Mobile Banking and Payments ' 2nd Edition

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Mobile Banking and Payments ' 2nd Edition
Published on April 2010

Report Summary

Mobile Banking and Payments is the second consecutive report from berg Insight analyzing the rise of the mobile handset as a device
for payments, money transfer and banking worldwide. This strategic research report from Berg Insight provides you with 130+ pages
of unique business intelligence and expert commentary on which to base your business decisions.
This report will allow you to understand the dynamics of: Payment services based on premium SMS, WAP billing, transactional
networks and credit cards.
Money transfer services for subscriber-to-subscriber financial transactions within and between countries.
Mobile banking services for banked populations in the Western World and unbanked populations in emerging markets.
NFC as an enabling technology, fusing the mobile handset and the credit card into a unified payment device.
The ecosystem required for providing financial transaction services in the mobile environment.

Executive summary
Mobile financial services include a range of various applications and usage areas. Most of these services could be classified as
mobile payments, mobile money transfer or mobile banking. The mobile handset is now established as a means for payments in
certain niches such as digital services and ticketing using premium SMS. Berg Insight believes that this type of applications will
continue to grow with WAP billing and credit card payments gradually increasing their market shares. Mobile money transfer is
expected to achieve a market breakthrough in the coming years, generating revenues in the range of US$ 1.2'6.2 billion in 2015. Berg
Insight also anticipates that mobile banking will become highly popular among existing Internet bank users and also become the main
digital channel for retail banks in emerging markets. As a result the number of active users of mobile banking and related financial
services worldwide is forecasted to increase from 55 million in 2009 to 894 million in 2015.
Mobile payments refer to the utilization of mobile handsets for making purchases. Traditionally, mobile payments have focused on
purchasing mobile content, but over time the application area has diversified to include goods and services. Initially, premium SMS
was the vehicle for payments as it offered unmatched reach and a simple process familiar to the vast majority of the subscribers. As
the number of people using their phones for data services increases a range of alternative methods opens up. Today, many content
providers are moving over to WAP billing, which offers practical advantages and higher payout rates. Furthermore, the mobile devices
are converging with PCs and a natural step is to utilize the payment methods already established on the Internet, which offer better
payout rates and do not rely on operators. These methods are primarily transactional networks and credit cards. In a long term
perspective the mobile handset has also been identified as a vehicle for delivering contactless payments using NFC technology and
we are starting to see commercial roll-outs in a number of markets.
The money transfer market has grown considerably over the past years, however the current global economic downturn has
constrained the remittance volumes temporarily. Still remittance is a growing market in a long term perspective, driven by a number of
factors such as migration, globalization and urbanization. Many mobile banking and payment providers are glancing at the US$ 600
billion flowing every year to developing countries, which generates about US$ 60 billion in remittance service revenues. There are
over 4 billion mobile subscribers in the world and extensive networks of airtime agents have been built up giving the mobile media
unmatched reach and it has been identified as a vehicle for remittance. Today, there are a number of international mobile remittance
services available in the US, Europe and the Gulf states. Yet, money transfer networks such as Western Union and informal value
transfer systems still dominate the market. Mobile banking is an evolution of telephone and Internet banking that provides mobile
subscribers with access to standard banking services such as account information and payments. There is a major difference
between mobile banking for the banked population in the US and Europe compared to the unbanked population in Africa, Asia and
Latin America. The services differ significantly as they fill different needs and builds upon different business models.
In Europe the service is at the initial stage and is seen as a convenience service that does not generate additional revenues, but more

Mobile Banking and Payments ' 2nd Edition Page 1/7


a service to build value-added applications upon. In emerging markets the service targets unbanked or under-banked people that do
not have access to other official banking systems. There is a wide range of players of every size in the mobile banking and payments
industry. Since the different services are strongly interconnected most firms dedicated to developing platforms for mobile commerce
offer a number of services. Many platforms comprise for example banking services, over the air payments, proximity payments (NFC),
remittance, airtime top-up as well as other functions such as marketing and vouchers. In addition to these players there are also large
IT firms with the capabilities of delivering tailored solutions to operators or financial institutions that integrate with the current systems.
Large banks such as Citigroup or Bank of America have the competence to develop mobile banking and payment schemes in-house.
There have also been initiatives from the international card payment giants Visa and MasterCard.

Table of Content

Table of Contents

Table of Contents....... i
List of Figures.... v
Executive summary....1
1 Premium SMS and other text or voice based payments....3
1.1 Introduction.3
1.1.1 Setting up a premium SMS payment gateway ....4
1.1.2 Advantages and disadvantages for consumers and merchants .4
1.1.3 Examples of applications .....5
1.2 Mobile content sales....6
1.2.1 Market overview ....6
1.2.2 Payment methods .8
1.3 Public transport ticketing....8
1.3.1 Single journey ticketing......10
1.3.2 SMS public transport ticketing in European cities ..............11
1.4 Parking payments......14
1.5 Other micro-payments and voting.............17
1.6 Case studies ..............20
1.6.1 Telenor: Mobile payment service enabler..20
1.6.2 Plusdial: Premium SMS public transport ticketing provider ......21
1.6.3 NOW! Innovations: Mobile parking payment provider........22
2 Next generation mobile payments....23
2.1 Mobile operator billing......23
2.1.1 WAP billing ..........24
2.1.2 Other operator billing methods ...........25
2.1.3 Payment intermediaries and payment platforms ................26
2.1.4 Case study: Payforit enables cross-operator WAP billing in the UK..27
2.2 Transactional networks.....28
2.2.1 Online payment networks ..29
2.2.2 Mobile transactional networks ............30
2.2.3 Case study: Canadian operators team up to deliver mobile transactions..........32
2.3 Credit/debit card billing ....32
2.3.1 Safety aspects of credit card usage....34
2.3.2 Credit/debit card usage for mobile commerce ..34
2.3.3 Case study: App stores generate millions of credit card purchases .35



2.4 NFC technology ' enabling integration of credit cards into handsets.....36
2.4.1 Contactless smartcards......36
2.4.2 Mobile NFC..........39
2.4.3 Case studies from Europe and Asia....43
3 International mobile money transfer .47
3.1 Global money transfer outlook .47
3.1.1 The money transfer market 51
3.1.2 Cost of remitting money.....52
3.2 The GSMA Money Transfer Programme ...54
3.2.1 Programme objectives .......54
3.2.2 Ecosystem structure...55
3.3 Case Studies..............56
3.3.1 Belgacom ISC and eServGlobal offer the HomeSend remittance platform .......56
3.3.2 Etisalat offers mobile money transfer for expats57
3.3.3 Western Union focus on mobile money transfers...............58
4 Mobile banking .61
4.1 The banking sector....61
4.1.1 Retail banking......62
4.1.2 The Western European retail banking industry..65
4.1.3 The US retail banking industry ............68
4.1.4 Trends in the retail banking industry...69
4.2 Telephone and online banking.70
4.3 Mobile banking ..........72
4.3.1 Utilising mobile devices for remote banking......72
4.3.2 Levels of functionality for mobile banking..74
4.3.3 Mobile banking in Europe and the US75
4.3.4 Mobile banking in emerging markets .79
4.4 Case studies ..............85
4.4.1 Bank of America ' Mobile banking adoption rises in the US.....85
4.4.2 FNB ' 20 percent of its customers use mobile banking.....87
4.4.3 M-PESA ' More than 8 million users in Kenya and Tanzania....88
4.4.4 The Philippines ' GCASH and Smart Money attracts 7 million users ................90
5 Forecasts and conclusions93
5.1 Mobile payments .......93
5.1.1 SMS payments ....96
5.1.2 WAP payments ....96
5.1.3 Mobile transactional networks ............96
5.1.4 Credit cards.........97
5.1.5 Mobile NFC payments98
5.2 International mobile remittance...............100
5.2.1 Value proposition for players in the ecosystem................101
5.2.2 Market analysis and forecasts...........102
5.3 Mobile banking........104
5.3.1 Mobile banking in the US and Europe.....104
5.3.2 Mobile banking in emerging markets ......109
5.4 Industry player analysis..115
5.4.1 Consolidation trend and vertical integration by mobile operators...115
5.4.2 Service portfolios......116
5.4.3 Market positioning....117
5.4.4 Future role in the mobile and financial industries .............117



6 Company profiles.............119
6.1 Mobile payment providers......119
6.1.1 Bango................119
6.1.2 Ericsson IPX ......121
6.1.3 Fronde Anywhere .....122
6.1.4 Luup .122
6.1.5 mBlox ................123
6.1.6 mChek...............124
6.1.7 Netsize...............125
6.1.8 Nokia 126
6.1.9 Obopay..............127
6.1.10 Sybase 365........127
6.2 Mobile banking providers .......129
6.2.1 Comviva.............129
6.2.2 Firethorn ............130
6.2.3 Fundamo ...........130
6.2.4 M-Com...............131
6.2.5 mFoundry ..........132
6.2.6 Monitise .............133
6.2.7 MShift ................134
6.2.8 Utiba .134
6.2.9 VeriSign .............135
6.2.10 YellowPepper ....136
6.3 Financial institutions 136
6.3.1 Visa...137
6.3.2 MasterCard........138
6.3.3 Mobipay.............139
Glossary .141

List of Figures

Figure 1.1: Mobile content value chain overview........7
Figure 1.2: Public transport statistics for 15 European cities (2006)..........9
Figure 1.3: Selection of mobile payment systems for public transport (Europe 2010)............11
Figure 1.4: Mobile parking solutions in some European cities ................15
Figure 2.1: Payforit's Accredited Payment Intermediaries (Q1-2010) ......28
Figure 2.2: Examples of online payment services (Worldwide 2009) ......30
Figure 2.3: Examples of mobile transactional service providers ..............31
Figure 2.4: Global market shares for general purpose cards (Worldwide 2009) ....33
Figure 2.5: Shipments of contactless cards (2009)..37
Figure 2.6: Worldwide cumulative shipments of FeliCa contactless chips (July 2009) ...........38
Figure 2.7: NFC handset and reader .......41
Figure 2.8: Examples of mobile contactless projects (Worldwide) ..........42
Figure 3.1: Top 10 remittance recipient countries in US$ billion (2009) ..48
Figure 3.2: Remittance flows to different regions in US$ billion (2003'2009).49
Figure 3.3: Sources of remittance in US$ billion by recipient regions (2009).50
Figure 3.4: Main players in the international P2P remittance market (World 2007) 51
Figure 3.5: Average cost for sending US$ 200 between different countries (2009)53
Figure 4.1: Top 10 banks (Worldwide 2008) ............62
Figure 4.2: Retail banking revenues by region (2006).....63



Figure 4.3: Split of fees for retail banks by region (2009)64
Figure 4.4: Average bank fees with local usage pattern by region (2009)......65
Figure 4.5: Major European retail banking players (2009) ......67
Figure 4.6: Top 10 US banks (2009)69
Figure 4.7: Monthly online banking users as share of adult population (2007) ......71
Figure 4.8: Levels of mobile banking sophistication, examples of functions (2010)................75
Figure 4.9: First major US banks to launch mobile banking ...77
Figure 4.10: Selection of European mobile banking launch dates ..........78
Figure 4.11: Mobile money deployments in Africa (January 2010)..........83
Figure 4.12: Mobile money deployments in Asia (January 2010) ............84
Figure 4.13: Mobile money deployments in Latin America (January 2010) ....85
Figure 4.14: Bank of America's mobile banking application...86
Figure 5.1: Primary areas of use for mobile payments....94
Figure 5.2: Application stores by vendor (2010).......95
Figure 5.3: Comparison of payout rates for WAP billing and credit cards ......98
Figure 5.4: The largest receiving countries of remittance (2009) ...........102
Figure 5.5: Mobile international remittance revenue forecast (2009-2015)...103
Figure 5.6: Traditional business model for mobile banking and payments ..105
Figure 5.7: Online banking and mobile banking in the US (1995'2009) ......107
Figure 5.8: Forecast of active mobile banking users in the US and Europe (2009'2015).....108
Figure 5.9: Major mobile financial service deployments in emerging markets (2009)...........112
Figure 5.10: Forecast of mobile financial services users (2009'2015) ..113



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Mobile Banking and Payments ' 2nd Edition