Wednesday, September 21, 2005
Redtone : Mobile Money
Familar scene ?
Mobile Money is a trademark of Mobile Money Internation S/B; subsidiary of Redtone International S/B. Well, of course there are many theories pertaining to why a big company like Redtone opted to create a subsidiary. It used to be that subsidiary can help the mother company to avoid heavy taxes. But for this case, I think they are preparing for a possible acquisition in the future for the reason that Mobile Money is going to be very successful and going international.
Mobile money provides the facility of paying via the mobile phone. In layman term, whenever one needed to buy something, just send some SMS messages and that will do.
Technically, a mobile money transaction involves 4 parties:
1. User - Mobile phone owner who is having a bank account and must registered to mobile money service.
2. Merchants - Business units that is providing merchandizing. They can be any businesses that sells something for money.
3. Mobile Money - service provider
4. Banks - Bank negara as the moderator and Hong Leong bank as the principal bank.
Why Redtone ?
Because they are expert in mobile services such as SMS. They have the technical know-how about SMS gateways and etc. They know how to handle large simultaneous users, to deal with the possibility of server overloaded and even how to perform cost-efficient load-balancing. A project at such scale definitely requires a lot of practical experiences before it can be handled properly.
As a result of that, Mobile Money is invested by Robert Kuok group, whose founder is Malaysia's richest man. Therefore, Mobile Money requires no funding from the MSC or Venture Capitalist, they are cash rich.
How it can be successful?
It will not be successful without the initiative of agents going around town to look for merchant sign-up.
What compelled agents to do so?
The ability to have passive income for at least some time, in this case it is 7 years + 3 months. For every merchant signup, agents are entitled to a 0.056% of each transaction transacted through mobile money.
I have reason to believe that this cut of 0.056 percent is shared by Mobile Money and not from the merchants, otherwise they wouldn't be interested. Mobile Money can do so because of two reasons:
1. It is getting a bigger margin from the master banker - Hong Leong Bank (probably gives Mobile Money 2% for each transaction.)
2. Mobile money will only share the cut with agents for a maximum of 7 years + 3 months, thereafter they will earn continuous income until the world cracked. Meaning that if an agent signup Giant Supermarket as the merchant, he would be able to benefit for 7 years + 3 months monthly transaction of Giant transacted through Mobile Money from the day of the signup. This implies that an agent can still earn continuous income if he keeps signing up new merchants.
To qualify as merchants, organizations need to produce a bank statement and directors' approval declaration.
Why am I attracted to it?
Passive income! This is a good example of passive income, where you just need to work hard to signup the merchants and sit back to enjoy the commissions accumulate your pocket.
Redtone and Mobile Money, as established company would be able to make sure that the service is stable and also I believe that they would have 24 hours customer service support.
It can replace or complement RFID.
They are currently busy with MOU and activities, everything should be ready for agents by end of October 2005.
What technology they are using ?
I don't know because it is confidential. However, they have developed a few patterns for technology.
Why would people need it ?
1. Users - Convenience
- Convenience (No need to have a special device like e-pay, just use mobile phone)
- value added service (I think they will also be POS functions)
- Guaranteed by Bank negara.
- Cheap implementation.
3. Web sites - I also hope that web sites can also qualify as merchants, so that Internet user can use Mobile Money instead of credit card to transaction online. This is even better because there is no need to expose credit card information to the Internet sea. The backend activities will encapsulate the details.
4. Business person - Business potential as agents, passive income and wealth creation (if you can signup with big companies such as Giant, A&W, Fridays and etc)
For more information, please read this.
Mobile money is a merchant programs. Many other merchant programs(such as go2020) failed there is no strong financial backing. And they relied too much on MLM methodology to survive. Over hear, MM wanted to treat it as similar to agencies (like insurance selling)
I think it will not be so straight foward (as if there won't be any big frog jumping on the street sceanario), big accounts must have already been taken by Redtone directly. It is like a chicken and egg situation because for the project to be justified, they are forced to get the commitment from big companies like Giant, Tesco, Ikea and etc first in order to proceed with all these investments inclusive of huge advertisement spending.
Therefore, we have to be the first mover, try to sign up as much merchant as possible in the first few months before it is taken by someone.
Nevertheless, it is good to know that Sapura is also coming up with similar thing called M2. This is good because competition is always good for the consumer, including agents. Even if I can earn RM 500 for doing nothing every month for 7 years & 3 months is good news for me.
1. "Big frog jumping on the street" is a cantonese term where it implies scarceness, means bed of roses don't drop from the sky.
2. MM need to make use of agency methodology to help them with the push. It is important to get the first motivation rolling in order to trigger the neuclear reaction. The idea will never break the ice if only the Internal sales person is doing the talking which is limited in term of time and boundary. The key to success is to reach a critical mass of users in the shortest time possible.
3. Competition should be encourage so that MM don't over-arrogant.