Paymo, An Efficient Model for Merchants ?

In the mobile payments market, we usually see 3 cases (sure it’s changing rapidly), banks providing mobile services, telecommunication firms providing it and cooperation between banks and Telcos. Apart from that, here we have lots of startup mobile service providers and Paymo Inc. is one of them who is targeting 3 billion customers worldwide. They have an appetizing expression for the merchants(internet sites, mobile internet sites,etc.) : “Paymo delivers 3 billion new customers for your business.”

Plus, On July 08, they raised $5 mio from angel investors. Though, the company is pronounced as the first company to provide global micro payments service for online merchants. For me, the main segment Paymo focuses is the merchants than the consumers. These words in Faissal Houhou’s profile, VP Business Development International at Paymo., “Paymo is now focused on solving the needs that merchants have for a global mobile payments solution. For online merchants, PayMo is revolutionary. For consumers it will feel comfortably familiar, being based on SMS and Premium SMS / WAP interactions.”  proves it.

Soon, I d be providing more details about Paymo if I can get some detailed info from the team. By the way, as a consumer I recommend you to try the Demo in the site.

1. Just write your mobile number.

2. Confirm the SMS you received.

3. Here is your product available !

Next : I will be posting about Mpayy…

A Survey About Mobile Payments

Last week, I tried a little survey about the usability and awareness of mobile money transfers. I used the FriendFeed contacts and my university mail group as the candidates and got 30 answers back. The candidates were between 23-45 years old which is the target age interval for mobile services. Let’s have a look at some of the feedbacks.

Ali Haydar Ünsal, who has a deep experience in banking, is complaining about forgetting the pins/passwords in shopping but still uses frequently for money transfers. Ekim Nazım Kaya, founder and CEO of Botego finds it the easiest and simple way of money transferring. Meriç Kara, a technology editor, and Y. Emre Güzer, an e-commerce expert, uses it in case of forgetting their wallets home and upon sisters’ insistent demands. On the other hand, 60% of my colleagues from university don’t use it and only 5% of them are using properly. Some of them complain about advertising deficiencies.

Having these results make me think about possible improvements in marketing the mobile money transfers and payments as well.

First of all, I believe that, a payment mobilizer must determine the optimum mass for introducing and advertising the product. After the innovation process and launch of the product, the most important part is finding the correct consumers and effecting consuming part of their brains. Not only in mobile payments, but also in other sectors’ products, we see that there are lots of idle facilities and products which are not used and analysed by the owners.

Second, it’s so important how you positioned and named your product. If the consumers (another result of the survey) mix your product with other similar products, you can not have loyal consumers. You must highlight the difference, advantage and excellence (if there is) of your product. Also, it’s beneficial to show the specific uses of your product. For example, in this example, catchwords like “You forgot your wallet home, no problem!” or “Maybe your friend needs money right now in his nature trip” or “You had to hurry to take a taxi ? Still no problem !” , etc…

Third, people must understand the advantage to use your product. Why should they need your new mobile money transfer service against the typical services ? Linked with promotions, online campaigns, location based games, advergames and fixed time limited contests ( e.g. On this Saturday, between 1 – 5 p.m., whose friend draws money the first gets the big award)

In my opinion, these are the main and well known ciritical key points of implementing a mobile transfer / payments service.

Android Banking

Last days, I am hearing so much about launches of Visa’s mobile applications. Last month, again, Visa announced that they will be delivering Visa mobile applications for the Android platform. You can read about the launch here or here. During the launch there s a key sentence from Global Head of Product that I really loved. “combining two of the world’s most powerful and ubiquitous consumer innovations, electronic payments and mobile technology” These words always increase my enthusiasm about the joint of mobile & internet & payments.

The mobile services developed for Android will include, shortly, alerts against fraud, discount&loyalty offers from 3rd parties and merchants, location based services providing coordinates of merchants promoting, nearby ATMs through Google Map/Earth.

If you are wondering about Android platform developed by our biggest lovemark, GOOGLE, you can check Google’s Android 2.0 page or you can enjoy the video about how they created it as an open source project. Plus, see the applications in T-Mobile-G1 mobile phone, I guess still there are lots of people who haven’t touched it yet including me

What I want to talk about Android is the possible opportunity for the banks. When Apple distributed i-phone in the Turkish market with Turkcell and Vodafone, TEB, Akbank and GarantiBank were the proactive ones who improved mobile banking services for iphone. Now we are not sure when we’ll be able to see Android applications in Turkey, hopefully in 2009, but still mobile service providers, telcos and banks must be creating new and useful applications for their consumers.
Especially, the location based promotion model can be used for bright ideas. Finishing this post, I recognized that I must search more about location based payment & promotion & campaign models.

ps: Unfortunately, while I was editing this post, all “blogger” based blogs were banned in Turkey ! Sometimes I really feel the irony working on these topics in a “banned” country.

Difference between mpass/Germany and CepBank/Turkey

Two German mobile operators, Vodafone and O2 launched a mobile payment service called mpass on October 17th in Germany. The system is quite well-known as you enter your mobile number and mpass pin, confirm the SMS you receive and order your product as the amount is debited from your bank account. You can read shortly about the process here. Or you can check the website here that I couldn’t find any English version of the site.

In Turkey, at the end of 2007, Garanti Bank has already launched the new payment system, CepBank Shopping with the leaders of Turkish e-commerce industry.

There s a small difference that consumers can use their mobile passwords as a pin (except prepaid users), but CepBank consumers must register for using the system which is not a big deal. I think the big difference is the providers of the system. In Germany, the system is provided by mobile operators and in Turkey by the bank. So here comes the penetration difference. Vodafone and O2 introduced the product with a target of 70 million bank&mobile phone customers in the future. On the other side, in Turkey, maximum 6,5 million customers will be able to use the CepBank Shopping product, that’s all!

Personally, I believe that if we want to expand the usage of mobile payment systems, we have to support the cooperation including all the banks and mobile operators. Especially, in these innovative products which the society is almost foreign to, companies must move together. Because that can help the consumers to familiarize with the new products. And because, mobile payments is a change of consuming behaviour, itself. Think of a mobile payment system in which the consumers have chance to choose their mobile operator and their bank inside the e-commerce website. They can change the operator and the bank according to discounts, promotions, campaigns, etc. For me, this is the real marketing strategy war, the real capital market. Shortly I support the mobile operators as a provider rather than a bank, and free format payment choices rather than both

Interesting Results from MasterIndex 08 Report

Last week, I had opportunity to get a copy of Mastercard’s MasterIndex August 2008 report. It s a report of a detailed research which has been done 2 times a year on 1.000 candidates. What s good for me was to see the recent payment behaviour of the people in Turkey. As it’s a confidential report, I would like to specify the interesting results rather than publishing the report.

Besides, the report is in Turkish, better to translate it According to the report, the number of people who think the best place for their savings is “under the mattress” (term reference : BBC News) has risen to 11% where foreign exchange alternative following with 8%. But am sure in the crisis environment the saving behaviour of people will be changing probably. Less investment instruments and more under mattress and gold savings. We will see what happens. The high level investment behaviour is still the same. 40% of people would like to use their money for real estate investments.

If we look at the consuming behaviour of Turkish people, we ll see the sharp increase in credit card usage. In the last 5 years, the usage of credit cards in Turkey has increased by more than 100%. Comparing with 2003 (usage : twice a month), the candidates using their credit cards twice a week is the majority in 2008. The volume of the credit card usage is increasing as the socio economic level decreases.

Moreover, 70% of the people use their credit cards for clothing and supermarket shoppings. 75% of those candidates have never used e-commerce. Another question asked to the candidates is ” What if there s chance to pay with credit card instead of cash, where would you choose ?”. Answers are, in order, 36% vote for the bill payments, 17% taxi payments, 17% rent payments. So this results can lead the banks and government to study “deferred payment & credit issues” on these topics. Most of the Turkish people choose their credit cards according to the reliability of the bank. Interest rate and contribution fees are other important reasons while choosing the credit card type. 45% of people have 1, 27% have 2 and 17 have 3 credit cards where the average is 2 credit cards per person. Only that result is enough to show the installment love of Turkish people. The young professionals, aged between 25-34, are the most credit card users.

People mostly use the credit card in white goods shoppings. Clothing, furniture, supermarkets and e-commerce follows. In e-commerce sector, 11% of people pay by cash, 1% by debit card, 58% by credit card and 15% use alternative payment methods (should be searched). Therefore, it’s clear that online shopping bases on installments. This can be an important data for the alternative electronic&mobile payment providers. Also change of credit card usage frequency (from twice a month to twice a week) shows the reality of rapid growth of credit card numbers in last 5 years. I remember the days when the banks were yelling out to give out credit cards without consumer scoring results. 60% of people use credit cards where the amounts are between 20-250 Turkish Liras. This interval can show the average shopping amounts of people as well.

The results of online shopping behaviour shows the recent situation of Turkish e-commerce sector. 75% of people never use online shopping. Only 5% of the 25% online-shopper (1% of all) use e-commerce sites more than once in a month. Although, e-commerce giro reached $10 billion, still there s a great e-commerce potential in the future. In the net, 52% of people buy event tickets, 47% buy electronical goods, 42% buy flight tickets and trip reservations.

The answer to “Why credit cards” is quite clear that 90% of people say “Installments and Discounts” – price sensitive answers Bonus collecting is also a strong reason to use credit cards.

I tried to summarize the long credit card report and there are really some interesting and suggesting results, especially in online shopping and the reasons to use a credit card.

I am sure in the near future, the behaviour of consumers will be changing in payments. Mobile and internet service providers will be providing various types of payment models. But the behaviour of Turkish people is the determining factor here. Economically, low segment and poor people are the big majority in Turkey. At the same time people never stop buying clothing, furniture, white goods and shopping in supermarkets. Banks and their credit cards are still the kings in payments because they provide lots of discounts, promotions, campaigns and of course installments. The mobile payment providers entering the Turkey market must be analysing these topics so carefully and catching the Y & Z generation’s payments. A solution with a mobile phone can boom the market as the penetration of mobile usage is so much more than the penetration of banked population. But just easy, reliable, quick and well-designed solutions will survive, I guess.

RingGo in UK can be a model for Ispark in Turkey ?

The RingGo, cashless parking service provided by Cobalt Telephone Technologies, lets British society use the car parks without any cash, credit cards or PayPass.

The system is quite easy to use. When you park your car in those locations (more than thousand), you check for the RingGo sign as you can see below.

After this step, it’s up to you. If you already registered in the system, you only have to confirm your location, your payment card security code and the length of time you stay. If you haven’t registered yet, you have to deal with a longer procedure (like the colour of the car, the plate number, etc.) So for sure, registering your info before is better I think. Because the strong feature of RingGo is that it works on a pay as you go basis. Another topic, the tariffs, depend on the car park you use. In some of them, you can find promotions even cheaper than paying with cash, even free periods at the weekend.

The system is not so hard to understand. You can find the press releases here, references for RingGo.

Now let’s think a similar solution for car parks in Turkey, mainly in Istanbul. In Istanbul, car parking has been managed by Ispark, a subsidiary of Istanbul Metropolitan Municipality. In 3 years since Ispark was established, they have earned huge amounts of money by short and long term parking in local places. The problem is, the company has a serious problem about labour costs. They have thousands of parttime and seasonal employees. Ispark has a rotation programme in which the employees change their locations periodically.

On the other hand we also know that some important tech projects are driven. Intelligent Transportation System – Otomation project is one of them based on wireless, mobile and NFC technologies. They call the project as “mobile park”. The project hasn’t been runned yet, however you can find some info here, unfortunately only in Turkish.

Because Ispark is a governmental association, they don’t announce the progress about technology projects. RingGo model can be an innovative solution for car parks and car houses of Ispark, whereas it’s not worth implementing it on the street parkings. Some more, I ll be searching for the mobile payment opportunities in car parking. It seems that Nordic countries seem interesting to be analysed.

Bill Me Later Succeeds in Turkey ?

Last week, ebay announced that it acquired BillMeLater for $945 million (820 cash, 125 in options). You can find the detailed info about the acquisition here, here, here, here or here in Paypal Media. Many people discussed if it is a good move or not during the global crisis environment. Probably, the management of ebay will explain the latest situation and their detailed investment plans in ebay’s Q3 2008 Earnings Call on 15th of October. In this post, I will be writing neither about the accuracy of the decision nor how BillMeLater works. You can find a short video about BillMeLater process here or a detailed explanation in their website.

You remember, on May 2007, ebay announced that it acquired 10% stake in gittigidiyor.com, Turkey’s leading e-commerce company based on online trading. And now, it’s discussed that ebay will acquire all stakes and/or Paypal will be an alternative payment system in Turkey at the end of first quarter of 2009. So it means that Turkish consumers will be meeting a new deferred payment method with BillMeLater.

At this point, the consuming behaviour of Turkish people has to be analysed. BillMeLater positioned itself as an alternative for Visa/Mastercard credit cards. So people who don’t want to provide a credit card number and who need a credit purchase will be using this system. If we look at the statistics of credit card usage in Turkey, we can see the increasing percentage of credit card numbers and revenue. By the end of 2007, number of credit cards reached a number of 38 million, number of domestic transactions reached 1,5 billion and the domestic revenue reached 145 billion Turkish Liras. (Ref : Interbank Card Center Datas)

On the other hand, according to Sina Afra‘s (new General Manager of ebay Turkey) presentation on May 2008, there will be a $10 billion e-commerce market next year in Turkey. You can view the presentation here : turkey-internet-sector2008-1210938033630990-9

So despite the indefinite results of the global crisis, both the usage of credit cards and e-commerce market is rapidly increasing. Since Paypal+BillMeLater is adventageous against credit cards with lower commission rates, secure and simple usage and different payment alternatives, it seems logic to enter the Turkish e-commerce market. But I have some concerns about the entrance to the market.

First of all they have the leading player, gittigidiyor, with them so it will be quite easy to enclose the e-commerce market also with the help of some personal relationships. Probably, afterwards, they will have more agreements with companies of Telco, Clothing, FMCG sectors.

I am wondering how they will check the credit score, credit outstanding and status with credit agencies in Turkey. Because that s how they work in the USA. With the help of social security number, they are capable to check all these criterias. But in Turkey, there isn’t any integrated common database where you can check one’s credit score. Credit insurance companies, all the banks, even the different departments are using dissimilar criterias to evaluate their customers and consumers. Moreoever, the companies also use different methods to measure the credit worthiness of their retailers, distributors and suppliers. Summing all these, “loose credit topic” is very important. Their strong algorithm pulled in via Web APIs from credit agencies and other data providers doesn’t seem feasible in Turkey, right now. Also their “social security checking system” can not work here.

I guess, after a period, ebay will be in contact with the banks and credit insurance companies about this topic and probably they will be working with a main bank in Turkey. They can use the id card interrogation database of the biggest banks who cover the big part of the customer pie. Another question is how they will fund the deferred payments in C2C business, not similar with B2C business. Because the individual seller will not be waiting for his/her money so long. That is to say, how will they adapt CIT Bank application to Turkey?

There s one more question, that, what if some banks are also working on this “billing later” model ? Then, there can be some deals or a competition between ebay and the banks.

Actually, I am so excited about the entrance of ebay, because there will be some huge changes also in payment behaviours of consumers. At the same time, it’s exciting how ebay will implement BillMeLater operations into Turkey e-commerce market. Because it’s so sure that Turkish consumers really love deferred payments. A suitable solution with BillMeLater can make them so shopaholic. Let’s see how it will work…

Mobilizing The Payments

As I have been working, reading and searching about mobile and electronic payments for more than 1 year, I decided to collect my ideas and studies on this blog. The name “paymentmobilizer” is just a title which I thought can be good for a person who s building his career on this topic.

In this blog, there will be mainly some specific topics like the improvements in the mobile and online – electronic payments sector, innovative approaches to the payment channels and business solutions, hot news from mobile&internet world, the business opportunities in different countries, new payment models and my ideas and studies about all these. So shortly, my purpose is to share my ideas meanwhile I am improving myself about mobile & online payments.

Plus, I would very glad if you can comment and also share your ideas with me.

Let’s mobilize the payments !