UAE becomes key mobile remittances gateway

The mobile money service market is growing at "a phenomenal pace" globally, and the UAE is emerging as a key mobile remittances gateway in the GCC region.

The region has a huge potential for growth as the governments and regulators are keen to promote transparent and secure money transfers by migrant workers, according to Luup, a provider of mobile money transfer solutions.

With an exceptionally large migrant population, the size of the remittance market in the GCC alone is nearly $50 billion, of which a sizeable portion is still going out of the region through the traditional corridor of hawala, said Morten Hofstad, Regional Director Middle East, Northern Africa and Asia, Luup. If regulators and government in the region follow the initiatives taken by the UAE authorities in discouraging hawala and to bring more accountability and transparency in remittances, 99 per cent of remittances by salaried migrants would be through mobile money transfer system, he said.

Apart from ensuring accountability and transparency in transaction, mobile money transfer solutions will be both cost effective and time-saving for migrant workers who can complete the transaction within seconds with just one command on their mobile phones, he said.

Luup has already singed up with Emirates International Exchange and other two exchange houses to provide this solution.

A report by analysts Gartner states that mobile money transactions will total $4.5 billion by 2012 globally. The estimated annual growth of remittances in the GCC region alone is pegged at over 20 percent in the next five years, said Hofstad,

The region also has one of the highest mobile phone penetration rates in the world, as mobile phones are a key tool for these mostly unbanked migrants. "Based on the region's potential, the Mobile Money Transfer, or MMT, conference is a great opportunity to share experiences and ideas that can pave the way for mobile money transfer initiatives globally," said Hofstad.

At the MMT Global Conference in Dubai on Tuesday, Luup highlighted how it is establishing the UAE as a key mobile remittances gateway by partnering with companies’ across
 the region.

In a speech given together with the National Bank of Abu Dhabi, Luup shared the successful case study of the first launch of international money transfer using MoneyGram via mobile phones in the Middle East. Luup also pointed to its strategy of expanding the ecosystem further by building partnerships with countries receiving remittances from the GCC region.

Consumers keen for more ‘proactive’ mobile banking services - Research

The smartphone generation is already engaging with mobile banking services and receptive to apps, mobile internet sites and text messages, but eager for banks to provide more ‘proactive’ services to help them keep control of their finances, according to new research.

Mobile marketing company Sponge surveyed 450 consumers via the mobile internet in August and found that 44% claimed to already use the mobile internet, apps or text messaging to interact with their bank; and more than one in four said they did so ‘frequently’.

Of those who didn’t bank via their mobile phone (56%), two-thirds said they would be significantly more likely to use such services if they owned a smartphone. Smartphone penetration in the UK is growing at 70% per annum (source: comScore) and likely to reach 25 million subscribers by the end of 2012.

Although the majority of respondents associated mobile banking with standard ‘control features’ such as checking their balance - almost half (49%) rated this the most useful function - Sponge’s research also revealed a clear appetite for more proactive services. Specific areas of interest included a text-based customer service facility (48%), a mobile service that prompts customers to move funds around in order to maximise their rate of return (17%) and a location-based service offering consumers discounts or other rewards from retailers when they use their bank card (26%).

“There seems to be a definite opportunity for more proactive services to drive positive brand differentiation between banks,” said Alex Meisl, co-founder and Chairman of Sponge. “Despite substantial advertising investment, no bank has yet succeeded in laying claim to this territory. The basic mobile solutions banks are currently focused on are perfectly valid and useful in their own right – but the smartphone generation has different expectations, and the bank that moves most aggressively to meet them has the chance to re-frame and personalise its relationship with its customers.”

Additional findings from the research include:

• Awareness of, and interest in mobile banking services is currently focused on standard features. Just over a quarter (26%) found viewing mini-statements the most useful function, while 9% found bill payment options best. A further 9% felt the ability to transfer money between accounts most useful, and 6% preferred an alert function when they were about to go overdrawn.
• Despite the growing adoption of mobile services, there appears to be a lack of distinction between different banks’ offerings. When asked whether other banks were more advanced than their own in terms of the services they offered via mobile, 70% either “didn’t know” or ranked them “about the same”.
• While there are some lingering concerns about safety and security around mobile banking (32% cited this as the greatest barrier), neither price nor privacy appeared as major issues. Less than 5% felt “mobile banking would be expensive”, while less than 8% were concerned about their bank “invading their private space”.
• Mobile media consumption in general is occurring across an increasingly broad range of sites and services. 73% of the sample claimed to visit more than ten mobile internet sites each month, and 45% said they visited more than 20. 30% used between four and ten mobile apps each month, with a further 24% using more than ten.

Equens and Federal Reserve Banks launch international payments service

Last year the US’s Federal Reserve Bank and Europes Equens signed a memorandum of understanding on cross-border payments processing in multiple currencies, including the US dollar and euro.

Since then DZ Bank has joined the project, which enables financial institutions in the US to send payments in dollars, euros and British pounds to 22 countries across Europe via FedGlobal ACH Payments.

Conversely, banks across Europe can send dollar payments via Equens to the United States. DZ Bank serves as the European gateway operator, with Equens acting as the payment processor.

Now, DZ Bank and US Bank have become the first institutions to use the service, which is the first live implementation under the International Payments Framework Association. The association is a collaborative effort among public and private groups in Africa, Europe, North America and South America to standardize and make more efficient the transfer of low-value payments around the world.

Michael Steinbach, chairman, board of directors, Equens, says: "This service fulfils an increasing demand within Europe for the efficient processing of low-value cross-border payments around the world. It is our ambition to extend this service to include other regions, countries and currencies."

SADC plans payments harmonization across South Africa, Namibia, Swaziland & Lesotho

A project run by central banks of the 15-member Southern African Development Community aims to complete a pilot project harmonizing the payment infrastructures of the four Rand Monetary Area countries within two years.

News of the initiative came from Tim Masela of the South African Reserve Bank who was speaking on a panel at Sibos in Amsterdam about SEPA "replicants" - payments initiatives worldwide that are building on the experiences of Europe's migration to a single euro payments area.

"Learning from the experience in Europe is very useful," he says. "Particularly in the area of legal frameworks."

Subsequent project phases propose an extension to the wider SADC group and the creation of a single currency for the region, even though this is unlikely before 2018.

"Although there is a common currency target for the region of 2018, we don't think it's feasible by this date. But we want to make sure that any new payment infrastructure we develop can support it," says Masela

In the first phase of the project, which the central banks led by the South Africa Reserve Bank are planning, the group plans to run a pilot requiring minimal capital investment. It will seek to integrate the existing bank and payments infrastructure across South Africa, Namibia, Swaziland and Lesotho to ensure all cross border transactions can be processed without correspondent arrangements.

Masela says he expects this will take up to two years.

In the second phase, once it's been demonstrated that the integration results and scale of transactions make it worth proceeding, the group will seek to build new shared infrastructure that can serve not only the four pilot countries, but the entire SADC group. This would probably take a further three years, says Masela.

The final phase would seek to completely dismantle barriers to cross-border banking, irrespective of the HQ location of individual banks. Masela cautions that such a move will require considerable legal change and political will to proceed.

MANAGING OPERATIONS RISK - Registrations are closing this Friday

Join us for a 2-day intensive course on Operations Risk Management & Mitigation– from assessment to implementation at the Don III, 125 Pretoria Avenue, Sandton, Johannesburg on the 17 & 18 November 2010.

But you need to act fast as REGISTRATIONS ARE CLOSING this Friday - 29 October. We still have a few spots available.

For more details CLICK HERE.

Registrations for our International Payments course close this Friday (29 October)

Registrations for our intensive 2-day primer on International Payments are closing this week - on Friday 29 October. We still have a few spaces available. Dont be dissapointed.

For more information CLICK HERE.

Safaricom expands M-PESA Mobile Payments to supermarkets

Kenya's Safaricom has expanded its mobile money service, M-PESA to enable payments at all Uchumi and Naivas Supermarket outlets across the country. Speaking at the launch ceremony held at an Uchumi outlet, Safaricom CEO Michael Joseph said the company was leading the way towards a cash-less society where most payments will be made via the telephone or online, hence reducing the risks involved in carrying cash.

"I am extremely excited to be launching Nunua na M-PESA service allowing cashless payments at-the-till for people without a bank account. It resonates with our company?s commitment to lead the way in innovations that provide convenience and security to our subscribers," said Joseph. "Following positive feedback from customers who participated in a pilot, as well as the Central Banks go-ahead to roll-out, we shall now proceed with expanding the merchants that will accept Nanua na M-PESA".

Joseph said Safaricom will continue partnering with organizations to expand the variety of payments that can be made using M-PESA with the aim of providing increased convenience to Kenyans while at the same time maximizing their mobile phone usage.