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Wednesday, September 28, 2005

Mobile Money demsytified

Mobile Money... something interesting for Malaysian to look for in the coming months.



I attended a briefing yesterday nite and was indeed enlightened.

Important Facts:
1. Mobile Money is on route to be de-merged from Redtone for the reason that it is a company offering financial service compared to Redtone's telephony service. Also, it has identified Telcos to be the biggest beneficiary merchant and thus cannot work together when Redtone is a strong competitor of other Telcos.

One of its intention (for creation of Mobile Money) is to enable Telco to bypass middleman (retailer) for its reload coupon merchandizing. It is calculated that by using Mobile Money, revenue for such business segment can be further enhanced.

2. As Agent you get to do the following:
2a. Sign-up user:
For every successful application, bank will pay to agent.
RM 9(upon approval) + RM 51 = RM 60 (bank will pay you this)
To be eligible as user, one must have must able to get approval from bank for a credit card account AND has an IC.
Thus, signing up user is like selling credit card on behalf of the bank.

2b. Sign-up merchant:
Merchant must be a legistimate business entity in Malaysia AND with a Malaysian bank account. For the application to be approved, certain official document must be submitted alongside application which would include director's resolution.
Accordint to the speaker, this is important because all director needed to agree upon the chosen bank account for Money to be taken and transferred from/to Mobile Money. Proper bank statement must also be shown.

Upon sign-up, agent will get RM 12.50 from Mobile Money.

3. Current banking partner:
3a. Hong Leong Bank
3b. BCB (next week)
3C. Public Bank (coming soon)
3d. Maybank (coming soon)
All of which would provide credit and debit tied-up to Mobile Money.

A user may thus sign-up as many account with the banks and have them linked to Mobile Money account. User many be able to choose the approriate one for payment at any case.

On the other hand, bank would assume the following order of preference to provide user(Mobile Money) with the service:

1. Credit service
2. Current account
3. Saving account.

The reason is simple, if users tied-up with saving accounts, bank will not likely going to make a profit out of anything because there can't be any interest charged. This also tells us why transaction via saving account would comes with transaction fee of certain percentage. As compare to credit services, the bank hope that you don't clear all your debts and thus can impose interest charges on you.

Possible Applications:
1. Someone can pay bill when he or she is oversea, provided that the roaming service for mobile phone service is enabled.
2. Using Mobile Money to top-up Touch N Go value. (Apparently the information is not stored in the chipset of the card)

Security:
It only matter when we are talking about E-Cash:
E-Cash is actually a 6 digit number.
To use E-Cash, one must do the following:
1. Give casher the 6 digits number(representing serial number) + 4 digits ID (to be determined by user)
2. Casher will interact with Mobile Money via normal phone or handphone through IVR services.
3. Mobile Money will provide you with a new 6 digit number. Thus the e-Cash number can only be used once.

Compare to normal cash, which is = paper + serial number. In this context, the serial number is the most important element. Therefore, e-Cash capability for Mobile Money is not a joke because each e-Cash number is supposed to be identified with a real serial number from the central bank. Mobile Money must thus has a backend system to carefully identify each matching and so on. The ability of its system to handle large backend data is similar to any bank, data is huge and requires 24 x 7 availablity.This is perhaps one of the technology pattern which they invented for in dealing with crytopology. I have a reason to believe that they need to have an huge simulation engine to get the job done bcoz you need to virtually simulate the cash activities to cater for debugging and monitoring needs. Without the simulation engine, any fraud is not traceable. This is the stand-out feature of mobile money compared to others similar technology. My god, this is fantastic!

Coming up next:
Redtone is creating a special terminal for such purpose which is meant for convenience of casher. This terminal would be quite similar to a phone and it is meant to replace credit card's terminal used by many.

It is expected to perform faster transaction than credit card terminal due to the fact that it uses IVR compared to credit card one that uses dial-up.

Sapura also having another services in the form of terminal.

Compare to Credit Card:
1. Merchant is charged 1.525% per transaction for mobile money while credit card charges 3%-6%.
2. Merchant must achieve number quota in order to be eligible as credit card merchant and also to get the credit card terminal free. Otherwise, it will be taken back by the bank. On the other hand, Mobile Money provides no quota because you can actually use the mobile phone as the transaction terminal.

Computerized evironment:
For those shops that didn't use any IT system, now they can do-away manual calculation with Mobile Money. Basically, merchant would be given a login account to the corporate web site to determine the transaction amount daily and monthly. Records will be available for three months and merchant is adviced to download them to local drive or simply print them.

This is just perfect, it gives those Mamak store the ability to tally the deal faster and without the worry of being robbed. Infact, if every transaction is performed through Mobile Money, there is no need to go to the bank the next morning.

I am thinking that it will be a great ideal if they can expose the system via web services (similar to blogging service) so that other developer can integrate the service to other systems.

Loyalty Program:
The system is also capable of creating personal loyalty program for every merchant. Means that Merchant now can produce their own bonuslink or Mesra card. Not only they can print their own card but also come with existing system to handle the backend data.

Agency:
According to the speaker, agency is meant for recruit of agent. and thus they are eligible for 25% of your money earned. Well, this is a little unfair but I salute Mobile Money for doing this because it shows loyalty towards its affiliate. Basically, there are around 80 agencies (companies) and they are those who have helped Redtone to be what they are today. They are not planning to have more agencies and thus these 80 lucky people would get very passive income for at least 7 years. Personally, I respect and salute this decision because you have to remember your root.

Software for Point of Sales:
Mobile Money has created a software which a believe is a web service for merchants to allow their existing P.O.S (point of sales) to be Mobile Money enabled. For instance, A & W has around 50 branches in Malaysia and is centrally managed. The IT services is incharged by Datascan (a local IT company) and should A&W wanted to use Mobile Money, it would be sensible that all branches would have seamless integration of such technology. Mobile Money will not charge consultation fee for helping A&W to integrate existing P.O.S with Mobile Money(bcoz they have internal technical person) but yet A&W has to negotiate a price with Datascan.

This is also a barrier for A&W to quickly decide that Mobile Money is the next big thing for them. It would take some time.

According to Mobile Money, they are willing to deploy consulting team to help out agent with complicating scenario such as mentioned above. But please make sure that the potential merchant has high revenue stream.

Taxi Driver:
Taxi drive can benefit from the program via the service called the micro payment service, where individual can signup as user and merchant.

E-Commerce:
Web site with E-Commerce facilty can also make use of Mobile money for transaction. However, the merchant fee for E-Commerce is must higher compared to the default one; at 2.5% - 5% per transaction. This is probably due to the fact that fraud is higher in the E-Commerce industry.

Current Promotion:
Merchant is eligible for a discount of RM 60 for application fee from now till 31st October 2005. After this period, the default fee is RM 300.

Lost your phone?
When you lost your handphone, changes are that Mobile Money information might be exposed. To deal with such problem, you only need to inform Mobile Money to disable your account temporarily, until new details are feedback.

Conclusion:
Why Redtone ?

Because they are sifu(guru) in term of telephony services, high-demand data transaction system and also mobile solution. They have been using this technology for the convenience of their IDD business handling for 3 years.

Redtone understands the dynamic of prepaid card business, as well as the psycho-behaviour of retailers and distributors for trading. Mobile Money was envisioned to solve many unfair trading practice which has hampered the industry. Currently, it is a bad business for the retailer.

Mobile Money is special because it tie up with the bank and has obtained approval from centra bank(bank negara) as a financial service.

In other words, Mobile Money will be hiring financial consultant pretty soon.

For official documents, please read this.

Interested to be agent:
Please contact me directly.
brandon teoh, brandonteohno1@yahoo.com, +6012-665 3243

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