’s happening in the most populous country in the world, and now the largest online retail market. Here’s Why ..

chinaimageOn a trip to Beijing a few years ago I found myself on a main road trying to hail a cab in the evening at rush hour. After moving to several different locations and not succeeding I finally walked the long distance to my hotel and put this down to one of the most difficult travel experiences ever. Now, though, you can simply order and pay for a cab from your mobile phone, and this is just one of a set of highly convenient mobile payment services now available.

An immense change has taken place in mainland China over the last 5 years over which we have carried out in-depth studies of this market. This has positioned China as the largest online retail market in the world, and a leader in the use of Digital Money. Services started strongly on the Internet and have now gone mobile and offline, in contrast to a number of African countries that grew on the M-Pesa Kenya model.

A strong focus on innovation

Over 2014, the downturn in traditional sectors such as real estate and slower growth in exports resulted in Q3 2014 economic growth sliding to 7.3%, the lowest growth level since the global financial crisis. This prompted the China State Council to promote innovation especially in the MSME sector, with a new 40 billion yuan ($6.5 billion) venture capital (VC) investment announced in January 20154. To place this figure in context, since first launch of the VC program in 2009, just 9.1 billion yuan was allocated.

Shift Thought sees this as one more indicator of how China is reinventing it’s positioning in the global business value chain, and digital money services are an integral part of this plan. Several large IPOs are expected as the large Chinese banks continue to restructure and go public, with a reported 5 banks doing so since Oct 2013.

Over the past 4 months Shift Thought has completed an immersive study and analysis of the highly complex China financial services market, leading to the publication of our 380 page in-depth report on every aspect of money going digital in China, including details on regulation and sizing of the various different sub-markets. I share a few highlights in this blog, as the first in our “Focus on China Series”.

Historic changes in regulations

As the market has demonstrated a voracious appetite for the new services, regulators have struggled to stay in control and also safeguard the existing licensed players in the market. In rapid succession we’ve seen regulations that brought in new third party providers, online banks and agent banking. New regulations are imminent that will have wide ramifications for start-ups and existing players alike.

First online private banks

Last month we saw the launch of the first private online bank WeBank, and there are a number of other newly licensed banks about to launch. What is interesting is the strategic potential this creates for the category Shift Thought terms as the ’Internet Tech Giants (ITG)’ of China: including groups such as Alibaba, Tencent, Baidu and others. We see huge M&A activity and rebranding activities that are readying these groups for the next level of strategic expansion over 2015.

Internet Finance

With the rapid increase in the use of the Internet, especially through smart devices, the most important trend we saw in 2014 was the meteoric rise of Internet Finance including a range of online financial services such as online payment, crowd funding, P2P Lending and others. This prompted the banks to jointly issue limits on the amount that could be transferred to investment funds such as Alibaba’s Yuebao, with P2P regulations expected shortly.

Third party providers deepen services

In 2010 the PBC released regulations to allow third party non-bank providers of payment services. Since then over 264 licenses or extensions were granted to third party payment institutions, of which over 97 supported online payment and over 30 (including the 3 mobile network operators) have permission for mobile payment services. Favourable tax treatment for online transactions has further ignited this market.

Online Payment market slows down after meteoric rise

Over the last 4 years along with massive growth, there has been stiff competition in the online payments market, with some of the providers already forced to close down. However the achievements have been phenomenal, leading to the creation of the largest online retail market in the world, and digital wallets transforming into mobile wallets.

The rise of O2O services

Both online payment and mobile payment grew strongly over 2014, with mobile payment substituting offline payment and new O2O services emerging that connect online and offline services in a manner that has been uniquely innovated in China. These O2O services allow consumers to find and use products online and offline in new ways that support their lifestyles and completely shake up the existing retail market, with strategic partnerships being formed to reposition and link retailers and online providers.

Financial inclusion

A key concern of senior Chinese Government, working with development groups this year has been for the 400 million unbanked/under-banked in China, and the 100 million under the poverty line residing largely in rural areas. Other underserved segments include migrant workers, MSMEs and unemployed workers, with recent lay-offs from state-owned enterprises (SEOs). We explore each of these segments at length, to look at the services now available to them and how these are changing – including domestic remittances, inward remittances, lending and branchless banking services.

Focus on rural areas

Some of the most interesting innovations we saw were those that are now going into rural areas, with the rapid spread of the mobile internet. In a manner that creates rich scenarios for The Digital Money Game as described in my recent book, providers are targeting multiple services over multiple channels in a bid to cement their market shares and create and grow new markets through their innovations. Our report details these innovations, such as a unique green telephone that has been adapted to support Point-of-Sale and banking transactions and was distributed free to rural households.

So why is this important to you?

This is not just important from the perspective of making an entry into the largest digital money market in the world – a feat not for the faint-hearted, I’m afraid.

As we saw Chinese goods flooding Western markets in the past, the new digital channels are enabled a new Chapter in Chinese export capabilities. We see a number of services already extending across South-East Asia. With the benefit of massive IPOs (such as Alibaba’s  $25 billion, the largest IPO of it’s kind ever), providers are readying themselves to travel further afield, and you may need to compete against these new services in the US and European markets and not just in Asia Pacific.

Digital Money in China 2015

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We are proud to announce the release of our globally unique report “Digital Money in China 2015”. This is essential reading for anyone who offers, or plans to offer any one the 32 key services we cover under Digital Money: including Online Payments, Mobile Payments, P2P Lending, Digital Banking, Remittances and more. Contact us today to look inside this report and learn more. Our team is ready to support you in your plans for China and elsewhere in the world. Drop us a line at contact@shiftthought.com to arrange for a call to discuss your unique requirements.

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Ria Digital – Innovation in remittances within the Euronet group

Today I am speaking to Darren Bruce, who set up Ria Digital at Ria Financial Services, the third largest money transfer operator in the world. Darren shares with us what it means for remittances to go digital, the trends he observes and the outlook for 2015. Enjoy!

 

Darren, it is a pleasure to speak to you today. Could you please tell us a bit about yourself and your role at Ria Digital?

RMT-Mobile-Nav-in-Android-PhoneI joined Ria two years ago as Vice President and General Manager to create Ria Digital as a startup within Ria Financial Services, the money transfer division of Euronet. I oversee Ria’s digital business including the ground-up development and expansion of Ria’s digital products and services across the globe.

Prior to joining Ria I spent 4 years with the Western Union Company in Denver, Colorado, as Head of Global Emerging Product Operations. In this capacity, as you know Charmaine, I oversaw the strategic management and operational direction of the company’s new/emerging products consisting of e-commerce, account based money transfer, prepaid cards and mobile money transfer. Prior to Western Union, I lived in the Netherlands for 10 years where I worked for Canon, Cambridge Technology Partners, and Nike mainly focussed on web/e-commerce capacities.

I started Ria Digital to lead the company into the fast-paced world of customer needs in the digital age including linking the physical world, which Ria is already very strong, to digital world where the opportunities are endless.

 

 

Please could you give us some background about Ria Financial Services and how Ria Digital fits in, as well as how HiFX which you just acquired fits in. As a Group how do you work? I understand Euronet has become a big prepaid issuer in Europe

rialogoSince opening our first storefront in 1987, we have grown into the third largest money transfer service in the world. Ria has over 240,000 locations in more than 130 countries—and growing very quickly—as well as connections to over 50k banks across 100 countries.

In addition to money transfer services, Ria also offers bill payment, mobile top-ups, prepaid debit cards, and check cashing. In every service that we provide, we work hard to ensure a clear, simple and valuable experience.

 

In April this year imageWalmart and Ria launched a retail industry first – Walmart-2-Walmart Money Transfer Service. Walmart-2-Walmart offers a clear fee structure with just two pricing tiers: customers can transfer up to $50 for $4.50 and up to $900 for $9.50. This leverages Walmart’s existing footprint and technology, with Ria being the licensed money transfer operator for all Walmart-2-Walmart transactions, and Walmart the authorized agent of Ria.

 

imageIn May this year Euronet acquired HiFX, this has been a great addition and very complementary to our core business. It is a UK-based mainly online initiated international payments and foreign exchange services provider that enables us to extend towards delivering an account-to-account international payment service to high-income individuals and small-to-medium sized businesses. HiFX transferred over $15bn for customers in the UK, Australia, New Zealand and Europe during 2013.

 

imageLooking at the Euronet level, our global payment network is extensive and it now includes over 19,000 ATMs, approximately 72,000 EFT POS terminals and a growing portfolio of outsourced debit and credit card services which are under management in 47 countries. We have card software solutions, a prepaid processing network of over 600,000 POS terminals at approximately 295,000 retailer locations in 33 countries. So in short, we have a lot of great products and capabilities as a group as you can see.

 

How much of Ria business is cash-to-cash and how much is digital?

As far as Ria Digital goes, we celebrated 2 years in October this year, so we are still quite new and have been focused on building the foundational elements needed to compete in the digital space. The vast majority of Ria’s business is still cash from the send side, delivered into accounts or as cash around the world.

As you can see, Ria has a robust set of products and capabilities, and at Ria Digital we are “digitizing” these products and services so we can offer our customers more convenience and choice. We are very complementary to our core business. Digital builds on the values and tradition of our core business while looking to target customers that have become accustomed to an easy, efficient online consumer experience. We get to innovate and push for change in this industry while standing on Ria’s solid foundation which is a big advantage—we have the network and the experience behind us.

It is also important to note that “customers” are not only end consumers, they are also our key partners, those who are looking for a company to help power their financial services in an easy, simplistic way, and can move quickly to deliver – this is a very important part of our strategy.

 

What are some of the key trends you observed in the remittances industry over the last year?

Well, I guess sending money using the digital channel is old news now, and the mobile trend has also been obvious for years, but specifically around “digital”, it is the experience within the channel that has continued to evolve. There are so many new technologies that remove, or at least improve, the friction at various points throughout the customer experience. It has made sending money online a lot easier and safer than in the past.

I mentioned key partners already, and the truth is there are more and more companies looking to add money remittance to their current offerings or product sets. Companies that have not been involved in remittance are jumping into the mix, a lot of them up the game from a user experience or brand perspective, but money remittance is not an easy business to enter, therefore these companies look to partner with companies like Ria who know how to do it, we’ve been talking to immigrant remitters for 30 years.

At Ria Digital we move at the pace of a startup, within days rather than months and years!

 

How do you see the recent entrants such as Apple Pay and Google Wallet and what this may mean to MTO business?

There is a lot of talk about these new entrants recently and I see this really reaffirming and validating digital payments. People have been mainly taking about what’s happening at the POS but there is a lot happening in the online experience as well by removing friction, for instance, on-boarding of new customers is becoming easier.

Anyone who has anything to do with commerce or financial services on the handset and pushes the envelope on the experience really helps all of us get better.

 

How are people taking to digital channels around the world – are there some interesting regional differences?

There are definitely regional differences when it comes to money transfer in the digital channels, no two global markets are identical; each is driven by local conditions of environment (economic, technological, and demographic elements such as a market’s average income, and access to the Internet), infrastructure (broadband and/or mobile phone penetration), regulation (legal and governmental areas such as compliance and eKYC), financial services (the accessibility of financial services, the options for paying online), and most important of all – consumer readiness (their familiarity with, and willingness to use digital channels).

 

How has the advent of smartphones affected how people transfer money?

Today, out of the seven billion people in the world, approximately six billion are cell phone subscribers. Not all of these own a “smartphone”, but smartphone penetration is growing very quickly. For many people, the phone is the primary or sole internet connection, no need for a PC. The point is that these connected devices put a lot of power in the hands of the consumer and provide them a great deal of choice and convenience.

Aside from sending an actual money transfer, customers can easily check exchange rates, compare service providers, view the status of their transaction, and even find a physical location where they can send or pick up a transaction, which is a great example of how smartphones are connecting the physical world to the digital world.

Another obvious area related to phones is stored value / Prepaid debit cards and mobile wallets which empower the “un” or “under” banked, and allow these customers to take part in the ecommerce and/or digital financial services world. Specifically in regards to money transfer, these customers had no other choice in the past but to travel to a physical location with cash in order to send money to loved ones back home, now they can send from the palm of their hand easily and securely.

 

Are there some key opportunities you see in the evolution of money transfer?

Specifically when it comes to money transfer in the digital channels I think there are many opportunities in terms of taking more costs out of the process. Performing electronic verification, taking payments online, and mitigating fraud are all necessary but add cost to the process.

At Ria we pride ourselves on providing a fair price to consumers, it is very important to us, and the more costs that can be reduced in a transaction, the more savings that can be passed on to the customer.

 

What are some of the challenges faced by providers?

As you know Charmaine, we are in a highly regulated industry, and therefore we have some very important responsibilities to ensure we provide safe, reliable, and compliant services for our customers. There is a lot of work, and skill required to ensure this, and at Ria compliance is number 1, we have a great team of people who focus on this day in and day out, and that extends far beyond our Compliance team.

Everyone at Ria is responsible for compliance, it is in our DNA. So I would say compliance is both a challenge and an opportunity.

 

What is your vision for 2015?

That’s just around the corner isn’t it!

Over the past 2 years we have built the foundational elements, and developed the key capabilities that are required in the Digital space, in 2015 we will start to capitalize on these efforts as we accelerate our current US business, expand our service globally, and deliver on our Partner Program, which as I mentioned earlier is an important part of our strategy. We are in a very exciting time, the space is buzzing.

 

It has been a real pleasure to speak with you Darren, thanks for sharing your thoughts with us and wish you the very best for the ambitious plans you have going forward.


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Darren Bruce is Vice President and General Manager of Ria Digital for Ria Financial Services, the money transfer division of Euronet Worldwide, Inc. He has held this position since October 2012. Darren oversees Ria’s digital business including the ground-up development and expansion of Ria’s digital products and services across the globe. Darren has a Bachelor of Science Degree (Physics, Math, and Engineering) from Mount Allison University in Sackville, Canada. He also has a Diploma in Applied Information Technology from the Information Technology Institute in Halifax, Canada.

Ria Digital Website : https://www.riamoneytransfer.com


Charmaine Oak is 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 me on Twitter @ShiftThoughtDM and The Digital Money Group on LinkedIn

Thank you for reading, and thanks in advance for sharing about us to your network!

 

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A navigation guide into one of the most complex markets for Digital Money in the world

 

Focus on India Series : Having recently completed our in-market analysis of the emerging payments market in India, I’m confident in saying the country represents one of the world’s most complex, yet promising, battlefields for digital money. India is poised on the brink of a huge economic transformation and making money digital is a crucial part of the solution.

 

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Digital money has a tremendous future in India, and I see a convergence of several factors that combine to create an unstoppable wave. Yet for this country of over a billion people, of which May 2014 World Bank estimates show 179.6 million live below the poverty line, money is going digital in a variety of ways and the savvy providers need to recognise this in order to make their business models work.

 

 

 

India’s Demographic Dividend

Even when services are designed to appeal to the under-banked, providers cannot take their eyes off India’s rapidly growing, massive and youthful middle class. Even if one assumes only 30% of the population of India’s population of 1.2 billion is reachable, this is still a sizable 360 million, considerably larger than the 5.4 million population of Singapore and 7 million of Hong Kong, for instance. By 2015, India’s middle class is expected to be in excess of 267 million. What is more interesting is the trajectory, as the size of the middle class (monthly household income ₹ 20,000-100,000)  was a mere 25 million in 1996.

 

Precipitating Factors

I grew up in India, travelled around the country for the introduction of MICR and worked with RBI, SBI and several banks in India to help computerise different areas of banking, in my early work at Wipro and my own company Visionix. More recently I have personally visited the country to attempt to implement financial services since 2006. It was, to say the least, a test of endurance. However, many recent developments favour payments going non-cash and give me cause to believe that 2015 will be an important year for India.

Firstly, mobile penetration is remarkable and is aided by the September release of budget Android One smartphones that appeal to a highly price-sensitive market.

Secondly, a highly thrifty, large population desperately needs convenient ways to save and spend.

And, last but not least is the will of the government. The recent meeting between Mark Zuckerberg and Prime Minister Narendra Modi highlights the opportunity that digitally connecting remote villages presents to businesses around the world from a wide variety of perspectives.

 

Evidence on the ground

The cash-centric Indian economy is at last moving towards non-cash payments. By end of September 2014 more than 53 million new bank accounts were added in India to disburse benefits and social security to recipients. This is one example of initiatives from the Modi government, strongly backed by the Reserve Bank of India led by Governor Raghuram Rajan.

India’s US$4 billion e-commerce market is set to soar to US$20 billion by 2020.2 E-commerce is being driven by cheap handsets and mobile data plans that enable consumers to buy from their increasingly smart mobile devices.

 

Born Digital Money

As in Africa, mobile money is poised to strongly support financial inclusion goals. But there is more.

In my book “The Digital Money Game” I describe how people expect a whole package of services across online, mobile, social and local situations, creating a multitrillion-dollar industry worldwide. India’s market is a perfect example and consumers are demanding convergent financial services from the start, as opposed to the mobile-centric services that took off in Africa.

This requires, for instance, the ability to provide a service not just using mobile phones but through multiple channels and the ability to offer not just one service but many. Our research this year confirmed that this is needed to compete in emerging markets, and India is a prime example.

 

Reaching previously unreachable markets

Underpinning the non-cash transformation is Aadhaar, the world’s largest biometrics project that goes across all segments of the population. This paves the way for middle-class consumers to make payments to their domestic help, for instance, while also using their new wallets to pay for higher-value airline tickets, goods and services. The rise of mobile Internet access aided by smartphone penetration is bringing young and highly connected shoppers online and is creating conditions for prepaid and digital wallets to thrive.

India’s 1.25 billion people are spread across 29 states and seven union territories and, as a consequence, the complexity of the market has been likened to that of all the European markets put together. Marketing in this highly fragmented environment is challenging due to differences in regulations, income, religion and culture and, notably, the lack of government-issued identification. With just 58% of Indians registered at birth, it’s no wonder that India is the largest user of cash among all emerging countries. With little to no ability to verify their identities, unsurprisingly, just 48% of people have access to bank accounts and traditional payment cards.

 

The emergence of Cash-on-Delivery (COD)

Around 20% of Indians have Internet access, so online sales have only just begun to grow, but the opportunity is immense, particularly as consumers look for ways to digitize cash. So far Indian consumers have not given up their reliance on cash to shop online. Instead, cash-on-delivery (COD)—a uniquely Indian phenomenon—has penetrated many urban markets. This involves consumers ordering online and paying for the goods when they’re delivered, generally at home. Flipkart popularized this convenient way for consumers to shop online with confidence and without plastic cards, and the company has been rewarded with wave after wave of investment.

 

In pursuit of Cash-before-delivery

But launching truly digital money services requires that players connect the dots between the online and mobile worlds and the offline world. As the Indian e-commerce market matures, COD is giving way to CBD (cash-before-delivery). COD has caused some problems for e-commerce merchants because many consumers refuse to accept items on delivery, after the initial flush of an impulse buy has faded. To meet the demand of merchants and to fit into the increasingly mobile-centric consumer lifestyle of Indian consumers, mobile wallets and prepaid payment instruments have flooded the Indian market and challenged the prevailing COD model.

 

Connecting the dots

Our studies show that global e-commerce companies are busily pursuing their strategies to enter this nascent market and rub shoulders with the home-grown services, both categories of players must be mindful of competition from outside their immediate vision.

For e-commerce players, digital money solutions that incorporate CBD will be critical. The race is on between Amazon, Flipkart and Snapdeal. So far Amazon, which recently invested US$2 billion in India, spent this Diwali in hot pursuit of Flipkart consumers. Meanwhile Flipkart shut its payment gateway Payzippy within a year of launch and its recent acquisition, Ngpay, is expected to provide the next platform for its attempt to extend into digital money.

As what we term as a new “nationalised liberalisation” emerges and global players ramp up investment, taking advantage of new ease of doing business in India, Shift Thought offers a range of consulting services, research and portal access that offer timely and vital knowledge on how to navigate the still murky waters of building new brands in India.

 

Shift Thought offers a Navigation Guide

Recently released Shift Thought research explains why and how e-commerce strategies must evolve to compete in the new digital money industry. Our report provides facts and figures not just on the mobile wallet services that have been launched—and the unique way in which prepaid services are taking off—but on the whole set of services we term digital money. I believe that is the game that global providers will need to get right to capture the new opportunities presented by the Indian market.

Our Digital Money in India 2014 Viewport released this month explains how the competitive landscape is unfolding in India, with case studies of how providers are creating unique solutions, and this article is part of our Focus on India Series through which we share highlights of our research.

Whether you are interested in taking up the challenge of entering the market, or simply wanting to know more about what’s happening, just drop us a line today at contact@shiftthought.com and we will be delighted to talk you through some of the key trends that affect you and the various options available through which we can help.

 

Join us to discuss this further and add your valuable comments at my post on LinkedIn

viewport_india_2014

 

Some parts of the blog have been published in my blog “India’s E-Commerce Boom Paves Way for Digital Money” on PAYbefore Op-Ed. 

 


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How Apple play affects The Digital Money Game

Now that Apple Pay is here, how does it affect the projects in your pipeline? Which should you drop, where should you invest more and who should you look to partner next? We are at the cusp of the creation of a new ecosystem. But will Apple Pay fare better than Google Wallet did when it first launched in May 2011? There is a feeling of Déjà vu and Let’s Wait and See. For Apple as well, Apple Watch was No. 1 – payments was No. 2.

So is this going to ignite NFC payments? How will things change? The short answer is I don’t think anyone knows yet. We’ll what are the mobile operators thinking now – we all know Verizon was not a cheer leader for the Google Wallet. What is PayPal thinking? What if Walmart does not come around?

Why is this important?

applepay

The major factor for any new payment service is adoption. So far adoption of NFC has been a 10-year war between the banks and the mobile operators and has struggled to gain traction.

Then in 2011 we had the entry of the Google wallet, and each of the card schemes with their own wallets. Still consumers and merchants failed to adopt. While contactless cards have gradually crept into use, paying by phone continues to prove elusive, for a variety of reasons, with one of the main ones claimed to be lack of handsets, customer security concerns and business model.

Apple has 800 million customers as “card on file”. Additionally the API will be available to developers. Merchant support has already been announced: Integration with Uber, a food app from Panera, Major League Baseball's app to order tickets from your phone, and Open Table to pay your bill from your iPhone 6 or iPhone 6 Plus. Apple API to be offered in iOS 8 to allow app developers to integrate Apple Pay into their applications.

Apple has a following, so is not dependant on mobile operators to push their phones, however operator subsidies that could be as high as $500 help make them affordable. The rapid adoption of smartphones across the world has changed the balance of power. Certainly in the US, Apple is Top Dog as a smartphone manufacturer, with 42.1% OEM market share as of June 2014 according to comScore reports.

However while in the US and Europe Samsung and Apple dominate, the share of both providers has been dropping in emerging markets where we see a fragmentation emerging. In urban China, Xiaomi with its affordable RedMi model continues to go from strength to strength, securing a 27% share of smartphone sales in the second quarter of 2014, compared with 21.1% for Samsung. And payments by watch + iPhone cannot be a top priority for the masses in emerging markets.

Too little too late?

So far Apple was a late starter where contactless payments are concerned. Like a swan, the movement seemed to be more “under-water”, as news of patents obtained for motion based payments got out in January 2013. Apple obtained a US Patent for a digital wallet and virtual currency. It described a system of managing credits via mobile device. Mobile users would be able to receive credits or coupons stored in their account. Check out Patently Apple for the whole background.

Back in June 2013 Apple released its first mobile commerce platform, called the iCloud Keychain: consumers could an store a variety of information, such as passwords and financial details for use across several Apple devices (Mac, iPhone or iPad) to log into websites or make purchases online. The platform did not support NFC and existed as an application rather than a physical device.

Earlier in June 2012, the Apple bar-code-based Passbook mobile wallet was launched, as a basic mobile wallet without payment functions, using barcodes to store and represent multiple boarding passes, store cards, and movie tickets. It had location-enabled alerts, and real-time updates and it displayed passes based on a specific time or location. When consumers walk into a participating shop the loyalty card appears and can be scanned to pay or check balance. It was expected that this could evolve into a mobile payment service by linking the Passbook to customer credit cards and iTunes accounts.

Effect on the Digital Money Game

Contactless payments that Apple Pay now propose to offer comes as a reinforcement

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Online payments and ecommerce in India

India’s ecommerce market is set to soar to USD 20 billion by 2020 (1), with growth generated, mainly, by the use of smartphones.

 

The USD 4 billion ecommerce is being driven by cheap handsets and mobile data plans that allow consumers to buy from their mobile devices. As we say at Shift Thought, India’s payments market is 'Born Digital Money', and this demands convergent payment services of the variety we describe in our Digital Money in India 2014 Viewport, which reflects our recent market studies in India, and from which this analysis is taken.

I had the opportunity to share my opinion on the direction of the e-commerce market with The Paypers, the Netherlands-based leading independent source of news and intelligence for professionals in the global payment community.

Click here to read the whole Expert Opinion published on 19th September 2014.

 

 

Charmaine Oak

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

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How Apple Play affects The Digital Money Game

 

Apple has made their play: iPhone 6, iPhone6 Plus, Apple Pay and a wearable Apple Watch. Now that Apple Pay is here, how does this potentially affect retail transactions, e-commerce in general, and the projects in your pipeline.

 

We are at the cusp of the creation of a new ecosystem. But will Apple Pay fare better than Google Wallet did when it first launched in May 2011? There is a feeling of Déjà vu and Let’s Wait and See but also a sense of optimism and expectation of improved retail experience. In the near term iPhone 6 and iPhone6 Plus will be the real winners for Apple revenue, but in the long term Apple Pay will play an increasingly important role in generating revenue from previously untapped sources. As far as the role of Apple Watch itself is concerned, it’s revenue impact in the near term is uncertain but could become more significant as developers bring out apps and its role evolves.

Let us take a look at Apple Pay, as a prerequisite for starting to answer the myriad questions - Is this going to ignite mobile payments? Will it make digital payments more secure? How do the opportunities now stack up? How are the mobile operators likely to react? We all know Verizon, AT&T and T-Mobile were not cheer leaders for the Google Wallet. Softcard (rebranded from ISIS) is readying its own offer. What is PayPal thinking and how does this fit with the Braintree One-Tap announcements? How will Walmart react, and where does this fit with respect to MCX?

 

So why is this important?

The major factor for any new payment service is adoption. Offline retail payments have been sought to be addressed through a variety of methods from PayPal, Google and others, and so far by Apple using iBeacon functionality, BLE and other technologies. So far adoption of NFC has been a 10-year war between the banks and the mobile operators and has struggled to gain traction. It was important for the industry to know Apple’s position with respect to NFC as a standard for mobile payments.

We would all agree that in the current retail and e-commerce arenas one of the most pressing needs is security. The Apple announcement certainly seems to go a long way in addressing this need. For example the combination of its biometric sensors in its devices with the contactless transmission of one-time card number combined with the fact that Apple creates a device-only account number that they store in the secure element, provides a basic foundation for enhanced security. Furthermore as far as customer perspective is concerned, the fact that one can find the phone more easily and take action if it is lost goes a long way towards addressing concerns.

 

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Back in 2011 we had the entry of the Google wallet, and each of the card schemes announced their own wallets as well. Still consumers and merchants failed to adopt. While contactless cards gradually crept into use, paying at retail POS by phone continued to prove elusive, for a variety of reasons. For the longest time, one of the main reasons was claimed to be lack of handsets. However, customer security concerns and more importantly business model were arguably even greater challenges.

And what about adoption?

One of the major challenges in creating a successful service is the ability to bring a large customer base on board rapidly. At the retail level this translates to satisfying consumers both on convenience and trust. In this respect Apple has 800 million customers from their iTune stores as ‘card on file’. However there is a separate step involved to get consumers to start to use Apple Pay for contactless payments as it launches shortly in the US.

This is where the convenience and trust come into play and is something for which we’ll need to wait and watch.

Additionally the Apple API will be available to developers and this is an exciting space to watch. We saw how millions of apps became available for the iPad and iPhone – now Apple Watch is here, and although tethered to the iPhones for the present, it presents a new frontier of innovation. For the present the watch offers an opportunity to integrate a variety of health and fitness related services – something I think we will hear a lot more about shortly.

Merchant support has already been announced: McDonalds, Integration with Uber, a food app from Panera, Major League Baseball's app to order tickets from your phone, and Open Table to pay your bill from your iPhone 6 or iPhone 6 Plus. Apple API is to be offered in iOS 8 to allow app developers to integrate Apple Pay into their applications.

 

So how will mobile operators react?

Apple has a following, and is not overly dependent on mobile operators to push their phones, however operator subsidies that could be as high as $500 considerably help make them affordable. The rapid adoption of smartphones across the world has changed the balance of power. Certainly in the US, Apple is Top Dog as a smartphone manufacturer, with 42.1% OEM market share as of June 2014 according to comScore reports.

Some news is in already as to how mobile operators view this. Softcard (formerly ISIS) have made a statement that they see Apple’s support to NFC as a significant step that sets the stage for rapid scale adoption of mobile commerce.

However while in the US and Europe Samsung and Apple dominate, the share of both providers has been dropping in emerging markets where we see an emerging fragmentation. In urban China, Xiaomi with its affordable RedMi model continues to go from strength to strength, securing a 27% share of smartphone sales in the important China market in the second quarter of 2014, compared with 21.1% for Samsung. And payments by watch + iPhone cannot be a top priority for the masses in emerging markets, although urban, higher income Chinese consumers do seem to be quite interested. 

 

What about the others?

As we describe in great detail in our book, payments has become a hotly contested space. Another fairly late entrant is Amazon.  Just take a look at the Amazon Fire Phone, the first smartphone designed by Amazon. Amazon has vowed to create a whole new shopping experience and until December 31, 2014 the fire phone comes with 800 Amazon Coins to spend on apps, games and more as well as 10% discounted purchase for more Coins. They also offer other benefits including a year of Prime Benefits (Video, Delivery, Books and more).

Such bundles of value are what the customer is increasingly coming to expect, and the whole Apple offer will need to evolve to meet the competition.

 

Too little, too late?

Without doubt, Apple is a late starter where contactless payments are concerned. Like a swan, the movement seemed to be more ‘under-water’, as news of patents obtained for motion based payments got out back in January 2013. For instance, Apple obtained a US Patent for a digital wallet and virtual currency. It described a system of managing credits via a mobile device. Mobile users would be able to receive credits or coupons stored in their accounts. Check out Patently Apple for the background on Apple patents for payments.

Yet, little happened until now.

  • Back in June 2013 Apple released its first mobile commerce platform, called the iCloud Keychain: consumers could store passwords and financial details for use across several Apple devices and they could log into websites or make purchases online. But the platform did not support NFC and existed as an application rather than a physical device.
  • Earlier in June 2012, the Apple bar-code-based Passbook mobile wallet was launched, as a basic mobile wallet without payment functions, using barcodes to store and represent multiple boarding passes, store cards, and movie tickets. It had location-enabled alerts, and real-time updates and it displayed passes based on a specific time or location. When consumers walk into a participating shop the loyalty card appears and can be scanned to pay or check balance. It was expected that this could evolve into a mobile payment service by linking the Passbook to customer credit cards and iTunes accounts.

Effect of Apple Play on the Digital Money Game

The contactless payments that Apple Pay now propose to offer come as a reinforcement to the Digital Money Game of some players, but a threat to others.

And it is no longer enough to offer just mobile payments. To gain adoption, Apple must be able to offer a range of ways to pay, across the web and other channels including TV, now being hotly talked about in emerging markets. And they must get the interoperability story right, and rapidly prove the concept beyond the US market.

 

Read all about this, and work out your own strategy with our recently published, highly acclaimed book, The Digital Money Game. Also, if you would like to discuss immediate ramifications on your projects just drop me a line at coak@shiftthought.com.

 

LIDMGCover

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