Editor's Corner


GSMA CEO Rob Conway kicked off today's keynote session by breaking down the GSMA's partnership with MasterCard Worldwide for its mobile finance initiative. Conway broke the initiative into two parts: The Global Mobile Money Transfer initiative and the Pay Buy Mobile initiative.

The Case for Mobile Remittances

Conway first announced that the Global Mobile Money Transfer project at 3GSM Asia in Singapore, he noted a problem in the global remittance industry: "The problem we had was the fact that while an international remittance industry was big, it's about $230 billion, that number only represents the tip of the iceberg because there's a lot of money that moves on that you never see. People carry cash across borders in all kinds of funny ways. And the fact of the matter was, many of these people are poor migrant workers. And these poor migrant workers, many of them are unbanked and underbanked in the world today."

The other problem with transferring small sums of money is the fees: "Today in the U.K., if you wanted to send money from the U.K. to India--£50--it would cost you £12. Ladies and gentleman, that is 24 percent. In addition you pay also the origin on the float on the foreign exchange that goes on beyond that--that's a huge some of money for some of these people," Conway explained. 

Conway said at the speed of a text message, money will be received, which is better than the current state of credit card charges probably, but SMS messages aren't always seemingly instantaneous--it won't take much for a new user to get antsy about sending his or her wages via their experimental banking service. Conway hopes the savings outweigh the potential nervousness: "Obviously we believe we can substantially reduce the cost it takes to transmit funds."

Mobile Remittances Market Outlook

The GSMA predicts that their initiative will see the quadrupling of the number of mobile remittances to 3.2 billion by 2012. The GSMA is working with MasterCard Worldwide to pilot the ability to connect 700 carriers around the world, much like they did with connecting carriers for interoperable voice and roaming data services. MasterCard will do the clearing and settlement functions that they do incredibly well, and they'll connect that down to the regional and local capabilities, so operators working with local financial institutions will be able to connect into that hub.

"Pay Buy Mobile"

Of course, mobile finance has another popular application: mobile payments. The GSMA is also spearheading a project called Pay Buy Mobile. Conway noted in his speech: "Well some of you may say, 'gosh, there have been many attempts on how you do mobile payment,' well, we believe that the time is right for robust mobile payment activity that will allow for the purchases of goods and services by mobile phone and, yes, none of us can do it alone--whether banks or operators--got to be done together." 

Conway suggests two options for mobile payments, which will probably complement each other: over-the-air (OTA) downloads and preloading encrypted credit card information from the bank on the phone's SIM card. That SIM will then interface using NFC to connect up with a bank's point of sale terminal in a merchant's location. The GSMA plans to determine best practices for over-the-air and the NFC and so forth. Visa and Mastercard have both informally signed off on the project.

2007: A breakout year for mobile payments?

While it's rarely a good idea to count your eggs, it looks like 2007 just may be the year that sees mobile financing break out from a decade of false starts. The GSMA is pushing these initiatives aggressively with 14 carrier partners led by Korea's KTF and the big credit companies MasterCard and Visa. I had my eye on the Visa keynote at the CTIA show in Orlando next month as a harbinger of a ramping up in mobile payments/banking news, but this MasterCard announcement with the GSMA came as a surprise. Mobile finance was one of the first phrases out of Conway's mouth this morning. The phrase will be on everyone's lips by the spring. -Brian

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