Executive Session: MasterCard Tells All on New Mobile Money Deal

Late last week, MasterCard announced that it had forged a new partnership to deliver mobile money services to 2.5 billion underserved customers. Today, Mobile Group Executive Mung Ki Woo explains how this new effort will reshape the global payments marketplace for consumers.

What key problems are MasterCard trying to solve with this partnership program?

In emerging markets, where only a small proportion of the population is banked, the banking infrastructure is not well developed (low number of branches, ATMs, card-accepting merchants). As a result, mobile telecom operators, supported by banks, have deployed “mobile money” service around the globe.

For millions of consumers, most notably in Africa, Asia, Latin America and Eastern Europe, these mobile money programs are helping to ensure access to safe and convenient forms of financial services. Yet, the mobile money programs launched by wireless carriers/telcos have largely remained closed loop, offering consumers limited capabilities to make payments, most notably mobile top-up, bill payment and P2P payments within the network only.

Through an open loop solution, MasterCard, along with Comviva, Sybase 365 and Utiba, are working to enable consumers to purchase goods and services via their mobile phones at millions of physical and online merchants worldwide, as well as transfer funds and pay bills.

Current launch partners’ mobile money solutions are installed or being deployed in more than 200 telecommunication operators and banks across the globe covering more than one billion consumers.

Why did MasterCard choose to partner with Comviva, Sybase 365 and Utiba?

We feel the partnership model provides us with more flexibility, increased opportunities for innovation, and better supports the entire ecosystem in addressing financial inclusion within emerging markets. Whereas other companies have chosen a different path, we see partnership as our best investment, and the next logical step to further expand our presence in the mobile money space, and Comviva, Sybase 365 and Utiba are key strategic platform partners to implement this vision.

Who are the other players in the space that you’re working with, or speaking to about the Mobile Money Partnership Program?

We are speaking with global, regional and local platform providers, service providers and application developers serving the Mobile Money market.

What is the current mobile money opportunity worldwide?

Mobile payment is being adopted all over the world in different ways. According to Juniper Research*, the combined market for all types of mobile payments is expected to reach more than $600B globally by 2013, double the current figure.

What is MasterCard’s mobile money footprint?

• In 2010, MasterCard and Smart Hub of the Philippines, one of the pioneer markets in Mobile Money, entered into a joint venture to mobilize MasterCard payment solutions for consumers around the world. The Mobile Payments Solutions JV allows banks, merchants and mobile network operators to quickly and cost-effectively provide customized mobile solutions to unbanked consumers.

 

• Since launch, solutions have been deployed in Brazil, Turkey and the Philippines.

 

• In 2011, MasterCard and Telefonica entered into a joint venture to lead the development of mobile money in 12 countries in Latin America where Telefonica is present with the Movistar brand. Telefonica has 89 million subscribers in these 12 countries, which include Argentina, Columbia, Chile, Ecuador, Guatemala, Nicaragua, Mexico, Panama, Peru, El Salvador, Uruguay and Venezuela.

 

• In 2011, MasterCard and Telefonica also announced the creation of a joint venture to offer mobile financial solutions for 65 million Vivo consumers in Brazil. The initiative will create a mobile wallet allowing consumers to make payments via their mobile phones as well as transfer funds, pay bills and make online purchases.

 

• Also in 2011, MasterCard, Airtel Africa and Standard Chartered Bank launched the world’s first virtual card which operates off a wallet residing on a mobile phone; as a result, the companies were honored for Mobile Payments Innovation at Mobile World Congress. This innovative payment method, known as PayOnline, offers consumers in Kenya (with plans to expand throughout Africa) the opportunity for greater participation in the financial system as they realize the benefits of mobile commerce.

 

How does mobile money fit into MasterCard’s overall mobile strategy?

Mobile money is one of the integral pieces of MasterCard’s mobile strategy and the main approach for financial inclusion of the underserved. For more than a decade, MasterCard has led the transformation of mobile phones into secure mobile payment devices. We have pioneered the development of unique mobile information services to facilitate and promote commerce, and we continue to be a champion of global mobile payment standards. We continue to develop technologies and offerings in conjunction with various partners in the ecosystem, as we feel the partnership model provides us with more reach, flexibility, increased opportunities for innovation, and better supports the entire ecosystem.

What is the timeline for this announcement?

We have already begun work with Comviva, Sybase 365 and Utiba to engage telcos and banks in discussions regarding open loop system migration.

What is the benefit of an open-loop system for the end consumer?

The mobile money programs launched by wireless carriers/telcos and supported by banks have largely remained closed loop, offering consumers limited capabilities to make payments, most notably mobile top-up, bill payment and P2P payments within the network only.

Through an open loop solution, consumers are able to purchase goods and services via their mobile phones at millions of physical and online merchants worldwide, as well as transfer funds and pay bills

Can you confirm regions that are supported by this partnership program?

In emerging markets, only a small proportion of the population is banked and the banking infrastructure is in most cases not very well developed (low number of branches, ATMs, card-accepting merchants). Mobile Money creates new payment opportunities for existing account holders and addresses the needs of 2.5 billion global consumers who are underserved or unbanked. The MasterCard Mobile Money Partnership Program will look to address financial inclusion in Africa, Asia, Latin America and Eastern Europe.