Challenges of Mobile Wallet Implementation in Pakistan Payment Industry

With the advent of smart phones in Pakistan, a big question that comes in the minds of Banking Gurus, is whether or not Mobile Wallet will take off in Pakistan? Since, people are keeping everything in mobile, why not their banks, their ability to pay bills, their ability to be agile in shopping, and keeping tabs on their account. Every bank / clients / switch involved in Payment industry of Pakistan is thinking of coming up with ways to connect their Bank Accounts with Mobile Phones, because they know that the future lies of Banking lies in Mobile Phones.

Brett King’s book “Banking 3.0” have a slogan that “Why Banking is no longer somewhere you go, but something you do”. Bret king provides a pictorial view of 2016, about how less and less a consumer would be interacting with physical banks and how more consumers will be interacting with their devices, tablets, mobile phones. This gives us a clear idea of where the Banking / payment industry would be heading and whether this is the time for Payment industry of Pakistan to move towards Mobile Wallets or not.

According to the State Bank of Pakistan quarterly report, the number of transactions through mobile (excluding Utility Bill Payments) in a quarter of 2014 is 59 thousand alone worth 232 million rupees. The similar figures are provided by Gallup Research (provided in list of articles section at bottom) in a much more visualized. These reports are giving a litmus paper test of how much ripe is the market for Mobile Wallets.

Let’s discuss of what constitutes a Mobile Wallet. A mobile wallet will be very much similar to our traditional wallets that we carry. In women’s terminology, clutches, purses. For example

#	Traditional Wallets have	Mobile Wallets might have
1	Money (Hard Cash)	Credits – Think Easy Paisa Credits
2	Debit Cards	Digitized / encrypted form of Debit Cards of Multiple Banks
3	Credit Cards	Digitized / encrypted form of Credit Cards of Multiple Banks
4	Loyalty Cards	Digitized Loyalty cards or Loyalty would be gained by using Transaction stats, or by the app itself.

Recently, in Pakistani Payment scene, MCB has launched their, Mobile Wallet – MCB Lite, but according to the definition, that is not a complete mobile wallet. Also, according to the news in Social Media, MCB Lite is using Mobile Wallets in LUMS (Lahore University of Management Sciences) and they do have plans to make LUMS a Cashless environment. Latest Technology like NFC would be piloted in LUMS. This is because; mainly the target audience is young generation who don’t have any discomfort in using technology.

As PayPal’s president David Marcus says, for a Mobile Money to truly take off, it must offer more. It has to be the experience you have online today. You will go fast, pay fast, and the merchant will know more stuff about you, so that they will provide better options to you. In other words, the merchants will provide better services, which will enhances both the consumer experience as well as it will provide grounds for banks to innovate further services in mobile wallets.

So in other words, if a complete Mobile Wallet experience might be like a person wandering in a Shopping mall. Where by a Mobile Wallet app will sense, that one is near some restaurant that he loves to dine in. Based on time of Mobile (around 2000 hours, dinner time, and location, think Google Location / Foursquare) a Mobile wallet app might suggest or inform that the restaurant in the shopping mall you are wandering offers a discount. (Think checking in to Foursquare Venue or using OnTheGo.pk). One can avail that discount, by (A) tapping on the app, and redeeming it later or (B) physically going and ordering before a set time. Now at the time of actual transaction, the customer will have a choice of deciding which medium through which to pay. He could choose to pay via credits in his wallet (think Easy Paisa). or he choose to use his Debit / Credit Card. Again, one mobile wallet could hold multiple Bank’s Credit / Debit Card. Payments could take place via WIFI being offered at merchants end, or by using GPRS / 3G on consumer’s end. Another way of payments being done is to use alternatives like NFC, QR Codes, Near Sound Data Transfer ™ (NSDT™). QR Codes are already being used as discount redemption by Olaround (http://olaround.me) in Pakistan and at Starbucks internationally. At the end of the day, the merchant will know that you paid via Mobile Wallet, your feedback about the experience was good / bad, and that you came to the merchant via the location based advertising. This way, the merchant will provide better offers next time.

Mobile wallet could also have Inter Funds Transfer, where by Mobile phone holder’s Contact list could be scanned or provided by choice from the user by giving the app the permission of scanning not the complete address book, but by scanning a group in Contact list, or say, just scan my WhatsApp contact list or Viber Contact List. Since Mobile Numbers are unique, the funds could be transferred to any one on your contact list which has a Phone number and he would be credited with the amount of Money transferred. Again, a Mobile App would be needed, to send the Sender’s Mobile Number, Receiver’s Mobile Number and the amount (which could be debited off from receiver’s end. If, at the time of transaction, the receivers don’t have Mobile Wallet, it will be automatically created for them. This model of fund transfer is very similar to what Easy Paisa / Time pey / Mobi Cash is offering these days. This model could also be integrated into Mobile Wallet. Also, Wallet to Wallet transfer could also be made possible, if the two customers are on the same wallet or switch (think 1 Link / MNET) and app could display this information as well.

Another area which will add more value to Mobile Wallets would be providing Personal Finance Manager Apps. In other words, if a Wallet can keep track of Incoming Credits (Deposits) as well as outgoing Debits (Withdrawals), why can’t a wallet provide a complete Personal Finance Manager, which will inform beforehand, the consumer whether or not they have exceeded their budget or it they are near their border line of exceeding their budget in real time. Simple Mobile Wallet is already doing this. (https://www.simple.com/goals/ ).

Personal Finance Budgeting is a big area for improvement, where only a select few banks / financial institutions might go. On consumer end, there are people who may want to the keep their finances to themselves. The banks, if they do the math, they will actually know more about their customers (KYC), since they are already having their customer’s income in their account, plus the debits will be counted for and against the Credit / Debit payment cards / and / or Mobile based cards. They would offer something of a far greater value than what they are offering today, if they implement Personal Finance Manager app / functionality in Mobile Wallets. Think Personal Expense Manager App on Android. (https://play.google.com/store/apps/details?id=at.markushi.expensemanager ). All they have to do to is to provide the customers with the ability to manage their personal budget in their mobile apps. Again, Simple is doing an awesome job of managing their budgets and goals in the palm of their customers.

To truly take off a Mobile Wallets, the mobile wallets should provide

• location based offerings from merchants
• Loyalty points
• digitized, secure, multiple credit / debit card in wallet
• wallet to wallet transfer using contacts / phone numbers
• Transactions could take on WIFI, 3 / 4G or using QR Codes or Near Sound Transfer or NFC (Near Field Communications)
• Security of remote wipe of Wallets in case of Mobile snatching
• Personal Finance Management would be big plus for consumers

There are are some parties that have to work together to bring in a consolidated, centralized mobile wallets. The following are the parties in no random order.

– Telcos – think telcos in Pakistan that is, Ufone, Mobilink, Warid, Zong and Telenor. They will be backbone of providing a Mobile Wallet, since Mobile Wallet has to be associated with a Mobile Connection / Mobile Numbers. Off course, like IP Addresses, there will be unique Mobile Numbers. Every Mobile is a Unique Mobile number and it is tagged with one unique CNIC) as per PTA (Pakistan Telecommunication Authority).

– Banks / Financial Institutions (to offer their Credit Card / Debit Card in Digitized / encrypted form in Mobile wallets, along with ability to provide fund transfer along with Loyalty points and / or finance manager functionality).

– Merchants (Naheed Super Store / Imtiaz / Butler’s Chocolate Cafe / Levis / Ego to name a few, who will offer their products to enable Mobile Wallet payment scheme, or if they want to be a part of Advertisement on Mobile Wallets). Plus, if they start loyalty based programmes, they can really capitalize on Mobile Money. (Think OnTheGo.pk [ https://play.google.com/store/apps/details?id=com.activemake.pound ] )

– Clients / Consumers – They should be the driving factor behind Mobile Wallets. They should be comfortable in sharing their details, spending habits, locations to merchants / banks in a secure way, that will not hamper their privacy. These days, even when electronic Bill payments are active, there is small number of people, who are still accustomed to the electronic Bill Receipt they get as a receipt when paying bill to Bank’s Line. The small paper gives a small sense of security, had there been any dispute that paper might save their day. Since SMS in smart phones might get lost, they might not be searchable, the emails might get archived. Paper receipt rules. It is the basic perception of consumers that one has to be removed and to entice them to come to Mobile Wallets. It will be the same perception shift when ATMs were introduced in Pakistan in late 80s, and people were used to do banking in banking hours and visiting the branch. For that perception to change, the dispute resolution process might have to be changed to include digitized receipts, and to give the consumer a sense of security.

– App Developers / Companies – Off course, Mobile Wallets have to be applications on mobile platforms. Be them on Android, IPhone, Symbian, and Windows platforms. To truly fly with any mobile wallet, a mobile wallet has to be developed on all platforms. There are many financial institutions that could play a big part in development of Mobile Wallets along with adding layers of security which might remote wipe a complete wallet or remote freeze a wallet in case Mobile Phone is lost or stolen, by allowing the consumers to send an email / SMS to a fixed number of Wallet Administration and / or Bank contact and / or Carrier Help line. This is just an idea brought by Android phone security, but there might be better ways to lock down a wallet in case mobile phones are snatched.

It might not be wrong to say that just like visits to Banks are minimized, almost nullified because of ATMS, Mobile Wallets might have the potential to minimize the usage of Payment Cards. Our wallets will have fewer cards for us to carry and our Mobile phones will still be the same thickness or less, but will have more apps to carry our digitized cards, and our worries would be to keep our mobile batteries up and running and never to lose our mobile phones in public places.

What matters is how State Bank of Pakistan regulates mobile wallets in the payment industry of Pakistan, since third world countries are already moving ahead in the game. Again, we might be needing a good blend of App Developers / Financial Institutions offering development of mobile wallets, Merchants, Telcos and Banks along with providing a central consolidated service provision.

Links shared in this Article.

http://en.wikipedia.org/wiki/Mobile_payment
http://www.google.com.pk/wallet/
http://www.mcbmobilepayments.com/what-is-a-mobile-wallet/#.U1EbIVew7L4
http://www.mhitslimited.com/blog/what-is-a-mobile-wallet
http://www.forbes.com/sites/stevenbertoni/2014/02/21/how-do-you-win-the-mobile-wallet-war-be-like-starbucks/
http://www.quirk.biz/resources/mobile101/296/The-Mobile-Wallet
https://www.paywithisis.com/
http://www.hongkiat.com/blog/digital-wallets/

QR Based Payments
http://www.ericsson.com/m-commerce/blog/ericsson-dot-alternative-nfc-0

Near Sound Data Transfer
http://www.tagattitude.fr/en/solutions/mobile-money/case-studies/54-wallet

OnTheGo.pk
https://play.google.com/store/apps/details?id=com.activemake.pound

https://www.linkedin.com/today/post/article/20140416221405-29200492-tweet-a-coffee-another-example-of-starbucks-brilliance?trk=object-title

Simple Banking
https://www.simple.com/goals/
https://www.simple.com/spending/
https://www.simple.com/banking/
https://twitter.com/simple
https://itunes.apple.com/us/app/simple/id479317486?mt=8
https://play.google.com/store/apps/details?id=com.banksimple&hl=en

Expense Manager Apps on Google Play
https://play.google.com/store/apps/details?id=at.markushi.expensemanager
https://play.google.com/store/apps/details?id=com.code44.finance
https://play.google.com/store/apps/details?id=ru.orangesoftware.financisto

OlAround
http://www.olaround.me/
https://play.google.com/store/apps/details?id=com.flip.olaround

https://www.google.com.pk/search?q=MCB+lite+on+LUMS
http://www.mcb.com.pk/assets/MCB_Bank__LUMS_sign_MoU.pdf
http://lums.edu.pk/news-detail/lums-and-mcb-sign-mou-to-transform-lums-into-a-cash-2397
http://propakistani.pk/2014/01/01/mcb-launches-mobile-wallet-a-single-solution-for-all-financial-needs/

http://www.etechcrunch.com/mcb-lums-signed-mou-mcb-lite-services/6370/
https://www.paywithisis.com/
https://salmankhwaja.wordpress.com/2014/04/08/whats-a-mobile-wallet/
http://www.amazon.com/Bank-3-0-Banking-Somewhere-Something/dp/1118589637

State Bank Quarterly Report
http://sbp.org.pk/psd/reports/2014/First-Quarterly-Review-FY13-14.pdf

Gallup Report
http://www.gallup.com.pk/Polls/Mobile%20Money%20Cyberletter.pdf

---

Author Bio:

Salman, Khwaja has served professionally in Pakistani IT Industry as a Technical content writer / author, Quality Assurance professional, Information Systems Auditor / Process Consultant and is now serving as a Release Manager. He is passionate on mobile technology, technological advancements in payment systems and providing consultation on various IT related problems. He has been consultant for The Tooba Foundation / Smile Savers as a Free Lancer. http://thetoobafoundation.wordpress.com/ and http://smilesavers.com.pk/

He has an M.S in Computer Science from Muhammad Ali Jinnah University and B.Sc. (Hons) in Management Information Systems from University of London. He can be reached at twitter handle @salmaankhwaja or you can follow his blog at https://salmankhwaja.wordpress.com/