Mobile Payment, Cash-In the passion fruit! [Part 1]


Whenever a company start thinking to implement mobile payment solution or product, sales team starts to communicate and set deals with merchants and banks, marketing team start to work on how to make it sexier, should we start with NFC, digital codes or with cam recognition!

Mobile payment Cash InIt happens that technical, security and fraud team is also busy securing and tuning the service to make it extremely secure, fraud-less and fast as flash.

Afterwards when it comes to production, everybody is waiting and dreaming of the amazing traffic and the number of customers, who will love this service and become loyal to it, slowly it becomes clear that we have missed something for sure. Amazingly we have missed the passion fruit Cash-In!

mPesa, why and why not?

If you started in Kenya or any similar rural areas with no banking or wire transfer infrastructure, internet is a dream, and even if you are lucky and have a bank in your neighborhood, the possibility that “A” and “B” parties own a bank account is almost 0 percent.

It makes a sense that customer “A” will visit the next mobile station, which is almost every where, Cash-In and transfer to “B”, “B” is 100% a mobile owner – he maybe owns 2 or 3 lines even- and “B” will simply pass by the nearest mobile agent and Cash-Out.

But when it comes to payment, its really different and even harder than money transfer!

The payment logical filter!

Whenever your start your payment business you have to pass your product on the payment logical filter.

Imagine “Adam”, who owns Credit and ATM cards, and let\s assume that he will walk to the nearest ATM or bank branch, withdraw 100$, move to the nearest payment agent and Cash-In, back to the shop and asks the merchant to pay with his new digital mobile service and finally when he will realize that his total grocery bill is 120$. Now Adam is handing over his Credit card and with a quick swipe he is done!

How many patient Adam’s out there waiting for you and your digital product! I believe you should not be surprised by the results and just give it a try. Its painful, isn’t it?

Its not an easy task to compete with the long standing Credit card industry, and without an extreme effort from your side you will never make it.

Also it looks hard but there are possibilities to pass a product over the payment logical filter and it works!

In this series a different techniques and solutions will be discussed and it should help you to pass the test – the logical payment test!

1- Uniqueness is a key!

The first methodology to help your customers to forget the Cash-In pain is to offer a real unique service. It must be unique, and can’t be purchased via Credit card or Cash. It should be attractive and stands for a real customer’s need and would be great if it solves a real problem for them. This technique will make the paradigm shift and transfer the customer pain from Cash-In process to a different spot.

In some areas and due to some political or financial issues which may last for few weeks or even a month, people are suffering to refuel their cars, Gas station queue is so long and it takes few hours to get your turn at the bump.

Can you imagine if you finalized a deal with a Gas satiation and announced your Gas refill product, where customers will request the Gas and it will be delivered in 24 hours at the customer door. In this case the complicated Cash-In process will be like a peace of cake, and slowly the Gas queue will be waived to be a Cash-In queue. and with a reasonable fees you will start your next step where you have loyal customers now that still using your digital Gas product even-though the political or financial issue is over.

This should be an example of a unique product which also touches a real customer need!

 

Photo Credit: http://www.cbc.ca/gfx/images/news/topstories/2013/02/07/hi-iphone-cash.jpg


Mobile Payment, MNO VS Banks an endless dilemma

One of the most repeated questions when a mobile payment discussion starts, who will won at the end in this newly invented war Banks VS MNO -Mobile Network Operator-?

MNO VS BanksOn a very personal thoughts, I can’t see a link or even a symptom of war, both players are enriching the game and their targets are totally different.

There is a clear line that distinguish bank users from MNO users, I’ll call it the 5K line. In most countries, if you tried to open a new bank account you will be requested to deposit a sum of 5K -in average-of your local currency, while with only few cents you can get your self a new SIM card and start transacting immediately.

The 5K theory explains why normal or even advanced users may easily transfer 1,2 or 5K using their mobile phone to a relative or a friend. But we can’t imagine a user transferring 100K from his mobile, users are likely prefer to do this via bank branch or at least online banking interface.

I do imagine that MNO will attract low-mid income users and encourage them to use the banking concepts and functionalists and slowly advance them to be a real banking users. On the below selected units we will try to spot the difference and potentials for each one of the two big players.

Customer Base:

As MNO will not attract low-mid users which is more than 70% of any community, MNO will be the winner with the biggest customer base. On the other hand banks will have the elite and high value customer base with total of 30% of the population.

Transaction Volume and Count:

MNO targeted revenue is the transaction fees, and to expand their revenue MNO will keep pushing and inventing new services to push the money circulation to the maximum maximizing their revenue in reverse. MNO clear target should be minimum fees and small-mid amounts transferred in an insane and flashlight speed.

Banks will come in the second place from the transaction count, and ranked as number one in the transaction volume ,where Bank concept is to encourage users to leave their savings for as long a possible allowing the Bank to do a numerous projects and investment to generate its revenue.

Cash Flow and Circulation:

While Bank is capitalizing on the savings, MNO will circulate the money like thousand times more than Banks do, and the flow will always be at the MNO side.

Resident Balance:

Banks resident balances and saving amounts will be more than MNO, specially that MNO will keep pushing for fast money circulation and the network will keep cashing in/out rapidly.

User View:

From a user prospective MNO will offer me fast and convenient way to get a certain service and I will sacrifice with small portion as my convenience fees. As a Bank user I will expect some profit -interest- on monthly or annual bases against my savings.

Profit:

As mobile payment era just started, its still too early to answer this point and nominate the winner, we will need to wait and see how it will go but I think we will some how end with an equal situation.

Finally, mobile payment will grow specially, when we are sure that both players will adopt the mobile as an official and convenient gateway for their financial requests and we will see an unlimited options and innovative solutions that is built and based on mobile handsets.

Khaled Sayed

 

Photo Credit:

http://paymentsafrika.com/live/wp-content/uploads/2013/09/Mobile-payment2-642×419.jpg

Bitcoin explained in nutshell

As an internet user you should be familiar with the open source term. Open source OS, office tools, graphic software or utility software.

Open source as a development model promotes:

  • Universal access via free license to a product’s design or blueprint
  • Universal redistribution of that design or blueprint, including subsequent improvements to it by anyone

Satoshi Nakamoto an anonymous internet user or group of users thought to apply a decentralized financial institution where anyone could join the community and be a part of a new open source money issuing system, not related or controlled by any legal or government. Funny!

Using a traditional Peer 2 Peer network and complex encryption techniques each connected client is now part of the new issuing system and in reverse he will receive his reward in bitcoin credits.

But How bitcoin get its value?

To answer this point we may raise another question why 1$ USD has a value? and the simple answer is 1$ USD is valuable cause you may exchange it with resources like a candy, gum or a small cupcake!

It’s valuable because your are quite sure that the candy shop guy will be interested to exchange his owned candy with your 1$ USD, the candy guy will exchange his candies because he is also sure that the coffee shop owner will be interested to exchange one of his hot espresso with his new collected 1$ USD.

It’s all a bout trust, where all the traders trusts that the US government will back its issued money with resources to keep it’s value along the way.

In bitcoin world, where users participate with their computing power to collect the new digital coins, and because it’s a long process and it takes time users value the collected bitcoins and start looking for alternatives to collect bitcoins faster. May be they offer their advanced services is exchange of bitcoins rather than coins and it might be also cheaper or bundled with some promotional offers.

New attracted users will keep looking for bitcoins to benefit the price difference and the offers as well! This will soon create a cycle and community who value this digital currency and as much the community grows the bitcoin value grows in response.

Back to our previous 1$ USD and imagine that you are lost in a desert between a group of people, and you had the last and only cupcake which will give you an extra 5 life days with a wise consumption. Will you trade your life-cupcake with 1$, 10$, 20$ or a Million USD!

That’s why bitcoin has a value!