Analysis of Payment Initiatives of Global Carriers

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Analysis of Payment Initiatives of Global Carriers
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• Summary
•  
• The traditional teleco business model has evolved
  from being monopolistic and conventional voice
  service providers to being a key stakeholder in
  an era of OTT and several ubiquitous applications
  across fields. One such key field is Payments.
• Some of the key issues that have forced the
  carriers globally to look beyond their core
  competency to newer verticals like payments
• Providing adequate Data capacity and
  monetization As we shift from traditional voice
  based model to data based model, the demand for
  data is increasing day by day. Today consumers
  value access to data more than the voice. The
  telcos are expected to provide their users with
  the seamless user experience and high quality
  speed during the data access. As a result they
  need to shift their strategies from voice model
  to data model and have to seek for solutions
  through which they can earn the revenue from the
  additional bandwidth that the users are
  demanding.
• Investments in infrastructure and ROI With the
  shift from traditional model, the operators also
  need to examine their physical infrastructure to
  provide the users the high quality speed which
  they are demanding.
• No longer want to act as a dumb pipe The
  carriers were reduced to being just a dumb pipe
  while services being offered by players like
  Apple and the OTT players grew. With the rise in
  competitions, telcos are not left with many
  choices but to enter into a strategic partnership
  with other players, and to look at new revenue
  opportunities.

With the expanding telecom ecosystem, the
operators are now exploring new verticals for
revenue generation. Mobile payments technology is
one of them. Today almost every operator is
expanding its horizon into this segment as they
have the customers trust for the billing
services. The telcos are trying to cash in on
this opportunity in every possible way. According
to IDC Financial forecasts, more than a trillion
dollars will be spent around the world using the
mobile devices by 2017. So mobile commerce is hot
for operators.
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• Market Segmentation
• Based on our study of the payment programs of
  global carriers, we have segmented the countries
  based on their M-Payments advancement level into
  3 categories
• Sophisticated These markets are characterized by
  developed banking infrastructure, debit cards and
  credit cards are a commodity and most of the
  financial transactions are cashless. In such
  markets, carriers M-Payment strategies focus on
  replacing the cards and the keys.
• Developed Many people in urban areas in these
  markets have access to bank account and ATMs.
  There is some use of credit cards but cash is
  used more frequently. Smart devices penetration
  is growing at a rapid pace in these markets. In
  such markets, carriers M-Payment strategies
  focus on replacing the cash, cards and the keys
  and replacing the bank accounts.
• Emerging Such markets have growing bank account
  penetration, especially in the medium income
  group. The penetration of credit cards and POS is
  very low. Most of the transactions are cash based
  (including even the business transactions). In
  such markets, carriers M-Payment strategies
  focus solely on replacing the need for bank
  accounts

In this whitepaper, we have discussed and
analyzed the payment programs of three global
Carriers TELENOR, TELEFONICA VODAFONE. These
are very global in nature.
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Operators and their payment strategies Worldwide
payments made through mobile phones rose by
about 38 in 2013, to 325 billion. By 2016, we
predict the Asia-Pacific region to be the largest
mobile payments market, based on the value of
transactions. Overall, mobile transactions from
consumers in countries like China, Thailand and
Malaysia are forecast to reach 165 billion by
2016, slightly ahead of Africa, where
transactions are expected to top 160 billion
over the same period. However, the emerging
markets represent only about 12-15 of the global
mobile payments market. NFC and Digital payments
are still the unexplored territories in the
developed countries and requires collaboration
between various operators and OTT/ISP players,
banks and payment networks. Let us try to analyze
the payment programs of three global Carriers
TELENOR, TELEFONICA VODAFONE.
Telenor History Telenor Group is a Norwegian
multinational telecommunications company
headquartered at Fornebu, close to Oslo. It is
one of the worlds largest mobile
telecommunications companies with 166 million
mobile subscriptions and operations in
Scandinavia, Eastern Europe and Asia.  As at 31
March 2013, Telenor had 3.2 million mobile
subscriptions in Norway, of which around 80 were
contract subscription. Forms of Mobile Payment
used by Telenor Contact-less NFC (Near field
Communication)-Telenor in collaboration with
DNB(Norways largest bank) offers a mobile
contactless payment product. M-paisa Easy
paisa Launched in Pakistan in 2009 through a
partnership between Telenor Pakistan and Tameer
Microfinance group. Telenor has a 51 of
ownership in Tameer group . The main
differentiating factor in it is that the customer
does not require a mobile phone or a account with
Telenor to pay his/her bills. These transactions
can be done by the merchant on his mobile
phone.  M-wallet a) Easy paisa mobile accounts
(m wallets)-This facility was launched in
Pakistan in 2010 for Telenor subscribers only.
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b) Mobicash was launched in Bangladesh. It has
offered Billpay services since last four years.it
is an agent assisted utility bill payment
service c) Platimo is an electronic payment
system by Telenor Serbia. It provides you the
facility of paying your monthly bills with your
mobile phones d) ATM SIM Dtac and KBANK in
collaboration have introduced an ATM SIM project
in 2007.This service offers bill pay, fund
transfer, balance check and ticket purchase
Presence of Telenors Services
Telenors Payments Services By offering E-PAISE
M-Wallet Contact-less
If we analyze Telenors payment services
offerings across the world, we can see that the
company has deployed NFC in sophisticated markets
like Norway and Sweden. On the other hand, in
countries like Pakistan Bangladesh, Telenor has
deployed the m-wallet facility for its consumers.
It is interesting to know that Telenor has a
subscriber base of more than 30 million in
Pakistan, which is much more than a subscriber
base of just 3 million it has in Norway!
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• Vodafone
• History - Vodafone is a British multinational
  telecommunication company. It owns and operates
  telecommunication network in 21 countries and has
  partner networks in 40 countries. Its worlds
  2ndlargest
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• Vodafone in Payment Industry
• Started in March 2007 in Kenya with Safaricom in
  the form of M-PESA.
•  
• Various modes of payment
• M-PESA
• M-PESA (M for mobile, PESA is Swahili for money)
  is a mobile-phone based money transfer and
  micro-financing service. M-PESA was aimed at
  mobile customers not having bank accounts. The
  M-PESA enables the customers with basic banking
  facilities.
• Presence in market-Vodafone, along with
  Safaricom started the M-PESA service in Kenya in
  2007. By 2008 it had 1.6 million registered
  customers, and by 2011 it had 14 million
  registered user, which accounted for 40 of
  countrys transaction. Next the M-PESA was
  introduced in Tanzania and Afghanistan in 2008
  following the success in Kenya. The M-PESA was
  then launched in South Africa in 2010 and in
  India in 2013.
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• Mobile Wallet
• In 2012, Vodafone partnered with VISA, to
  introduce a Vodafone Mobile Wallet. This will
  enable the subscribers to transact for goods and
  services using their smartphones instead of
  traditional coins and notes.
• Presence in market-Initially it was launched in
  Germany and then gradually expanded in Europe to
  Spain, Turkey and Netherlands.
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• NFC Mobile wallet / Contact-Less Mobile Wallet
• In 2013, Vodafone announced contact-less mobile
  wallet wherein the transaction could take place
  with just a touch or a wave of the subscribers
  smartphone. This was the first mobile payment
  service built on global platform.

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Presence of Vodafones Services
Vodafones Payments Services By
offering M-PESA M-Wallet NFC M-Wallet
Vodafone launched its NFC wallet in Spain in
2013. After that, it launched the service in
Germany and now Vodafone is planning to launch it
in the rest of Europe. We can see that most of
the countries that it is targeting for NFC are
sophisticated markets and have appropriate
infrastructure and facilities to support it. On
the other hand, in African countries and big
markets like India (where Vodafone caters to
about 160million subscriber base) , the companys
mobile payment services is confined to M-PESA.
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• Telefonica
• History-Telefonica is a Spanish multi-national
  telecommunications company. It has operations in
  Europe, North America, South America and Asia. It
  is worlds 5th largest telecom operator.
• Telefonica in Payments Industry
• The company started focusing on payments in Late
  2012 with M-wallet services in UK which is
  eventually converted into Contact-less M-wallet.
• Mobile Pass
• It is the Mobile-to-mobile money transfer
  facility. It enables to transfer the money from
  any M-Pass account to another M-pass account,
  virtually real-time.
• O2 Wallet / Mobile Wallet
• Telefonica started this service initially in UK
  in partnership with Monetise in 2012. This
  service enables the user to transact for the
  goods and services using their smartphones rather
  than traditional coins and bank notes. It was
  later introduced in Spain in Tie-up with Bango
  and other banks in 2013. Following this it was
  later introduced in Germany in the same year.
• Contact-Less Mobile Wallet
• With the advent in technology the mobile wallet
  was converted into contact-less mobile wallet
  using which the transaction can take place
  with-out a touch. This service is available in
  UK, Spain and Germany.

Telefonicas presence is confined mostly to the
Sophisticated and developed markets. The company
has adopted the payments strategy selectively
in the European markets where it has a strong
presence. It has deployed contactless NFC
solutions in markets like UK, Spain and Germany.
Thus, the companys main focus is on contactless
wallets only.
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Presence of Telefonicas Services
Telefonicas Payments Services By
offering M-Pass and O2 Wallet Contact-less/NFC
The difference in strategies across geographies
and across carriers can be attributed to the fact
that there is lack of infrastructure to support
contactless payments in many of the developing
countries. Besides, low cost smartphones have
major presence in the developing markets, and
most of these handsets dont support NFC,
Beckons, Transferjet or any other forms of
contactless payments.
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While the steps taken by the carriers around the
globe indicate their shift in focus towards
integrating payment solutions, we have already
witnessed few failures and shutdowns (eg. O2
wallet in UK). According to us, the carriers
approach so far has worked well in monopolistic
markets like Africa, but they might need to tweak
their approach in the more competitive markets
and work with FIs and banks. In these markets,
collaboration with other industry stakeholders
and even rivals is a better approach than
launching standalone services. Going forward, the
customers will appreciate wallets that are
interoperable across operators, handsets and all
mobileOS. .Thus the key question for the
carriers is not how to launch their own wallet,
but how to find the right business model and GTM!
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Authors
Lets T_at_lk Payment Lets Talk Payments is a
global initiative which is focused on US, Europe
and Asia for covering innovations in payments. It
is being build to become a complete resource
(online digital news, analysis, events, payment
product/feature reviews, surveys, interviews and
videos) for the payments industry. The company is
based out of Charlotte (USA) with teams and
contributors across the globe.
Knowledgefaber Knowledgefaber is a fact based
research and consulting firm focusing on emerging
opportunities in emerging economies
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