2010 APAC Mobile Payments Outlook

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June 2010

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Table of Contents

Market Overview

Market Drivers
Market Restraints

19
21

M-payment Initiatives by Country

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8
10
12
15
16

Market Dynamics

Asia Pacific Market Snapshot

Revenue Forecasts
Mobile Payments Channels
M-payments Business Models
M-payments Value Chain

Australia and New Zealand

Bangladesh
Cambodia
China
Hong Kong
India
Indonesia
Japan
Malaysia
Pakistan
The Philippines
Singapore
South Korea
Sri Lanka
Taiwan
Thailand
Vietnam

24
25
28
30
31
32
35
37
40
42
44
47
49
51
53
54
56
4

List of Figures and Charts

List of Figures

M-Payments Market: Telenor Easy Paisa Pricing (Pakistan), 2009

43

List of Charts

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M-payments Market: Revenue Forecasts (Asia Pacific), 2006-2015

M-payments Market: Revenue Size, Adoption and CAGR (Asia Pacific), 2009-2015
M-payments Market: Percent of Revenues by Payment Channels (Asia Pacific), 2009 and 2015
M-Payments Market: Value Chain (Asia Pacific), 2009
M-Payments Market: Market Drivers and Restraints (Asia Pacific), 2010-2015
M-Payments Market: Remittance Information (Bangladesh), 2005-2009
M-Payments Market: Mobile FeliCa Handset Circulation (Japan), 2009
M-Payments Market: Service Expansion of Mobile FeliCa (Japan), 2004-2008

10
11
14
16
18
27
38
39

Definition
2010 APAC Mobile Payments Outlook illustrates an overview of mobile payments (m-payments)
market in the Asia Pacific region featuring the diversity of the various markets; including most
advanced markets such as Japan and South Korea to emerging markets such as Bangladesh,
Cambodia and Pakistan.
In this report, m-payment has been defined as the kind of payment that is initiated by the use of a
mobile device. It also includes various banking and remittance services that are provided via hand
phones to the unbanked in the relatively less developed markets. There are three key participants in
the mobile payment arena; financial institutions (FI) that include banks and other payment operators
such as Visa and MasterCard; the mobile operators and new intermediary players (mobile payment
aggregators, security providers).
The report consists of three parts. Part 1 elaborates on the market overview, market sizing and
revenue forecasts, payments channels, business models and the m-payments value chain, Part 2
discusses demand drivers and market restraints and Part 3 explores the various m-payments
initiatives taken by 18 of the Asia Pacific mobile markets.

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Market Overview

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Asia Pacific Market Snapshot

The outlook for Asia Pacific M-Payments market looks very positive driven the rising consumer
demand in both developing and developed markets. Moreover, the technology for mobile remote
payment has matured over the years with opportunities now beyond content downloads, pre-paid topup and electronic bill payment. While, for mobile operators, m-payments provides new opportunities to
drive additional revenue, such as payment traffic, the market is also accessible to banks and new
entrants.

Having one of the most advanced mobile cultures in the world, Japan and South Korea lead the region
in m-payments adoption. However, in sharp contrast to the latter market, the mobile payments services
in Japan are largely operator driven where financial institutions involvement remains partial if at all.

Despite having one of the highest mobile penetrations in the region, Hong Kong, Singapore and
Taiwan have shown little adoption of m-payments until now. Mobile payments in these markets are
primarily driven by the use of smart cards as opposed to m-payments. However, availability of shortrange high frequency wireless communication technologies such as NFC is expected to fast change
this scenario as dominant payment service providers have already begun providing contactless
payment services via mobile phones.

The relatively less developed mobile markets such as China, India, Indonesia and the Philippines,
where access to traditional banking services is highly skewed against the rural mass population, are
showing rapid take-up of mobile banking services including person-to-person (P2P) transfers,
remittance and so on. Also in in emerging market such as Bangladesh, Pakistan and Sri Lanka,
although limited to mostly SMS-based bill payment and micro credit transfers, m-payments services
are increasingly becoming popular. These markets also have a good potential for mobile remittance
services due to the large populations of workers residing in other countries.

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Asia Pacific Market Snapshot (Contd)

Until recently, markets such as Malaysia and Thailand had shown little adoption of m-payments with
services predominantly focused on bill payment and top-up services. However, this scenario is
expected to change in the near term having being driven by various operator initiatives, especially in
the usage of mobile wallet services that are intended to suit small-value payments in retail stores.

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Revenue Forecasts
The Asia Pacific M-payments market, which registered revenues of $1.58 billion in 2009, is expected
to exceed $3.63 billion by 2015, growing at a CAGR of 14.8% over the forecast period, 2009 to 2015,
driven by technology innovations, various operator initiatives and the rising consumer demand in
both the developed and emerging markets.
M-payments Market: Revenue Forecasts (Asia Pacific), 2006-2015
4,000

100
80

3,000
2,500

60

2,000
40

1,500
1,000

20

Revenue Growth Rate (%)

Revenues ($ Million)

3,500

500
0

0
2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

Year
Note: All figures are rounded; the base year is 2009. Source: Frost & Sullivan
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Revenue Forecasts (Contd)

Japan and South Korea lead the region in mobile payments adoption. In comparison, despite the high
mobile penetrations, markets such as Hong Kong, Singapore and Taiwan have shown little adoption so
far. The relatively less developed mobile market such as China, India and Indonesia and the
Philippines are showing rapid take-up mainly driven by bill payments and m-banking services such as
remittance.
M-payments Market: Revenue Size, Adoption and CAGR (Asia Pacific), 2009-2015
Revenue as Percent of Total Mobile Revenue

3.0

*Bubble size represents growth

2.5

2.0

1.5

Japan
South Korea

1.0

Hong Kong

0.5
Thailand

0.0
0.0

5.0

10.0

Taiwan

New Zealand
Malaysia Indonesia China

15.0

Singapore
Australia
Philippines

20.0

India

25.0

Revenue CAGR (%), 2009-2015

Note: All figures are rounded; the base year is 2009. Source: Frost & Sullivan
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11

Mobile Payment Channels

The following slides discuss the four primary models for mobile payments:

Premium SMS/USSD Based Transactional Payments

This system enables the consumer to send a payment request via an SMS or an Unstructured
Supplementary Service Data (USSD) to a short code and a premium charge is applied to their phone
bill or their mobile wallet. Such transactional payment system is used most widely in the developing
and emerging markets where 2G phones still dominate. The most often used technology because of
its ease of use and ubiquity, a major advantage of SMS is that it does not require investments in
mobile networks or user devices and can be implemented in a short period of time.
Due to various reasons such as poor reliability (transactional payments can fail if messages get lost),
slow speed (it may take some time for a merchant to get receipt of payment), lack of security, and so
on, this system is gradually being replaced by other mobile payment methods such as mobile web
payments (WAP) and Direct Mobile Billing in the relatively more developed markets.

Direct Mobile Billing

This Direct Mobile Billing system enables the consumer to make a bill payment using the mobile
during checkout at an e-commerce site, such as an online gaming site or a music portal. This method
typically involves a two-factor authentication involving a PIN and One-Time-Password, and
consecutively, the consumer's mobile account is charged for the purchase. This method is
convenient for digital content purchase as it may not require the use of credit/debit cards, and thus,
bypassing banks and credit card companies altogether.

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Mobile Payment Channels (Contd)

WAP
Using this system the consumer can make a payment through a set of web pages displayed or using
additional applications downloaded and installed on the mobile phone; WAP (Wireless Application
Protocol) is used as the underlying technology. Transactions using this method are comparatively
faster and more secure (WAP 2.0 provides transport level end-to-end security). It also offers the ease
of use from a familiar set of online payment pages. However, in most such payment systems, the use
of a credit/debit card or other online payment solution is still required.

Contactless Payments
Contactless Payments such as Near Field Communication (NFC) are used mostly in paying for
purchases made in physical stores or transportation services where a customer typically waves a
mobile phone equipped with a smartcard near a reader module. While most transactions do not, but
some may require an authentication using a PIN before the transaction is completed. The payment is
usually deducted either from a pre-paid account or charged directly to users mobile or bank account.
While this method faces significant challenges for wide and fast adoption in the emerging and
developing markets, mainly due to lack of supporting infrastructure, it is enjoying quick popularity in
the relatively developed markets. For instance, Mobile FeliCa, the Japanese equivalent of NFC, has
become the de-facto standard method for mobile payments in the country. NFC is also expected to
gain fast traction in markets with high mobile penetration but little adoption of mobile payments, such
as Singapore, Hong Kong and Taiwan, where the dominant payment services and financial
institutions are showing keen interest in deploying the technology, and already holding trials.

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Mobile Payment Channels (Contd)

M-payments Market: Percent of Revenues by Payment Channels (Asia Pacific), 2009 and 2015

2009

Contactless
Payments
12%

WAP
6%

2015

DMB
2%

WAP
7%

DMB
3%

Contactless
Payments
23%
SMS/USSD
67%
SMS/USSD
80%
Note: All figures are rounded; the base year is 2009. Source: Frost & Sullivan

SMS/USSD accounted for almost 82% of m-payment revenues in 2009. Driven by ease of use and
ubiquity, SMS will continue to remain as the dominant mobile payment channel.

Contactless Payments, which accounted for 12% of m-payment transactions in 2009, is expected to
increase this contribution to 23% by 2015. This particular channel is largely going to be driven by the
more technology advanced markets where take up of electronic payment (e.g. smart cards) is already
high.

WAP/Browser-based payments will remain to be a small contributor in the longer term. A major constraint
impeding adoption of the WAP channel, especially in the developing and emerging markets, is that many
users still perceive mobile internet as more expensive and remain concerned about high data charges.

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M-payments Business Models

This section outlines the dominant mobile payment business models prevalent in the Asia Pacific region
which include commercial transactions such as business-to-consumer (B2C) and private transactions
between individuals such as person-to-person (P2P). Although very popular models for online
transactions, business-to-business (B2B) solutions, which involve serving business process needs, and
consumer-to-consumer (C2C), which occur directly between customers across a common business
platform, still remain very nascent concepts for the mobile platform.

B2C
The mostly used business model for mobile payment, B2C rely on either an operator-centric or bankcentric model, and allows users to use their handsets to pay for groceries, movies, travel tickets,
insurance premiums, phone bills, tax bills, and so on. As opposed to P2P and remittance, which have the
greatest potential in emerging markets, this model is predominant in the developed markets such as
South Korea and Japan where mobile wallets have begun replacing cash and even debit/credit cards.

P2P
Although the exchange mostly occurs directly between two persons, P2P transactions usually require the
need for a commercial platform. Such transfers are usually SMS-based which may involve the transfer of
minutes or minute values, transfer of funds, or even digital barter such as virtual good. Once limited to
the gaming and virtual world amongst users in the relatively more advanced markets, the P2P model is
now showing quick success in the emerging markets. Remittance, which can be considered a subset of
P2P model, is enjoying phenomenal success in countries such as the Philippines driven by the
significant population of Filipino workers residing in foreign countries. The success of this model is
expected to soon catch up in other emerging markets such as Bangladesh, Pakistan and Sri Lanka
which also enjoy large foreign remittances coming into the country.

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M-payments Value Chain

The below diagram describes the relationship between the major participants in an m-payment
scenario:
The m-payment application service provider (MASP) acts as an intermediary between the financial
institutions and mobile network operators by providing the necessary technical infrastructure to
facilitative a transaction. It usually maps the mobile phone numbers of the customer and the merchant
to their respective bank accounts and maintains this information. The users are provided with a client
m-payment application or a mobile wallet which usually interacts with the MASP server.
M-Payments Market: Value Chain (Asia Pacific), 2009
SMS
Banks
Mobile
User

Mobile
Operator

USSD

WAP/GPRS

M-payment
Application Service
Provider (MAPS)
Merchant
Source: Frost & Sullivan

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Market Dynamics

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Market Dynamics
While recent developments in technology, various operator initiatives and the rising consumer demand
make the mobile payment proposition more realistic than ever before, there are some key development
areas that must be given attention to make mobile payments a wide success. The market drivers and
restraints are discussed in detail in the following slides.
M-Payments Market: Market Drivers and Restraints (Asia Pacific), 2010-2015
Banking the unbanked
Need for a viable business model
Ubiquity of mobile
Interoperability issues
Win-win for all participants
Security issues
Contactless payment a reality
Need for stringent regulatory frameworks
Activation/registration a hurdle
Source: Frost & Sullivan

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Market Drivers

Banking the Unbanked

Bringing financial services to the unbanked is one of the major drivers of mobile payment services in the
near term, especially in the emerging economies such as Bangladesh, Cambodia, India, Pakistan, and
so on, which remain predominantly cash-based societies. For the owners of small businesses or
microcredit borrowers, the list of risks and inconveniences in going to the bank and dealing cash is
endless, and hence, the solution most certainly lies in mobile payment solutions considering the mobile
take-ups in these markets are one of the fastest in the region.

Ubiquity of Mobile Phone Usage

Following the developed markets, most of which have reached mobile penetrations of well above 80%,
with some markets such as Hong Kong, Singapore and Taiwan even exceeding 100% penetrations, the
developing and emerging markets are also fast catching up. Despite the large populations, India and
China have reached penetrations of 34.7% and 52.7% respectively, and in markets such as Bangladesh,
Cambodia, Sri Lanka and Vietnam, mobile subscribers are still growing between 20-40% (Y-o-Y). In
sharp contrast, in some of these markets fixed-line penetration is even less than 1% (e.g Bangladesh).
Hence, as alternative payment methods and cashless payment services, the mobile platform is expected
to dominate in most markets.

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Market Drivers (Contd)

Win-win for All

A major driver in the adoption of mobile payment services in general is the business model that delivers
value to all players in the ecosystem. For mobile operators, mobile contactless payment can provide a
means to add value to their commercial offering with new services enabling new revenue streams such
as transaction fees, data traffic (mainly from over-the-air downloads) and even applications for providing
financial services. Moreover, providing such useful services may also help in creating customer
stickiness, and thus, reducing churn. As for banks, providing customers with mobile payment services
reduces cash handling (for micro-payment) and costs (plastic card issuing costs for macro-payment). It
also offers the opportunity to offer more interactive services, linked to online banking services, such as
providing credit at the point of purchase. For merchants: contactless payment helps to speed up
transaction time as well as generating more transactions, especially for small-value payments, and
reduces cash handling.

Contactless Technology is Already a Reality

There are millions of cards in circulation all around the globe, including credit cards, electronic purses,
access devices, travel tickets, and so on. In the transport sector, contactless cards for travel tickets are
already a reality. Obvious examples include Octopus in Hong Kong, powered by RFID, which is used by
95% of the people in the country. In the payment sector, Visa, MasterCard and Amex have already
established their own contactless protocols PayWave, PayPass and ExpressPay respectively.
According to MasterCard, there are now 51 million merchant locations worldwide that accept PayPass
payments.

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Market Restraints

Need for a Viable and Sound Business Model

M-payments solutions generally involve many different stakeholders; financial institutions, network
operators, merchants, and so on. Each of these players may have different incentives and strategies,
and in many cases, these may be in conflict. For instance, while the mobile operators would like to
maximize revenues through each m-payment transaction, customers and merchants, on the other hand,
would like to minimize the costs. Another issue is the lack of co-operation between the players,
especially between banks and mobile operators. While both parties have their specialty; banks having
the infrastructure and knowledge on financial transactions and mobile network operators having the
expertise on the network itself and the technologies; the strength of one is actually the weakness of the
other. Hence, the issue often remains as to which party should be playing the main role and getting the
bigger revenue share.

Interoperability Issues
In many markets m-payment solutions lack the needed technology standards that can provide a
universal mode of payment, and as a result, lot of local and fragmented versions of m-payments are
offered by the various stakeholders. In most cases, these different models, some of which are network
operator centric models while some are bank centric, are not interoperable due to lack of
standardizations. To combat this, in some of the developed mobile markets, the governments are proactively taking various initiatives. A good example is Singapore where authorities have outlined detailed
plans to work with banks, telcos and payment processors to set up an interoperable infrastructure for
contactless mobile transit and payments. The three operators, all the major banks and other financial
institutions including MasterCard and Visa, as well as the Ministry of Finance, Monetary Authority of
Singapore and Land Transport Authority have all agreed to collaborate on a system through a Trusted
Third Party (TTP) infrastructure.

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Market Restraints (Contd)

Security Issues
There is the common end-user perception that mobile payment solutions may be fraught with
insecurities. For widespread use and customer acceptance of m-payment services, both perceived and
technical levels of security should be high. Customers need to be assured that privacy is not going to be
compromised and that there should be no possibility of financial losses. A stringent framework needs to
be adopted by the m-payment service provider to guarantee confidentiality, integrity, non-repudiation and
authentication of each transaction.

Need for Stringent Regulatory Frameworks

Despite its potential, in most countries, m-payments lack the status of other payment instruments such
as cash, cheque, and so on, which are usually authorized, adopted and guaranteed by the government.
Due to unclear legal implications of transactions, financial institutions have also been slow in adopting mpayment services. As the regulations for players in the financial industry are different from those
governing the telecommunications industry, each industry having its own particular standards body, in
case of any fraudulent activity it may prove unclear which party is to be accountable. So until there is a
clear legal framework, security issues will remain hampering the overall adoption of mobile payment
services.

Activation/registration a Hurdle
Although not much of an issue for micro payment solutions which are usually simple SMS-based
transactions, the activation/registration process, which consists of linking payment credentials to the
mobile phone, remains to be an obstacle for macro mobile payment adoptions.

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M-payment Initiatives
by Country

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Australia and New Zealand

Despite the high mobile penetrations in the countries, the mobile payment markets in Australia and New
Zealand remain nascent. Both the countries boast very modern banking systems and almost everybody
in these countries has a bank account, and most banks are providing mobile banking services simply as
an extension of their online banking. These services are mostly limited to SMS allowing customers to
only request their account balance, view a mini statement or transfer money between their own
accounts. And since, these services are mostly provided free, the operators are not particularly
interested. In fact, the banks too are beginning to lose their enthusiasm on mobile banking. For
instance, according to Australia and New Zealand Bank (ANZ), it is planning to discontinue its mobile
banking service which currently contributes just 0.6% of its internet banking customers. ANZs mobile
banking service, M-Banking, which first appeared in a 2008 pilot, lets customers check account
balances, view mini statements, transfer money and receive alerts; majority of the features can be
accessed through its text and Internet services.
Despite some of the leading banks interest in providing contactless payment services through mobile
phones, such as National Australia Bank (NAB) and Commonwealth Banks earlier trials with NFC, any
such contactless payment service is yet become mainstream. Last year, in early 2009, NAB had been
trialing contactless payments via mobile phone, but however, the bank finally launched its contactless
payment services this year without the mobile payments feature. Instead, the service enables the
customers to make payments when they hold their bank cards, embedded with Visa's chip-based
payment technology, up to a reader at the retailers premise. Thus, the mobile payments in these
locations are expected to be driven primarily by the use of smart cards as opposed to m-payment via
handsets unless there is a significant incentive for consumers to switch.

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Bangladesh
In sharp contrast to the developed countries where people are doing away with carrying cash, thanks to
cheques, electronic funds transfers (EFT) or credit/debit cards, Bangladesh still remains a predominantly
cash-based society. According to The Bangladesh Bank, the central bank of Bangladesh, less than
13.0% of the citizens use banks, and hence, only 19 million bank accounts exist in a country of over 150
million population. While cheques are not trusted, EFTs and credit cards have not gained mass
popularity due to unavailability of the infrastructure; stories of customers walking out of banks and getting
robbed are more than common. Especially, for the owners of small businesses or microcredit borrowers,
the risks and inconveniences in going to the bank and dealing cash is endless. Hence, the solution very
much lies in mobile payment solutions considering the mobile take-up in the country is one of the fastest
in the region; 28.1% of the population already has access to mobile phones, and this percentage is
expected to increase to 47.6% by 2015.
Remittance transfer is another area where mobile phones are expected to play a significant role in the
country. Over the last year and a half, on average, Bangladesh received US$685 million per month in
remittance from abroad, sent by the approximately 6.2 million people who are currently officially working
as migrant workers, with more than 90% of them residing in countries in the Middle East and South East
Asia. The convenience of mobile payment could certainly make it simpler and safer to send or receive
the remittance money, saving trips to the banks for many.
Recognizing this need for mobile services for banking and payment services, the operators are already
actively deploying and promoting various m-payments solutions; while the leading operator
Grameenphone has recently launched a mobile rail ticketing service following the quick success it had
with its BillPay services that allows customers to pay for utility bills through mobile phones, the second
largest operator Banglalink has recently signed agreements with a number of banks for providing mobile
based remittance services.
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Bangladesh (Contd...)
BillPay - Grameenphone
BillPay is a technology driven service with a large distribution
network that allows customers to pay their bills. Telenor Group
mobile operator Grameenphone launched the service for the first
time in 2006 in a cooperation with the utility company Bangladesh
Power and Development Board (PDB), in a bid to simplify the bill
payment process. Having facilitated payment of 100,000 bills in
just 11 months of the service, BillPay has been gaining quick
consumer adoptions ever since.
Reach
Currently the service only handles utility bills. The customers can
use the service in two ways, either through an e-wallet, or by
visiting one of the 4,000 authorized BillPay centers.

An authorized BillPay centre

Source: Operator Website

Convenient and Safe

The traditional billing systems are manual, increasing the risk of
human error, and also inconvenient as subscribers often have to
take the bill receipt to the respective authorities to correct or
expedite the transaction, In contrast, as a fully secured payment
service which allows automatic bill payment data posting at the
utility company end, BillPay offers a more convenient and safe bill
payment alternative.
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Bangladesh (Contd...)
M-Payments Market: Remittance Information
(Bangladesh), 2005-2009

mRemittance - Banglalink

The operator expects to make the service available through

2,222 Banglalink cash points soon. Expatriates will be able
to send remittance through a convenient channel with access
to a large number of cash points. If the beneficiaries have
Banglalink mobile connections, they will be able to receive
the remittance directly in their mobile wallet accounts.
Otherwise, by receiving a secured and unique transaction
reference number from the sender, the beneficiaries will have
to go to the cash points with proof of identification and
request for the disbursement.

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12
10
Remittance ($ Billion)

Mobile remittance services have been launched by the

countrys second largest mobile operator, Banglalink, along
with two banks, Eastern Bank and Dhaka Bank. The three
companies will together provide mobile wallet service, and as
per the agreement, selected Banglalink distribution outlets
will be used as 'Remittance Disbursement Cash Points while
$2.16 (BDT 150) per transaction will be paid by the banks to
the operator.

8
6
4
2
0
2005

2006

2007

2008

2009

Source: Frost & Sullivan

27

Cambodia
Even though almost half of the 14.0 million population already has a mobile phone, less than half a
million Cambodians have a bank account, and this means, a significant segment of the population in the
country are left unbanked. This certainly holds a good opportunity for mobile operators and banks to
reach out to these unbanked customers with mobile financial services. However, the mobile payment
services in the country has, until now, remained very much nascent and the existing services provided
by the operators are mostly limited to mobile airtime recharge and transfers. Absence of regulations for
mobile payments in the country and very low English literacy rates (as a relatively small market for
handset manufacturers, there are very few handsets that have Khmer unicode capability) are some of
the likely challenges faced by service providers in bringing mobile payments mainstream.
A pioneer in the mobile payment market is WING Money, a wholly owned subsidiary of the leading
global bank ANZ, that was launched in January 2009. The service provides cash in, cash out, airtime
top-up and person to person payments - using a 10 digit pass code users are also able to send a small
amount of money to non WING customers. A key differentiator of the service is that it is operator
agnostic and thus works on any phone - in fact, customers without a phone can also avail the service
using their unique customer registration number and PIN even on a shared phone.

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Cambodia (Contd)
WING Money

Launched in January 2009 by ANZ following a two

month pilot period, whereby a small number of
customers completed transactional activity while WING
tested the systems and business processes.

Since the launch, WING has been actively increasing

its customer base through a mix of marketing and sales
activities. It currently has more than 150 points of
representation in Cambodia, and is represented in 16
of the nations 24 provinces.

The service uses the USSD channel to serve

customers and is currently in partnership with one
mobile operator, with more to follow shortly.

Source: Operator Website

The WING customer base is primarily the under and un-banked Cambodians, largely garment workers
and other rural customers who have traveled to Phnom Penh or other urban centers for work. WING
provides them an affordable and fast way to transfer money to their relatives. Apart from money transfer,
WING also offers other mobile banking services such as payroll and micro-entrepreneurial loans.

In urban centers, the company has focused on the large student population, providing them person-toperson transfer and airtime top-up services.

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China
Mobile payment market in China is still nascent with usage mostly limited to mobile phone charges and
mobile application purchases. The fact that different telecom operators and banks have been using
various technology standards has posed inconveniences to end users. According to MerryMart, a
supermarket chain in Beijing which upgraded about 25 percent of its point-of-sale machines to support
mobile payments, it saw very few take-ups, and lack of 3G handsets and the complicated transaction
process were considered to be among major reasons behind this. However, the above scenario is likely
to change in the near future as other types of payment services, such as NFC, which now remain in the
trial phases, hit the market. These contactless payment services would be able to provide customers
the needed convenience of simple but secured transactions.
A recent twist to the contactless payment market saw China Mobile, the largest operator in the country
by subscriber base, launch a proximity payment service based on RF SIM technology instead of NFC.
While, with increased signal strength, the operators 2.4GHz standard based on RFID is touted to be
more advanced than the traditional NFC, its adoption is likely to encounter some challenges as majority
of the POS terminals supplied by banks and other financial organizations use the 13.56MHz NFC
standard, which is not compatible with RFID-SIM cards. Nevertheless, NFC technology is likely to gain
more traction in the near future as China Mobiles rival mobile network operator China Unicom has
announced to launch a commercial NFC standard service by second half of 2010 in conjunction with the
local banks. Moreover, the major local credit card organization in the country, China UnionPay, which
has been testing SIM-based mobile payments across six provinces, also confirmed its commitment to
NFC last month with a major expansion of its NFC trials to three new regions Shanghai, Ningbo and
Changsha. Nearly 13,000 merchant terminals across these provinces have now been equipped to
support NFC-based contactless payments for supporting a wide range of mobile payments services.

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30

Hong Kong
Despite having one of the highest mobile penetrations in the world, m-payments adoption in Hong Kong
remains limited. Mobile payments in the country is primarily driven by the use of smart cards,
particularly the public transport smartcard called Octopus, as opposed to m-payment via handsets. The
Octopus system is now the dominant electronic cash system in the country which is used by almost
95% of the population, and according to Octopus Cards Limited, an average of 10 million Octopus
transactions take place every day, with a total value of $85 million HKD (US $11 million). The Octopus
card, which is powered by RFID, is used as a form of electronic payment in a wide variety of public
transport, shops, restaurants, car parks and so on. The card is even used as an access control
mechanism at certain offices, apartment buildings and schools.
This dominance of smart cards is also driving the financial organizations
to offer contactless payments to customers using smart cards rather than
through mobile applications. In January 2010, DBS Bank, together with
Octopus and China UnionPay, launched the DBS Octopus ATM Card,
combining the functions of ATM card with Octopus' contactless smart
card to offer customers the convenience of banking and payment with a
single card. Also, in December 2009, Visa announced an alliance with
the 7-Eleven convenience store chain in Hong Kong to offer contactless
Visa card acceptance at more than 950 of its shops in the country
though 1,600 Visa payWave terminals.
However, given the high mobile penetration in the country, and with the
advent of NFC technology on mobile phones in the region, a natural
progression of such smart card to be widely embedded on mobile
phones is very likely.
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31

India
After Reserve Bank of India (RBI), the central bank of India granted permission to transfer funds across
various mobile-phone service providers in mid 2008, quite a number of the banks, both public and
private, jumped in to adopt a mobile transaction platform. RBI has restrictions on non-bank involvement
in money transfer, and therefore, development of mobile financial services applications is being
sponsored primarily by banks in India. Currently ICICI bank reportedly has the highest market share of
customers for mobile banking (almost 40.0%), followed by HDFC and the State Bank of India with
14.3%.
Although ATM and internet banking have been around in India for some time, penetrations and usage
levels remained moderate. While ATMs offer convenience, they seem to pose a perceived security
threat in India given many instances of mugging around them. Internet banking, on the other hand,
relies on PC and Internet, but penetrations of both have remained very low in the country. In sharp
contrast, mobile phone penetration is much higher and is still growing rapidly. Hence, m-payment
services are likely to become the dominant cashless payment system in the near future.
Financial services companies are now already working with mobile payment players like mChek to offer
innovative mobile phone solutions targeting both urban and rural Indian population. While the early
adopters are expected to be higher income people, in the longer term, the lower income segment in the
country, that does not have a land line or bank account, are likely to drive the demand for mobile
banking and payment services in the longer term.

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32

India (Contd)
mCheck

The service links users mobile phones to their Visa/Mastercard credit or debit
card allowing them to make payments through mobile phones

Users can securely pay for their prepaid mobile phone connection, postpaid
mobile bills, flight tickets, insurance premiums, movie tickets, utility bill
payments, and so on

Reportedly has more than 250,000 users with 60,000 transacting customers
with 90% repeat usage pattern, and has processed more than $2.1 million (100
Million Rupees) of mobile payments since its launch in September 2007

Service now live in India with Bharti Airtel, Tata Indicom and Tata Docomo, and
in Sri Lanka with Dialog Telekom
Achieved the Payment Card
Industry's Data Security Standards
1.2 - a global standard to curb debit
and credit card fraud

Has recently been certified by

Western Union as a Mobile Money
Transfer Vendor

Source: Operator Website

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33

India (Contd)
ItzCash

Launched in 2005, ItzCash Card Ltd. can be considered to be among India's first "Multi Purpose
Prepaid Cash Card companies, and currently has tie-ups with more than 5000 merchants and this
number is constantly increasing

Cards are available in various denominations: from $2.1 (Rs.100) to $210.0 (Rs. 10,000), and are
available through an extensive pan-India network spanning 180,000 outlets, called "ItzCash Point.
Additionally there are close to 20,000 ItzCash franchisees branded as ItzCash world

Enables users to perform a variety of transactions; shopping, travel

booking, mobile top-ups, utility bill payment, and so on. The scratch
card has a 12 digit account number and a 4 digit password at the
back of the card, which are used for the necessary mobile
transactions

Currently has more than 7 million unique active users, processes

more than one lakh transactions daily (worth $1.7 million - $2.1
million)

Source: Operator Website

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34

Indonesia
According to a World Bank Access to Finance study, while 50 percent of Indonesian households hold an
account in a formal financial institution, access to banking services is highly skewed to urban areas;
only 2034% of rural households have access to banking services. In contrast, with mobile penetration
already at 67.2%, the mobile market still grew by 20% in 2009 as number of mobile users continue to
increase substantially in the suburban areas, towns and rural areas. While this holds good potential for
MNOs and banks to reach out to the unbanked population by providing financial services through
mobile phones, the mobile payment and banking services have remained nascent in the Indonesian
market, mostly being hampered by regulatory hurdles. For instance, a major issue is the KYC
regulations which designates a government-issued ID card, drivers license, or passport as valid
documents for KYC compliance, and in Indonesia, many of the poor people face challenges in having
access to these documents, and therefore, are excluded from financial access. This also means that
both the MNO and the bank must incur costs associated with customer acquisition, and such costs are
likely to climb as the partnership reaches further to new previously unbanked customers.
So far, only the two largest MNOs have each developed an e-wallet or mobile wallet service for their
mobile phone customers; Telkomsels T-Cash and Indosats Dompetku, but adoption has remained low.
Telkomsels T-Cash, a mobile wallet allowing customers to make retail payments, has less than 80,000
accounts and it is likely that the operator would abandon the service for a bank account-based
application in the near future. As for Indosat, the operator has not been able to qualify for a remittance
license, which it needs to add P2P transfer functionality to the mobile wallet service, Dompetku.

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35

Indonesia (Contd)
In Indonesia, until now, for mobile operators, providing mobile wallet services is aimed at simply to
reduce customer churn and to facilitate airtime purchases. On the other hand, some of the commercial
banks have rolled out m-banking applications as an additional transaction channel for existing clients,
for example, Artajasa provides its Bersama m-banking platform to 30 banks, but however, usage levels
still remain low.
With Indonesia market as an example, it is evident that simply a standalone bank-based model or an
operator-based model may not be enough to take mobile payment services mainstream, and that a
strong co-operation between the two cross-industry players is very necessary. In fact, some MNO-bank
partnerships are expected to surface soon, as for instance, Axis, which launched in March 2008 as the
fifth GSM mobile operator in the country, has already teamed up with Permata Bank to provide
customers m-banking services linked to VISA debit card. The operator hopes to sign up as many as
300,000 of its mobile-phone customers in the first year, and thus, Permata Bank also benefits as the
partnership increases its customer numbers at low acquisition costs. However, the two companies will
still have regulatory hurdles to overcome to reach into the unbanked population.

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36

Japan
Being one of the leading countries in mobile payment adoption, mobile proximity payment at point of sale
using contactless integrated circuit (IC) chips has become most prevalent in Japan. The country had its
first taste of contactless service way back in July 2004, when NTT DoCoMo, countrys largest mobile
operator, began deploying mobile devices containing FeliCa contactless IC chip that was developed by
Sony. In comparison, it is only in 2010 that the European equivalent of the technology, known as NFC
(Near Field Communication), is beginning to have its first commercial launches. The FeliCa chip makes it
possible for mobile devices to contain multiple forms of data including personal identification, bank
account numbers and balances, credit account information, transit passes, and so on. As a result, in
addition to facilitating remote payments, the service enabled users to use their device as a substitute for
cash and cards at vending machines and merchants points of sale.
In 2005, the two other major operators, KDDI and Vodafone (later acquired by Softbank), also adopted
FeliCa, and Osafu Keitai, the commercial name of this service in Japan, became a standard in the
Japanese market. Almost all mobile phones launched in the Japanese market are now equipped with a
contactless smart chip and many players provide a wide range of services.
In contrast to some of the other markets in the region, particularly South Korea, mobile payments
services in Japan are largely operator driven where financial institutions involvement remains partial if at
all. For instance, one of the most popular services for Osaifu Keitai mobile phones, Mobile Suica, is a
prepaid product that can be re-charged when the remaining balance gets low, and while other credit
payment services such as QUICPay and iD require credit card companies involvement, many such
credit card companies in Japan are not quite financial institutions. Instead, major retailers and
manufacturing companies issue credit cards that can be registered for mobile payments. A good
example is the NTT DOCOMO, INC. (DCMX), a consumer credit service that launched on April 2006; the
service bills users with their monthly DOCOMO phone charges.
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37

Japan (Contd)
Mobile FeliCa

FeliCa Networks, Inc. established in Jan. 2004, is a JV of

Sony (51%), NTT DoCoMo (38%) and East Japan Railway
(5%)
The mobile wallet contains multiple forms of data including
personal or business identification (ID) information, bank
account numbers and balances, medical information, credit
account data, transportation passes, and authorization codes
Japanese tradition dictates that a loyal customer should
benefit from a return on the part of the retailer, and this
arrangement packs Japanese wallets with loyalty cards.
Mobile FeliCa unified all of these loyalty cards on the mobile
The dominant retailers in Japan allowed for the installation of
Mobile FeliCa readers in thousands of points of sales across
the country. For example, Seven-Eleven, equipped all its
stores (11,847 points of sale) with nanaco readers, in the
span of 5 months

M-Payments Market: Mobile FeliCa Handset

Circulation (Japan), 2009
2009 Mobile FeliCa Handset Circulation:
65 Million
Others
15.4%
Softbank
Mobile
15.4%

NTT DoCoMo
53.8%

KDDI
15.4%
Source: Industry Sources

"Osaifu-Keitai" service

Source: Operator Website

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Japan (Contd)
M-Payments Market: Service Expansion of Mobile FeliCa (Japan), 2004-2008

Source: Operator Website

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39

Malaysia
The mobile payments market in Malaysia, uptake of which has been limited until recently with existing
services predominantly focused on bill payment, is now gaining some momentum as it is gradually
moving into m-wallet services, remittance and top-up/transfer offerings, largely being driven by various
operator initiatives. For instance, Maxis, along with Maybank in Malaysia, is providing a m-banking
service for subscribers (bill payment, balance enquiries, fund transfers), and can be used to top-up
Maxis accounts, download content and pay for products such as movie tickets. The operator recently, in
collaboration with Nokia, Visa, Maybank and Touch 'n Go, also has announced the launch of Maxis
FastTap, an integrated mobile payment service that utilises Near Field Communication (NFC)
technology. With the service, customers can use their Nokia 6216 Classic phones to purchase goods
and services at more than 1,800 Visa payWave merchant locations as well as pay for toll, transit,
parking and theme park charges at over 3,000 Touch 'n Go points nationwide. Maxis has also now
begun providing international remittance services with Globe subscribers in the Philippines by which
customers are charged less than half of what the banks charge for sending money overseas.
The international remittance sent out from the significant migrant worker population living in Malaysia is
certainly a lucrative business for the operators to target as this segment of the population also has high
mobile phone penetration rates (more than 90% for all migrant groups). Maxis has recently partnered
with Western Union enabling its subscribers to send money across borders. Another operator, Digi, with
its banking partner Citi's Global Transaction Services, is also providing similar services, however, its
remittance business is mainly focused on Indonesia.

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40

Malaysia (Contd)
A few non-operator companies are also entering the Malaysian market with various m-payment solutions.
A good example is Mobile Money International (MMI), a small Malaysian company that focuses on
enabling m-transfer functions (limited m-banking or m-wallet services). MMI has some 12,000 partner
merchants, one of the largest partner being Tenaga Nasional Berhad (TNB), countrys main energy
provider company.
Mobile Money (MM Wallet)

A PIN-based mobile payment Solution designed by Mobile Money International Sdn Bhd to address the
limitations and bottlenecks created by cash, cheques and credit cards

Allows registered users to pay for goods and services through a mobile phone coupled with a 6-digit
security PIN via SMS. They can place online orders without the need to disclose their credit card
information

Users must have either a savings, current or credit card account with participating banks. It functions
like a credit card if a shopper applies for a "Pay by Mobile Phone" credit card account (eg Hong Leong
Mobile Credit Card). The user will be billed by the bank accordingly at month's end

In addition, it can also function as a debit card if it is tied to the users savings or current account. The
amount will be deducted from the users account upon successful transaction

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41

Pakistan
Pakistan is a country with a very high percentage of people without access to basic financial services
such as having a bank account, and hence, it is still a predominantly cash led economy. In
comparison to more than 97.0 million mobile subscriptions (as of 2009 end), the number of bank
accounts remain less than 30 million which presents an immense opportunity for the mobile industry
to add value by providing financial services to the un-banked. In fact, currently one of the major
objectives of the countrys State Bank is to work towards financial inclusion of masses and
consequently reaching out to those who are still outside the realm of financial services. In order to
achieve this, the organization has authored guidelines for both mobile and branchless banking that
are likely to prove instrumental in steering the banks and other relevant parities in the desired
direction.
However, while the country is taking substantial strides towards the development of Mobil banking
industry with series of mobile payment services and solutions entering the market, the necessary spirit
of partnerships between banks and telcos seem to lack in general. Currently there is fierce
competition between telcos and banks; all trying to maximize their share of the m-commerce
opportunity, and resultantly, a number of mobile banking solutions have emerged; some have been
launched by the banks, such as MCB Mobile, and some by the telcos, such as Telenors easypaisa.
The operators have even gone to the extent of acquiring financial institutions; there was the Mobilink
acquisition of Innov8 and Tameer Banks acquisition by Telenor Pakistan. While banks have the
experience to provide necessary QoS assurance, operators have a much wider reach, but unlike the
prior, they can be challenged by the lack of connection to existing payment networks. Hence, for
mobile payment services to become mainstream in Pakistan, strong co-operation is very essential
between the two cross industry players.

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42

Pakistan (Contd)
Telenor Easy Paisa

In October 2009, Telenor Pakistan and Tameer Microfinance

Bank together announced the launch of Easy Paisa.

By definition, Easy Paisa Mobile account is similar to a bank

account that customers can manage through their cell phones,
without the need of having a bank account. As of now,
customers can pay bills, transfer money domestically,
internationally and even can save money in their Easy Paisa
Mobile Account.

According to the operator, currently there are 2500 retail outlets

across Pakistan which will be increased in few months to 8000
retail outlets for bill payments and banking services.

Transactional Limits:

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Maximum Balance of $351 (Rs. 60,000) in the account at

any time

$117 (Rs.10,000)/day

$234 (Rs.20,000)/month

$1,404 (Rs.1,20,000)/year

M-Payments Market: Telenor Easy Paisa

Pricing (Pakistan), 2009

Source: Operator Website

43

The Philippines
The Philippines is recognized as a pioneer in providing mobile banking; more than 4.0 million users are
actively using their mobile phones for banking services such as deposits, withdrawals including
remittances or money transfer, bills payments, and loan payments. Filipino mobile operators such as
Smart Communications (Smart) and Globe Telecommunications (Globe) were one of the first worldwide
to start mobile money service; Smart started in 2001 through Smart Money, and Globe followed soon
after in 2004 with GCash. Smart and Globe are actively working with commercial and rural banks,
microfinance institutions (MFIs), non-bank financial institutions like pawnshops and non-government
organizations (NGOs). In fact, Smart has even been marketing its expertise overseas while Globe
joined forces with the United States Agency for International Development (USAID) through the
Microenterprises Access for Banking Services (MABS) program.
In the Philippines, while the greater portion of the population lives at or below poverty line and remains
largely unbanked or under banked, in contrast, there are over 60 million mobile phone subscribers 98%
of whom are on prepaid services. Hence, mobile banking services such as Smart Money and GCASH
have proven to be a great success enabling the operators to reach out to such lower income segments
providing them the benefits of reduced transaction fees and costs to send and receive money. For
instance, GCASH, which requires only a mobile phone and a one-time SMS-based registration, has a
minimal charge of U$0.02 (P1.00) per transaction. Subscribers can do their transactions at home
instead of traveling several kilometers to rural banks to pay or carry out their banking transactions.
The huge flow of remittances from abroad also offers a very attractive opportunity to the mobile
operators: and both Smart, through its service SMART Padala, and Globe, through G-cash, offers
remittance services. About 10 percent of the countrys 86m people work abroad, and the Philippine
Central Bank estimated international remittances to have reached US$17.3 billion in 2009.
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44

The Philippines (Contd)

SMART Padala

Touted as the worlds first International cash remittance service through text.

An SMS-based remittance service offered since 2004; generated 45,000 transactions in its first month.

Remittances are charged a 1 percent commission on all transactions, and subscribers pay $0.04 per
minute for airtime used in the transaction. This price is considerably less expensive than that of
traditional remittance services.

Available in more than 19 countries through its SMART Remittance Partners.

Also offers a domestic money transfer

service whereby Filipinos are able to
send remittance to the mobile of their
beneficiaries
anywhere
in
the
Philippines.

To encash, the reciever needs to go to

the nearest Smart Padala Center.
Alternative, the receiver can opt for a
Smart Money card which will allow them
withdraw cash in any Banco de Oro,
Expressnet
or
Megalink
ATMs
nationwide.

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M-Payments Market: SMART Remittance Partners

(The Philippines), 2009

Source: Operator Website

45

The Philippines (Contd...)

G-Cash

At participating remittance companies in the US, the UK, Australia,

and Taiwan, Filipino workers can send money via an SMS message
to Globe subscribers in the Philippines

The recipient can pick up the cash from any Globe Telecom store by
showing his mobile phone (with the SMS message) and a form of
personal identification

The remittance companies pay a commission to Globe of

approximately $0.97 per transaction, and the recipient, upon
collecting the money, is charged $0.21 for transactions below $21
(Php 1,000), or one percent of the transaction amount for larger
transfers

As of last year, 2009, Globes G-Cash subscribers had reached 1.04

million, and the G-Cash system was handling about $100 million per
day

G-Cash has a maximum transaction limit of $ 866.4 per day and a

maximum transaction limit of $2166 per month (both for incoming
and outgoing transactions). This is to comply with the Anti-Money
Laundering Act

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Source: Operator Website

46

Singapore
Despite being among the most mobile-penetrated countries in the region, similarly to Hong Kong and
Taiwan, Singapore has shown little comparable adoption of m-payments, and mobile payments in the
country is primarily driven by the use of smart cards as opposed to m-payment via handsets. Hence,
due to lack of significant incentives for consumers to switch, mobile payment solutions using the
handset failed to hit mainstream. However, availability of short-range high frequency wireless
communication technologies such as NFC is fast changing this scenario as dominant payment services
such as The Network for Electronic Transfers (NETS), DBS AXS and Singposts SAMs have begun
providing cashless payment services via cell phones.
The credit card companies and banks are also showing keen interest to jump on the NFC bandwagon.
For instance, MasterCard has recently announced plans to pilot a SIM+antenna NFC solution
developed by Gemalto, an international provider of security and cryptography, in the Singapore market.
For the trial, MasterCard is collaborating with DBS Bank, mobile network operator StarHub and EZ-Link,
operator of a contactless stored value card with over 20,000 acceptance points in Singapore including
public transport services and retail outlets. Participants in the trial will be existing holders of DBS and
EZ-Link Fevo MasterCards.
Strong government support has been instrumental in driving the NFC uptake. In February 2009,
Singapore became the first country to give the go ahead for the creation of a central Trusted Third Party
(TTP) designed to deliver a fully inter-operable, multi-application national NFC ecosystem. The creation
of Singapores national TTP is being managed by the Infocomm Development Authority (IDA), a
government agency that formed a roundtable group of banks, mobile network operators and transit
companies in January 2008 with a view of putting together a national plan for the introduction of NFC.

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47

Singapore (Contd)
Moreover, in April 2009, IDA announced the availability of funding to help
grow the installed base of contactless terminals in food courts, coffee shops,
fast food outlets, convenience stores, vending machines, and so on. In the
early stages of NFC adoption, IDA expects the annual revenue from NFC
mobile payments and advertising to amount to $43 million for Singapore,
and of course, with the maturity of the technology and services, the potential
annual revenue will grow as more services are deployed.

MasterCard PayPass application on chips

with flexible antennas that fit into phones.
Source: Operator Website

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48

South Korea
Having one of the most advanced mobile cultures in the world, South Korea precedes even Japan in
introducing mobile payment services. The two leading operators, SK Telecom and KTF, had launched
their respective post-pay mobile proximity payment services, Moneta and K-merce, way back in 2002.
However, these services were unable to get much traction due to various reasons. Firstly, it was much
inconvenient for users to scroll through a series of handset menus to complete a transaction, and then,
merchant point of sale readers were not interoperable with the carriers devices. And, most importantly,
either of the services were unable to trigger much interest from banks and other financial institutions as
the mobile operators demanded relatively a large share of the transaction revenue.
A change in the market eventually brought on by the third-largest mobile operator, LG Telecom, which
partnered with Kookmin Bank, one of the leading banks in the country, to launch BankOn in 2003.
Touted as South Koreas first IC chip-based mobile banking service, unlike Moneta or K-merce, BankOn
enabled its customers to use their mobile devices as a substitute for an ATM or transit card. Following
the success of BankOn, due to which LG Telecom was able to increase its market share significantly,
the other operators and banks also started offering mobile banking services using IC chips. SK Telecom
collaborated with smaller banks and launched MBank with dual-chip technology, a part of the chip
containing account information is controlled by the Bank while the other part is controlled by SK
Telecom which contains information on its Moneta payment product. KTF also launched a mobile
service, KBank, however, unlike SK Telecoms MBank, the service adopted a single chip technology
allowing the partner banks to issue and control the IC chips.
Since early 2006, other contactless solutions from Visa (Wave) and Mastercard (PayPass) have also
emerged. These services allow the users to insert a SIM-sized credit card certified by the card
organizations into their mobile phones enabling proximity payments.
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49

South Korea (Contd)

T-Cash

The mobile wallets are used for paying bus, subway and taxi fares, buying items
at 24-hour convenience stores, and paying for parking at a number of major
facilities such as Seoul Station, Gimpo International Airport and Seoul World Cup
Stadium

Payment Extended Online now accepted as payment at 11th Street, an online

retail and auction site operated by SK Telecom and Cyworld

Since launching the service in early 2009, SK Telecom reportedly gathered more
than 200,000 users of T-Cash

Service allows automatic recharging connected to credit card. When the

remaining amount on the card falls below the set-amount, the pre-set credit card
will automatically recharge it on the phone

M-commerce Potential- In December

2009, SK Telecom picked up 49% stake
worth $350 million in the credit card unit of
Hana Financial Group (Hana Bank is the
third largest bank by asset value in South
Korea). This is likely to facilitate growth in
mobile payment options
Source: Operator Website

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50

Sri Lanka
Having a reputation of being a trendsetter in the region vis--vis information communication
technologies, especially in the mobile arena, the island country had the first taste of mobile payments
services way back in October 2002, when Celltel Lanka, countrys first mobile network (recently
acquired by Etisalat), had launched the CellWallet. The CellWallet provided encrypted electronic
storage for information pertaining to a user's credit cards, debit cards, bank accounts and other personal
data, allowing the user to issue payment instructions from his or her mobile phone, without having to
transmit such sensitive data 'over the air' for each transaction.
Foreign players have also begun to enter aiming for a share of the countrys lucrative mobile financial
market. PayMate became the second Indian mobile payment company to enter Sri Lanka: the company
tied up with Bank of Ceylon (BOC) for enabling utility bill payments via SMS. Prior to Paymate, MChek
had tied up with Dialog and NDB Bank. Given this increased usage of mobile phones for financial
transactions, in order to boost public confidence in electronic payments, Sri Lanka's Central Bank is
currently working on new regulation policies for mobile payments by giving specific authority to the
Central Bank to regulate and supervise such service providers.
Several Sri Lankan banks have already tied up with mobile phone companies to launch payment
services for m-commerce. As mentioned earlier, state-run Bank of Ceylon launched a payment system
based on text messages developed by India's PayMate. Dialog Telekom and NDB Bank launched a
service called 'eZ Pay', which can be used to settle utility bills, engage in mobile banking or top up prepaid phone cards. Commercial Bank also has a service branded Com-e-load which offers bill settlement
for a number of telecom operators and other facilities.

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51

Sri Lanka (Contd...)

The huge Sri Lankan population working abroad are also a lucrative target for mobile operators to offer
services such as mobile remittances. Planning to launch mobile banking operations by end of this year,
Etisalat Sri Lanka is now in talks with banks to offer financial services on mobile phones, such as
money transfers for migrant workers in the Middle East. There is a significant Sri Lanka population
working in the Middle East market where Etisalat group has a strong presence.
PayMate
PayMate, which already has a payments network in India with over 3000 online
and 12000 offline merchant partners, expanded to Sri Lanka in 2008, by
partnering with the Bank of Ceylon. The service lets users to link their mobile to
an existing bank account, credit card or pre-paid account and use the mobile to
make payments through SMS
Key Features
Available across all GSM and CDMA operators
Enhanced risk-control through 2-factor authentication over IVR; does not require
the user to save PIN on the handset or in any application
Banking-grade data security with PCI-DSS 1.2 certified systems
Enables non-credit card holders to transact online via bank accounts & vouchers
Source: Operator Website

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52

Taiwan
Taiwan is another Southeast Asian market which shows little adoption of mobile payments services
despite the high mobile penetration of 110.9%. Similar to Hong Kong and Singapore, contactless
payment services in Taiwan too are expected to be dominated by the use of smart card. Taiwans
EasyCard payment system, originally used to pay public transportation fares, since April 2010 enables
users to make contactless payments at participating stores nationwide. The cards, an estimated 12-13
million of which are in circulation currently, feature a maximum storage value of $314.5 and a daily
spending limit of $93.4. Among the 10,000 participating retailers are 7-Eleven, FamilyMart, OK-Mart, HiLife, Starbucks, Wellcome and Matsusei supermarkets, Pizza Hut, Dominos Pizza and many others. In
contrast, despite some early trials of NFC by the countrys leading operators in introducing services
through mobile phones, such contactless payment on handsets are yet to be launched commercially.
The countrys second largest mobile carrier in terms of subscribers, in conjunction with MasterCard
PayPass services, had launched a service trial way back in February 2007, and was expected to rollout
NFC nationwide by 2008. Although, there has yet to be a rollout, post-trial surveys did show that more
than 75% of respondents preferred the phone payment to conventional credit cards, according to
MasterCard. Visa has launched a mobile contactless payment trial involving 500 customers of
Chunghwa Telecom Chunghwa Telecom, the leading Taiwanese mobile operator, Chinatrust
Commercial Bank and Nokia. The leading operator, Chunghwa Telecom, which was also unable to
realize its earlier plans to rollout NFC as early as 2008 or 2009, yet continues to work on the
technology. Among the many trials the operator had with NFC, a particular one which ended in January
2010, involved distributing two BenQ NFC phones apiece to up to 3,000 families in apartment
complexes letting residents to use the phones as an electronic door key, paying for train and bus tickets
with EasyCard contactless fare-collection application, and so on.

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Thailand
Keeping pace with the increasing mobile subscribers, usage of mobile payment systems in Thailand
have been increasing dramatically as all the major operators are deploying payment services. For
instance, True Money, an electronic-payment provider under True Corporation, which had been offering
an electronic wallet (e-Wallet) for more than three years, has recently launched a new kind of mobilepayment service called Touch SIM, after year-long trials involving 20,000 selected users. While the
existing e-Wallet offers online payments and is suitable for larger amounts, the new service, Touch SIM,
is an offline payment that suits smaller amounts of up to $6.17 per transaction. True Money currently
has around 5.6 million e-Wallet users which makes nearly half of its 14 million subscribers.
mPay is another operator driven service that has been enjoying high adoption, exhibiting growths of 30
to 40 percent per year, over the past two years. Advanced mPAY, an electronic-payment provider
owned by Advanced Info Service (AIS), the largest mobile operator in the country by subscribers, has
linked up with Tarad.com, Thailands leading e-marketplace provider, to extended its mobile payment
service for payments for products and services purchased from online merchants at the Tarad.com. The
company hopes to attract around 20 per cent of all 150,000 online merchants trading at Tarad.com to
adopt mPAY as their payment channels, whereby online merchants will be charged $0.15 per
transaction. According to the company, during the first half of 2009, customers' use of mPAY services
increased by 30 per cent over the previous year, with more than 3.3 million financial transactions being
made every month.

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Thailand (Contd)
Meanwhile, DTAC, which is also providing mobile-payment services through its ATM SIM in partnership
with KASIKORNBANK, has a slightly different approach. The aim of ATM SIM is to generate more
revenue for DTAC airtime rather than generating revenue from financial transaction fees, and thus,
rather than offering the payment service itself, the operator offers it through the Kasikornbank. After
being launched in March 2008, with a combined marketing budget of over $2.5 million from both
companies, 150 subscription booths, 100 mobile service units and 1,000 staff members, ATM SIM was
able to attract about 1.1 million subscribers in less than a year. With subscriber number hovering around
1.3 by the end 2009, Money transfers via DTAC ATM SIM amounted to about $170 million per month,
the average amount per transaction being $308.
ATM SIM

Service introduced in March 2008

Users can pay monthly dtac phone charges, top up prepaid

accounts, pay the bills of KASIKORNBANK credit card
accounts and pay for other services

The service was touted as Thailands first and only service

that enables customers to use ATM services via their mobile
phones

Customers can check their bank balance, make transfers

and payments and be informed of their payment deadlines.
However, customers are not able to do cash withdrawal
Source: Operator Website

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Vietnam
Although still a nascent market, prospect of m-payments, particularly in the areas of bill payment and mbanking services, seems bright for the Vietnam market. Firstly, the country has a population of over 86
million of which only 10% has bank account and only a small number of people have credit cards.
Secondly, the existing distribution models, large portion of which is delivered via scratch-cards, is
considered to be inefficient due to high production and distribution cost. Hence, the mobile payment
platform, considering that a good 70% of the population have access to a mobile phone, may seem
ideal for small value transactions such as retail purchase, refill of prepaid mobile airtime, lottery tickets,
and so on.
In Vietnam, m-payments services are mainly led by intermediary players. VinaPay is one such provider,
in fact, having launched services was back in 2006, a pioneer in the mobile payment market. The
provider focuses on providing a mobile top up & payment platform that offers electronic transaction
services to mobile operators, banks, retailers and end-users. Ecapay Vietnam is another such provider
which allows consumers to be able to send or receive money by using their mobile phone and the
internet. Ecapay has over 2,000 distributors in 35 cities across Vietnam enabling end-users to top-up
their Mobile Wallet for online purchases and for purchasing prepaid mobile airtime.
In addition, some Vietnamese banks have also started providing mobile banking services, but however,
these services are mostly free and offered as a value-added service to their existing customers. ANZ
Vietnam was among the first banks to have launched mobile banking service in the country, back in July
2008. It introduced a free mobile banking service enabling account holders to monitor their accounts
and even pay bills or send payments via text messages.

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About Frost & Sullivan

About Frost & Sullivan

57

Who is Frost & Sullivan?

The Growth Consulting Company

Founded in 1961, Frost & Sullivan has over 45 years of assisting clients with their decisionmaking and growth issues

Over 1,700 Growth Consultants and Industry Analysts across 32 global locations

Over 10,000 clients worldwide - emerging companies, the global 1000 and the investment
community

Developers of the Growth Excellence Matrix industry leading growth positioning tool for
corporate executives

Developers of T.E.A.M. Methodology, proprietary process to ensure that clients receive a 360o
perspective of technology, markets and growth opportunities

Three core services: Growth Partnership Services, Growth Consulting and Career Best Practices

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What Makes Us Unique

Exclusively Focused on Growth

Global thought leader exclusively focused

on addressing client growth strategies and
plans Team actively engaged in
researching and developing of growth
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aggressive growth objectives.
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360o Perspective

Proprietary T.E.A.M.TM Methodology integrates

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Working closely with client Growth Teams

helping them generate new growth initiatives
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T.E.A.M. Methodology
Frost & Sullivans proprietary T.E.A.M. methodology, ensures that clients have complete 360 Degree
Perspective from which to drive decision-making. Technical, Econometric, Application, and Market
information ensures that clients have a comprehensive view of industries, markets and technology.

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Global Perspective
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Over 10,000 clients worldwide from emerging to global 1000 companies

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