its been busy folks, I am definitely earning my keep! I will try and be around more.
J
J
Tuesday, October 25, 2011
NFC demystified(?)
NFC is such a wonderful thing. It involves "it all", drama, politics, sex, drugs and rock'n'roll but for me more importantly real product development.
I think everybody has heard about NFC being standards driven, well turns out its not - surprise, and my guess is that its the single reason we are not seeing deployed NFC in large commercial scale already.
I could take a quick jab at all the renowned vendors in the space whom are all trying to tie down the marketplace to their specific solution creating a technology based monopoly, but I will try not to - this time.
The issue is fundamentally that wireless operators and banks buy 'stuff', very rarely build it, and when things are not standard, its really hard to buy, since decision making becomes hard to do.
I love mobile payments, but I wish that all this nonsense would stop and banks and MNO's just get to work driving the solutions forward, lets break some windows - industry!
I think everybody has heard about NFC being standards driven, well turns out its not - surprise, and my guess is that its the single reason we are not seeing deployed NFC in large commercial scale already.
I could take a quick jab at all the renowned vendors in the space whom are all trying to tie down the marketplace to their specific solution creating a technology based monopoly, but I will try not to - this time.
The issue is fundamentally that wireless operators and banks buy 'stuff', very rarely build it, and when things are not standard, its really hard to buy, since decision making becomes hard to do.
I love mobile payments, but I wish that all this nonsense would stop and banks and MNO's just get to work driving the solutions forward, lets break some windows - industry!
Wednesday, June 8, 2011
New Role, New Perspective
As I begin my new role in a product space, where innovation meets BAU more so than in probably any other segment, I am realizing a couple of things - very few people in the world understands the inherent value of a UAstring or an HLR!
Obviously I am not writing this to state the obvious, nor does any really care - except for the folks working with these concepts daily - but it may be a symptom of a bigger disease.
I have worked as an entrepreneur in a small startup, intrapreneur in a larger organization, I have worked with banks, for banks, with carriers and now for carriers, and despite the fact that there are folks in these organizations that knows everything about the infrastructure deployed, these folks are few and far between, and they are never exposed to daylight, even though these guys are the gurus of their business.
This means that in products/services where KYC meets Sigtran these larger than life organizations have a hard time getting their heads around the implications, mostly because they cant get their heads around how their own infrastructure looks like, and lets face it, if that is the barrier then we wont move the needle. Worse yet, its actually quite complicated to explain all these delicate technical nuances which can determine success vs. failure
Innovation is a mindset and a risk profile - and mobile payments is exactly that - a mindset and a risk profile.
Billions of dollars in core business is at stake and billions of dollars in net new business from both customer acquisition as well as disintermediation opportunities - and if you cannot innovate of adjust your risk profile to accommodate this change, it will be hard to keep track, let alone play a part.
I am sure that 2011 will be a great year in mobile financial services in Canada and I look forward to #winning with the team
Tuesday, April 19, 2011
Payfone, Amex - bubble investment
I am guessing that everybody saw that Rodger Desai and Payfone pulled of a killing with Amex, Verizon and some other folks. Amex made a strategic investment into Payfone under the pretense that Payfone would become the default one-click mobile checkout allowing end users to purchase products using their carrier bill while Payfone would be leveraging the 'SS7' layer for recon and settlement of these funds.
The following is a couple of except from the press release that dropped upon the large investment.
"On the other hand, Payfone operates on a unique IP that focuses on steering the merchant sales conversion and earning revenues while ensuring an anti-fraud processing by checking with the carrier upfront, thereby delivering an authentic payment service."
"Currently, though there are 5 billion global mobile phone users, only 2 billion of them use credit cards. This again leaves a big gap to be bridged, which widens the scope of growth for card companies"
This is funny stuff - and very nondescript isnt it - I am sure that even a seasoned spin doctor would be scratching his head - 'what now?'
A couple of things spring to mind when I read this:
a. Who ever wrote this cant describe what they are doing in a clear and rational way
b. they indicate that they can bridge the global non-card based phone population (i.e. prepaid)
The 'unique IP' payfone has is off the shelf integrations into Belgacoms, TSYS, Sybases of the world, its really not that unique, in fact the integrations are probably priced (with labor and all) at around $10-30k per integration, and most likely 2-3 can cover the globe). Now what they do have, I believe, is some SS7 infrastructure in place sitting on some obscure MNO rack on say the isle of Jersey in the British channel. I happen to know that Payfone during their sales pitch tried to peg themselves as an MNO because of said infrastructure.
For somebody who doesnt understand this MNO setup it may sound very complicated, however these obscure MNOs on the isle of Jersey have such a low consumer base that they sell their infrastructure to enterprises around the world - this is an of the shelf offering for Jersey telecom and is not hard to get. Once you have that commercial relationship in place with ex. Jersey telecom the Jersey telecom's combination of commercial agreements with other operators and the SS7 network gives some unique capabilities including HLR/VLR lookups, EMEI and IMSI correlation incl. in some cases BST triangulation - again great features, and unique in the sense that Payfone decided to leverage this in payments, but not exactly Payfone's 'unique IP'.
Secondly the gap that Payfone proposes that they can bridge with this SS7 infrastructure in order to include primarily prepaid customers around the globe encounters serious issues - not only will you have to do various auths. around a prepaid customer before they do a purchase ex. is the prepaid account active, does it have a credit line attached, are there minutes/currency paid onto the prepaid phone account (remember prepaid in the world of mobile, doesnt mean the same as prepaid in the financial sector) - but even more challenging is the fact that when these types of carrier billing actions take place, something called a CDR is delivered to the issuing carrier, these CDR files are very rarely delivered in real time - to explain that to a financial person - it would be like walking out of Best Buy with your new 42' LCD after swiping your debit card, except your bank wont know that you are buying anything until at best 1-2 hours later - and Best Buy wont really know if you have the money to pay for the TV - hardly a great model.
Outside of these couple of things there are a slew of other issues, but Tom Noyes touches on some of them on his recent blog post HERE
I am still in total dismay that payments people in the US randomly throws money after stuff without doing any sort of due diligence, in my opinion Dan Schulman and team did not do their homework and quite frankly in a world which is hurt from a recent recession that the tax payers globally paid for - that is not an acceptable behavior. On another note - hat of to Rodger Desai/Payfone (and I mean this in the most positive sense) who managed to raise around $30m before generating any commercial revenue. At the end of the day my comments doesnt matter all that matters is the perception that it was a good deal.
The following is a couple of except from the press release that dropped upon the large investment.
"On the other hand, Payfone operates on a unique IP that focuses on steering the merchant sales conversion and earning revenues while ensuring an anti-fraud processing by checking with the carrier upfront, thereby delivering an authentic payment service."
"Currently, though there are 5 billion global mobile phone users, only 2 billion of them use credit cards. This again leaves a big gap to be bridged, which widens the scope of growth for card companies"
This is funny stuff - and very nondescript isnt it - I am sure that even a seasoned spin doctor would be scratching his head - 'what now?'
A couple of things spring to mind when I read this:
a. Who ever wrote this cant describe what they are doing in a clear and rational way
b. they indicate that they can bridge the global non-card based phone population (i.e. prepaid)
The 'unique IP' payfone has is off the shelf integrations into Belgacoms, TSYS, Sybases of the world, its really not that unique, in fact the integrations are probably priced (with labor and all) at around $10-30k per integration, and most likely 2-3 can cover the globe). Now what they do have, I believe, is some SS7 infrastructure in place sitting on some obscure MNO rack on say the isle of Jersey in the British channel. I happen to know that Payfone during their sales pitch tried to peg themselves as an MNO because of said infrastructure.
For somebody who doesnt understand this MNO setup it may sound very complicated, however these obscure MNOs on the isle of Jersey have such a low consumer base that they sell their infrastructure to enterprises around the world - this is an of the shelf offering for Jersey telecom and is not hard to get. Once you have that commercial relationship in place with ex. Jersey telecom the Jersey telecom's combination of commercial agreements with other operators and the SS7 network gives some unique capabilities including HLR/VLR lookups, EMEI and IMSI correlation incl. in some cases BST triangulation - again great features, and unique in the sense that Payfone decided to leverage this in payments, but not exactly Payfone's 'unique IP'.
Secondly the gap that Payfone proposes that they can bridge with this SS7 infrastructure in order to include primarily prepaid customers around the globe encounters serious issues - not only will you have to do various auths. around a prepaid customer before they do a purchase ex. is the prepaid account active, does it have a credit line attached, are there minutes/currency paid onto the prepaid phone account (remember prepaid in the world of mobile, doesnt mean the same as prepaid in the financial sector) - but even more challenging is the fact that when these types of carrier billing actions take place, something called a CDR is delivered to the issuing carrier, these CDR files are very rarely delivered in real time - to explain that to a financial person - it would be like walking out of Best Buy with your new 42' LCD after swiping your debit card, except your bank wont know that you are buying anything until at best 1-2 hours later - and Best Buy wont really know if you have the money to pay for the TV - hardly a great model.
Outside of these couple of things there are a slew of other issues, but Tom Noyes touches on some of them on his recent blog post HERE
I am still in total dismay that payments people in the US randomly throws money after stuff without doing any sort of due diligence, in my opinion Dan Schulman and team did not do their homework and quite frankly in a world which is hurt from a recent recession that the tax payers globally paid for - that is not an acceptable behavior. On another note - hat of to Rodger Desai/Payfone (and I mean this in the most positive sense) who managed to raise around $30m before generating any commercial revenue. At the end of the day my comments doesnt matter all that matters is the perception that it was a good deal.
Wednesday, March 23, 2011
RIM, Apple, Google, AT&T and the drawn lines
I know, I know - its been a while, thanks for the emails seeking my great wisdom - hardly worth mentioning the deficit of emails I have actually received, but I know that I have been living in the hearts of you all :o) But the truth is that very little have made me think in mobile money recently - Visa has continued to make mistakes that will eventually cost them dearly, MasterCard has kept on understanding its role in the ecosystem and have therefore been a shining star, the operators have done nothing of note (Isis is still not worth noting) and we are just as far along on the NFC track as we where Jan. 1st - or are we?
A couple of really interesting things have happened recently though, and I am not sure how many people have noticed, but a change has happened on the NFC front.
Historically we had a war with 2 camps banks/payments enablers vs. carriers. The war was mostly about who owned the customer relationship and how the ecosystem got paid while still maintaining the integrity of the data that was being transported.
That war still has skirmishes, but another war has started, in fact it may have been going on for at least the last 18 months (which is the approximate delivery time for a chip going into production until its available in a phone), but it has been going on in the deep shadows and procurements halls of companies with obscure names like NXP, Inside Secure and Gemalto (amongst others) - this war manifested itself the other day with an article openly talking about the topic.
The issue is essentially around whether the future of mobile payments (proximity) will reside on the handset manufacturers domain, in this case called the Embedded Secure Element (eSE) or the carriers domain the UICC - which is a SIM card with a Secure element included (USE).
RIM who has been loosing market share like Nokia, are trying to regain control over its destiny by turning into a consumer accepted brand (like Apple) from being primarily an enterprise brand - and it has turned out to be a harder transition than they expected. One of the last frontiers is the eSE which, if they get that, would allow them to generate a new revenue channel but also allow them to offer new services to their enterprise customers ex. is access controls (fobs). for carriers its about not loosing yet another fight after the LBS and content fiascos.
The interesting thing is that the fight went from being about business models, to being about technology with a business perspective - normally its the other way around. First we fight about technology and then the business, but this time the operators got blindsided and RIM who is running an announced trial with Bank of America and a rumored trial with Isis, are now well into deploying the solution. Notice though that Tobin says that RIM will continue to be pro carriers - the outcome will remain unanswered for a little bit still.
My fundamental issue and I guess question is "Would you, a John Doe customer really trust Apple, RIM or Google with your credit cards?" I know I wouldnt! I do think however that Google has a play in coupons at point of sale, and Apple in some remote payments capacity - but not in proximity.
I have, together with some friends, had unauthorized itunes transactions and when I call Apple I am informed that I should call the police and file a complaint. Obviously their "geniuses" are not equipped to solve real problems, just issues around when the next Ipad2 shipment is arriving oh and they are very very good at taking my order and my money.
I would be the first to admit that carriers are not the best at handling even their core business, and banks are not much better either, but both takes the responsibility very serious (ATT just made a $40bn investment in their customer base and the data streams), and thats what I need as a customer, a provider who take me serious when I call them.
Over the next couple of months this battle will unfold and I am sitting on the bleachers with a bucket of popcorn.
Game on, let me know if you hear anything or have some considerations I should know...
Saturday, January 15, 2011
Western Union and the remittance stagnation
I am sure that you have all seen the increasing number of Western Union (WU) announcements that are showing up on our Google news alerts, one of the recent announcements was my own dear colleagues in Canada (EnStream/Zoompass) who launched international remittance using the WU rails for cash-out and intl. settlement. As a self proclaimed pioneer, which only means that I have been living on canned beans longer than most in this space, I cant help but feel that the service providers like EnStream are actually missing the mark completely! It would probably have been cheaper to just set up a WU agent shop in Chinatown-Toronto.
Part of the things that fascinated me about the convergence between mobile and financial services was the ability to disrupt the existing ecosystems who has no incentive to change, but is interested at worst in stagnation and at best some sort of managed democratization of their services. Instead EnStream should have spent a little bit of time identifying, like companies such as m-via has done, their target corridor and then focus on a viable cash-out network in the inbound market. That way EnStream could actually have lowered fees for the end consumer, while building a brand, revenue and network.
By integrating and getting "certified" against WU nothing has moved and in fact I am sure there are all kinds of ways that WU can tie down their newfound cash-in agents, making it hard for future disintermediation. I think that service providers needs to understand that press releases with no revenue is not valuable, but a distraction (similar to how Visa's VMT service is a poorly packaged punchline, why even bother?)
I know I am harping on EnStream in this post, but I am not really intending to, EnStream in this post just symbolizes the complacency that the service providers are beginning to show.
It concerns me because this industry was and is being built on disruption and ecosystem displacement. I hope that in 2011 the service providers will dig deep one more time and get back to what the intent was from the onset.
Happy new year for remittance disruption - (come on guys, its not that tough)
Part of the things that fascinated me about the convergence between mobile and financial services was the ability to disrupt the existing ecosystems who has no incentive to change, but is interested at worst in stagnation and at best some sort of managed democratization of their services. Instead EnStream should have spent a little bit of time identifying, like companies such as m-via has done, their target corridor and then focus on a viable cash-out network in the inbound market. That way EnStream could actually have lowered fees for the end consumer, while building a brand, revenue and network.
By integrating and getting "certified" against WU nothing has moved and in fact I am sure there are all kinds of ways that WU can tie down their newfound cash-in agents, making it hard for future disintermediation. I think that service providers needs to understand that press releases with no revenue is not valuable, but a distraction (similar to how Visa's VMT service is a poorly packaged punchline, why even bother?)
I know I am harping on EnStream in this post, but I am not really intending to, EnStream in this post just symbolizes the complacency that the service providers are beginning to show.
It concerns me because this industry was and is being built on disruption and ecosystem displacement. I hope that in 2011 the service providers will dig deep one more time and get back to what the intent was from the onset.
Happy new year for remittance disruption - (come on guys, its not that tough)
Wednesday, January 5, 2011
My New Years Resolution in Mobile Payments
Like everybody else I have a list of 2011 todo's 95% of them will never materialize, but there is something refreshing about even making a todo list intended on improving your life. Very rarely do I make a "prediction list" in June, so "big ups" for December.
As most of you guys know I have been in the Mobile Financial Services Space since M-pesa was a mere thought bubble on a Vodafone presentation deck and I have had the pleasure of seeing Mobile Financial Services from a variety of different angles - Core Payment centric models with Zoompass, KushCash and others (TBA - wink wink), Mobile transport models with Zoompass, Clickatell and Mobile Money Ventures - and these different companies, plus the ones I have advised have allowed me to venture down all the verticals in the MFS space - pure banking, mobile money, pure remote, MMT and proximity payments, even a couple of core payment infrastructure plays. I am one of the few that have worked with ecosystems and deployed solutions in 1st, 2nd & 3rd world countries and its given me some untraditional perspective on things I guess.
When I began doing business in MFS in 2004, I started and launched a company called - - - - wait for it - - - - CellCash. CellCash was groundbreaking for its day, but in all fairness all it really was, was a stored value platform with SMS and Web as interactive channels.
Back then the business development cycles I had to go through to convince merchant acquirers that this was an ok use of the traditional merchant accounts, where tremendous.
I did succeed and was the first mobile money system launched in the US with all US carriers on board. I was lucky enough to sell the company shortly thereafter and go on to start KushCash with some friends. I guess the point here is that much have happened since 2004 and we all have a much better understanding of how the MFS space operates and looking back to those mornings in my home office trying to convince Chase Paymentech that it could be done definitely paid off - I feel blessed that I made the right choices and stayed in this space - Thank you all for making it fun and worthwhile.
Back then the business development cycles I had to go through to convince merchant acquirers that this was an ok use of the traditional merchant accounts, where tremendous.
I did succeed and was the first mobile money system launched in the US with all US carriers on board. I was lucky enough to sell the company shortly thereafter and go on to start KushCash with some friends. I guess the point here is that much have happened since 2004 and we all have a much better understanding of how the MFS space operates and looking back to those mornings in my home office trying to convince Chase Paymentech that it could be done definitely paid off - I feel blessed that I made the right choices and stayed in this space - Thank you all for making it fun and worthwhile.
So the market is now escalating and I think that companies that are in market already and have a foothold needs to go all out in 2011 - its the "Go big, or go home" year of Mobile Financial Services.
This leads me into my very profound resolutions :o)
This leads me into my very profound resolutions :o)
1. In 2011 I will help companies bank "A" continent. This has always been my objective and I think the time is right - so if you need ideas on how to bank a continent, reach out.
2. I will do my level best to help the market cross the final barriers in the communications gap between mobile and payments
3. I will be focused on 1 vertical to achieve my 9-5 goals and stay sane
4. I will create 1 disruptive technology - there are a couple of verticals that are not explored and on anybody's retinas - otherwise we will all become stale... and thats not ok
5. I will do my level best to be on the winning team for 2011 - no second place this year
There is quite a few people reading this and I hope that you guys will write your comments below so that we can capture your thoughts and perspective around 2011 in MFS.
Again I humbly thank you all for making the last 7 years unbelievably fun and exciting - and I guess its now "game on"?
Cheers - - - - J
Monday, January 3, 2011
5 Mobile Money Predictions for 2011
Happy New year to you all - Since I wrote the "Bong" blog post I have been away trying to get some good R&R for a big 2011.
I decided to create one of those "Prediction" blogs - just so everybody can tell me after the fact that I am wrong.
So here goes....
1. NFC goes mainstream in 2011
I think that after a long drive we are finally ready to place our bets and go mainstream with NFC. Some of the drivers are information around wireless operators now acknowledging that the handsets are coming in more than the original "test/pilot" batches, furthermore the Google's and Apple's of the world are driving behavioral change rapidly. Banks have to a large extend begun to understand that things can, and perhaps should, be done in a different manner than your normal BAU. Because of this shift SaaS and cloud models are beginning to get acceptance across banks. Innovation has rapidly become an agenda item with banks "post sub prime" and I have dealt with banks in even 3rd world countries that are rolling out RFID enabled cards in 2011. Biggest challenge will be for MNO's and FI's to be ready for the servicing of the solutions and many many more things - but this year will finally see all this come together.
2. The year m-pesa is no longer the poster child
I am keeping my fingers crossed - perhaps its wishful thinking. In all seriousness I think that 2011 will be the year of widespread Mobile Money roll out in 3rd world countries. We have crossed the hurdles of technology, we have jumped through hoops with agent models, we climbed the mountain of regulatory barriers and in all fairness we are ready to roll these services out in a "wash, rinse, repeat" manner that would have made Ford himself proud.
3. Acquisition spree
I think that in 2011 you will see some acquisitions from the associations and FI providers like FIS and Fiserv - these guys are all under tremendous pressure and if they dont make some drastic moves they will loose traction beginning in 2011. You will also see the card providers get even more active - companies like Gemalto has for years been buying small security companies but will probably have to ante up to keep new comers out of the space. Watch Silicon Valley for winners.
4. Demystifying Mobile Banking
2011 will be the year where people finally understand that mobile banking is not a great business, but its a great pivot point. Mbanking is a channel play and is very similar to other PSO's like CR2 and Accenture. Mbanking has no network capabilities because its a 1-1 relationship between the customer and their own bank, however mobile banking can be used as a great starting point for pivoting into network business' which is where the money is. I believe that mobile banking will increasingly be taken over by the larger FI's themselves, but the smaller CU's and mid sized banks may turn to their FS providers for help.
5. Emerging Payments & Disintermediation in Direct biller infrastructure
People have been speaking of emerging payments for some years now, but we are yet to see much movement. This year will see Direct Biller infrastructure being rolled out in larger scales, starting in emerging markets and trailing into the US and EU. Direct Airtime Top up will be a massive new opportunity in a +$300bn market filled with friction. Prepaid and postpaid electricity will be a big hit in emerging markets, so big in fact that the guys in the US should be having an emerging markets strategy in place today to capitalize on these massive opportunities. Mobile will play a massive role as the POP in these markets.
Lets see how right or wrong I am - I will keep score during the year.
Happy new year all!
I decided to create one of those "Prediction" blogs - just so everybody can tell me after the fact that I am wrong.
So here goes....
1. NFC goes mainstream in 2011
I think that after a long drive we are finally ready to place our bets and go mainstream with NFC. Some of the drivers are information around wireless operators now acknowledging that the handsets are coming in more than the original "test/pilot" batches, furthermore the Google's and Apple's of the world are driving behavioral change rapidly. Banks have to a large extend begun to understand that things can, and perhaps should, be done in a different manner than your normal BAU. Because of this shift SaaS and cloud models are beginning to get acceptance across banks. Innovation has rapidly become an agenda item with banks "post sub prime" and I have dealt with banks in even 3rd world countries that are rolling out RFID enabled cards in 2011. Biggest challenge will be for MNO's and FI's to be ready for the servicing of the solutions and many many more things - but this year will finally see all this come together.
2. The year m-pesa is no longer the poster child
I am keeping my fingers crossed - perhaps its wishful thinking. In all seriousness I think that 2011 will be the year of widespread Mobile Money roll out in 3rd world countries. We have crossed the hurdles of technology, we have jumped through hoops with agent models, we climbed the mountain of regulatory barriers and in all fairness we are ready to roll these services out in a "wash, rinse, repeat" manner that would have made Ford himself proud.
3. Acquisition spree
I think that in 2011 you will see some acquisitions from the associations and FI providers like FIS and Fiserv - these guys are all under tremendous pressure and if they dont make some drastic moves they will loose traction beginning in 2011. You will also see the card providers get even more active - companies like Gemalto has for years been buying small security companies but will probably have to ante up to keep new comers out of the space. Watch Silicon Valley for winners.
4. Demystifying Mobile Banking
2011 will be the year where people finally understand that mobile banking is not a great business, but its a great pivot point. Mbanking is a channel play and is very similar to other PSO's like CR2 and Accenture. Mbanking has no network capabilities because its a 1-1 relationship between the customer and their own bank, however mobile banking can be used as a great starting point for pivoting into network business' which is where the money is. I believe that mobile banking will increasingly be taken over by the larger FI's themselves, but the smaller CU's and mid sized banks may turn to their FS providers for help.
5. Emerging Payments & Disintermediation in Direct biller infrastructure
People have been speaking of emerging payments for some years now, but we are yet to see much movement. This year will see Direct Biller infrastructure being rolled out in larger scales, starting in emerging markets and trailing into the US and EU. Direct Airtime Top up will be a massive new opportunity in a +$300bn market filled with friction. Prepaid and postpaid electricity will be a big hit in emerging markets, so big in fact that the guys in the US should be having an emerging markets strategy in place today to capitalize on these massive opportunities. Mobile will play a massive role as the POP in these markets.
Lets see how right or wrong I am - I will keep score during the year.
Happy new year all!
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