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April 2016


    Good governance is about people: of the people, by the people, for the people. With more people armed with mobile and internet, governance also needs to go digital. While digital governance is topping the agenda of many nations, most governments still have a myopic view of it putting only generic information online. If governments truly want to harness the benefit of digital governance they need to focus on how technology can be used to create citizen-centric experience.

    A citizen-centric experience is about simplifying people to government interactions by making it digital. Consider applying for a passport. A truly digital process would’ve used digital tools such as the internet and the mobile for the entire process – right from filling required details, providing verification documents, paying service charges to tracking application status. With mobile and internet making deep in-roads into emerging economies, delivering such seamless digital experience is now imminently possible. However, there are few weak links, such as payments. With majority in emerging markets being unbanked and un-carded, digital payments remains a challenge.

    Mobile money, which has rapidly risen as a preferred alternative payments medium in emerging economies is the answer. Governments across the world are leveraging the power of mobile money to digitize Person to Government (P2G) and Government to Person (G2P) payments, advancing digital governance agenda, as well as achieving sustainable development goals.

    Figure 1 – Mobile Money enabling mGovernance

    Person to Government payments (P2G)

    Governments are using information communication technologies to improve the quality and efficiency of public sector service delivery. This includes usage of mobile money for P2G payments. According to the GSMA, in 2014, the ability to make payments to the government via mobile money was live in at least 13 markets across Africa, Asia and Latin America1.

    Tax payments

    Tax payments can be very taxing! Citizens have to fill up long forms, visit their local revenue authority or bank, and stand in long queues for hours on end to pay their taxes. But not anymore! Governments are now moving toward e-filling and mobile payments. Revenue authorities in countries like Kenya, Tanzania, Mauritius, Guyana, Rwanda, Cameroon, Uganda and Philippines enable individuals and businesses to use mobile money to pay income tax, corporate tax, property tax and VAT. With an end to end digital process in place tax payments get sorted in minutes.

    In addition to delivering convenience to citizens, mobile based tax payment is helping governments to curb tax avoidance and boost the amount of tax collected. Tanzania and Mauritius revenue authorities have experienced increased in tax collection due to introduction of mobile based tax payments. Digital tax collectioneliminates the need for maintaining and storing physical documentsand allows government officials to keep and track records electronically.

    Figure 2 – Mobile payment's impact on tax collection

    Government of Kenya is planning to sell government bonds via mobile. The platform known as M-Akiba will be delivered through all the major mobile money services, offering bonds worth Ksh 5 billion (nearly US$47 million) to over 32 million citizens. Today, 98% of government bonds are purchased by institutional investors and only 2% by individual investors2. By using mobile retail channels, the government hopes to reach more individual investors increasing their participation in government bond issuance. Citizens will not only be able to purchase bond via mobile money, but also receive the principle amount and interest in their mobile money account on maturity of bonds.

    Payments for government services

    In emerging economies, the private sector is either too weak or there’s a monopoly in the market leading to citizen exploitation. To accelerate economic growth and benefit the entire population, governments have set up public sector entities and institutions to provide basic amenities like electricity, water and sanitation amongst others. Citizens pay a charge to access these services, which in most cases is through cash or cheques. However, paper-based payments come with considerable costs. Besides financial costs related to printing, security, postage and clearing & handling of cash, there’s non-financial costs to consider such as growth of shadow economy as well as various environmental and security risks. The burden of cash usage on society is as significant as 1.5% of the GDP3. Moreover, due to limited collection points, usually there are long queues for payments inconveniencing citizens and creating chaos.

    These challenges can be overcome by using digital payments. In many emerging economies, mobile money is finding new use cases everyday: paying bills for utilities; buying tickets for public transportation; paying fees for schools and universities; paying for medical treatments and premiums for insurance. Mobile money brings cost benefits and savings for both citizens and government entities. Citizens save time and cost of travelling to payments points whereas public sector entities are able to reduce costs of paper invoicing besides curbing the menace of shadow transactions as well as reducing carbon footprint by eliminating paper receipts. Some successful examples of G2P payments are:

    School fee payments in Côte d’Ivoire: The Ministry of National and Technical Education (MENET), in Côte d’Ivoire, made it mandatory for secondary school students to pay their school registration fees digitally via of one of four accredited mobile money providers. In 2014, 99% of the students paid school fees digitally – 94% of which were mobile money transactions and 6% of which were online payments – proving the success of the MENET’s P2G payment strategy. The digitization of school fee payments provided two major benefits. Firstly, itreduced leakage of funds caused by theft, bribery and security issues.Secondly, digital registration of secondary school students allowed MENET toconsolidate its student database and significantly increasing the quality of its information. The database is now more up-to-date, includes a comprehensive list of 1.5 million secondary school students, and has eliminated duplicate entries 4.

    Figure 3 – Customer journey of school fees payment via mobile money

    eServices portal in Ghana: The Government of Ghana, in December 2014, launched Ghana Electronic Payment Platform (GEPP) facilitating digital payments for government services on its eServices portal. Citizens could pay online or through their banks or mobile money services like Airtel Money for various government services like passports, business registration, tax administration and police search reports. In order to process the mobile money payment the user must choose the mobile money provider on the eservice portal and fill in the relevant details. The payment is deducted from citizens’ mobile money account and confirmation is sent via SMS.

    Figure 4 – Electricity bill payments via mobile money in Cameroon

    Government to Person payments (G2P)

    Now, let us look at the other side of the story – government cash disbursements. Government gives financial aid to citizens in the form of cash, subsidies, distress payments and salaries. Governments globally are adopting mobile money to make cash disbursements frictionless.

    Cash aid and subsidies

    The government provides financial aid to the poor directly in the form of cash as well as indirectly through various cash subsidies on items like fuel, cooking gas, water and electricity. Most cash assistance schemes are hindered by long cash disbursement cycles, presence of middle men, large number of unbanked beneficiaries and inability to directly reach the beneficiary. With widespread mobile reach, mobile money is the quickest and the most cost-effective option to disburse cash to beneficiaries.

    Cash aid and subsidies

    In India, the Government of Madhya Pradesh, with partner Vodafone M-Pesa, disburses financial aid to mothers, who receive the payment directly on their mobile phone. The beneficiary is informed with an SMS mentioning the amount of the subsidy, the withdrawal code & procedure, facilitating cash-out at any Vodafone M-Pesa agent. Direct disbursement to the mothers has resulted in reduction of the money being collected by the fathers and therefore never reaching the intended beneficiary in some cases.

    Mobile money based cash disbursement is most useful in emergencies such as earthquake and floods. For example in Pakistan in 2014, the government partnered with mobile operator Mobilink to disburse funds to flood victims. The use of Mobilink’s mobile money service Mobicash ensured that fund disbursement is swift and transparent. Beneficiaries were able to cash-out flood relief funds from designated campsites located across the flood hit areas. The team deployed at the locations used Bio-metric Verification System (BVS) to maintain transparency and ensure that the funds reached the intended person.

    Not only government, but NGOs are also partnering with mobile operators for financial aid disbursement. Monetary aid is a better option compared to in-kind aid (such as food bags) as the affected families can use the money as per their choice and individual needs.

    Figure 6 – NGOs disbursing cash aid via mobile moneyAirtelPayments

    Salary payments

    In many developing countries, the government and public sector are the largest employers. Paying salary and pension to serving as well as retired personnel in far flung areas can be very challenging. Irrespective of whether a person is banked or unbanked, permanent or contractual, mobile money provide a robust channel to transfer salaries directly. The solution offers convenience specifically to the old age pensioners, as they can cash-out their salary at nearest mobile money agent and do not need to travel to bank or government offices to fetch salary.

    Mobile money salary payments eliminate the role of the middlemen reducing corruption. A good example is the Afghan National Police which uses Roshan’s M-Paisa to pay staff located in remote areas ensuring full and timely payment of salaries. The previous cash based salary system was marred by corruption with senior officials pocketing salary disbursements with such impunity that many junior policemen were not even aware of their real salary. With M-Paisa these policemen received their salary in full and on time leading to surprises all around. In fact, in some cases, the hike was as much as 30%, preventing defections of policemen to the Taliban who were paying higher salaries5. The use of M-Paisa helped to uncover ghost police officers, constituting 10% of the workforce, whose salaries were pocketed by others. In Democratic republic of Congo more than 66,000 civil servants, including the military, the police force, and pensioners receive payments via Airtel Money6.

    The road ahead

    There are several successful examples of G2P or P2G digital payment transactions, some of which I have mentioned above. However, another truth is that most governments have just focused on digitizing only one or two initiative. The true vision of digital governance can only be realized if there is a comprehensive strategy to digitize every use case scenario where the people and the government transact – whether it is a G2P or a P2G payment. The importance of user experience cannot be understated. Instead of providing a different user interface for every service, there should be a single portal/app for handling all government transactions. Whether it is paying electricity bill, purchasing train ticket, paying tax or receiving subsidy – every payment should be on a single portal, providing a seamless user experience, leading to higher adoption of digital transactions. Governments should also collaborate with all the digital payment players in the market without any bias to ensure that the digital payment initiative has a wider reach.

    1 http://www.gsma.com/mobilefordevelopment/wp-content/uploads/2015/10/2015_GSMA_Paying-school-fees-with-mobile-money-in-Cote-dIvoire.pdf



    4 http://www.gsma.com/mobilefordevelopment/wp-content/uploads/2015/10/2015_GSMA_Paying-school-fees-with-mobile-money-in-Cote-dIvoire.pdf

    5 http://foreignpolicy.com/2015/08/12/afghanistan-calling/


    About the author – Mohit Bhargava has over eight years of work experience in product marketing and research in the telecom domain. At Mahindra Comviva, he is serving as Manager in product marketing for the mobile financial solutions portfolio. His areas of function primarily include evangelizing Mahindra Comviva’s mobile financial products and their impact on transforming the financial landscape globally.

    April 26, 2016 0 comment
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    The EMV migration is now in full swing, and merchants, consumers and banking institutions are making adjustments to change their payment methods with respect to liability shifts. EMV migration is also laying the groundwork for the next generation of contactless payments which will be enabled by near field communication (NFC) technologies.

    What is EMV?

    EMV creates a secure ecosystem for card issuers, merchants as well as the customers. It is a transition from “swipe” based magnetic cars to “chip & pin” card base payment system. Unlike magnetic cards which contains only the static information of the card user, which can also be counterfeited, EMV provides dynamic information to the payment terminal that change with every transaction and thus helping in the containment of “card present” fraud. The other major change is how EMV cards are processed at the POS terminal. Unlike magnetic cards which are swiped, EMV will require the user to insert the card in the terminal for the duration of the transaction.

    What is EMV compliance?

    EMV compliance has become important to the card issuer as well as to the merchant/acquirer against the backdrop of the liability shift coming into effect after the cut-off date.

    For example, failing EMV compliance, liability arising from payment fraud could shift to the merchants in the following scenarios –

    Scenario 1: Counterfeit fraud

    If merchant terminal is not enabled for contact chip and a payment is processed with a counterfeit magnetic card (with track data copied from chip card) the counterfeit liability falls on the merchant after the cut-off date

    Scenario 2:  Lost or stolen cards

    If merchant terminal is not enabled for chip card and a payment is processed with a chip card, pin preferring CVM (online or offline) the liability of the lost or stolen card shifts from the issuer to the merchant

    The liability will shift to the merchant even if the terminal is chip card compliant but with signature CVM when the payment is made with a chip card with pin preferring CVM (online or offline).

    As is clear from the liability shift, the issuers as well as the merchants have very compelling reasons to comply with EMV compliance

    Is EMV the most comprehensive payments system around?

    Firstly, there is the behavioural aspect to EMV processing at merchant POS. Unlike the earlier “swipe” and pay technology, EMV will require the card user to insert the card inside the terminal for the entire duration of the transaction. Is it faster than “swipe”? The answer is definitely a “no”.

     EMV has played a big role curbing the menace of “card present” counterfeiting at merchant POS. However, EMV does not cover “card not present” transactions, for example, e-commerce transactions. With the rapid proliferation of smartphones, newer and faster networks, more and more people are expected to shop online in the future. So is it the most comprehensive? The answer is still a “no”.

    Also, EMV ready payment terminals will require out of pocket expense for merchants which they may not be ready even with the spectre of the liability shift looming in front of them.

    What is the way forward for EMV technology?

    EMV technology is expected to spur adoption of Near Field Communication technology or near field payments. Most of the EMV payments today use contact not contactless technology. So the next wave of EMV technology could be contactless NFC technology.

    NFC is getting more attention in the market now that we have gone through the initial wave of chip based EMV payment. This is a good sign because the acceptance infrastructure is already in place in the form of chip & pin based cards and chip and pin based acceptance terminals (merchant POS).  The customers accustomed to inserting their chip based card in the payment terminal may now look for something simpler in the form of contactless payments with NFC enabled mobile phones or wearables.

    Also this convenience does not have to come at a cost. The use of biometrics, HCE, tokenization, secured element (SE) in mobile payments proves that convenience does not come at the cost of security.

    Also, unlike “card present” EMV transactions that are possible only in a physical setting, mobile payments can be used virtually for making payments for ecommerce transactions. The rapid proliferation of smartphones and the acceptance of chip and pin payments could lead to a massive uptake of mobile payments in the future.

    Mobile payments is definitely the way forward for EMV taking into consideration the burgeoning volume and importance of virtual web based transactions. Contactless mobile payment is receiving significant attention as the focus is on providing customers with the most comprehensive payments solution catering for online as well as offline transactions. What we are witnessing now is a gradual transition from “swipe” to “chip” to “mobile payments” with “wearables” in store in the future.

    April 4, 2016 0 comment
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    The telecom industry is in a high growth phase and in such a scenario, it becomes difficult for the telecom service providers to handle all the chores of their offerings. The managed services market has given a much-needed support to the telecom operators and the same can be characterized by the agreements, which vary in scope between the telecom operators and Managed Service providers: incumbents, green fielders and lower-tier operations.

    What are Managed Services?

    Managed Services are extended by the Managed Service providers that take on the management responsibility for functions that have been traditionally carried out internally by a telecom operator. These services typically include establishment, operation and management of day-to-day operations of the mobile service operator’s network, services as well as business support systems.

    Challenges faced by operators today

    The telecom operators that have decided to rely on Managed Services have been mainly witnessing the following challenges:

    • Owing to increased competition and in turn increased financial pressure, the telecom operators need to improve their financial outcomes and reduce their IT costs by outsourcing their functions to a professional that can input higher efficiency and scale economy.
    • An increased level of complexity pushes the mobile service providers to reduce their need to build competence related to network and service and leave the management of this complexity upon the Managed Service Providers.
    • The telecom operators need to dedicate their efforts to revenue generating activities like customer acquisition.

    How can managed services help?

    The telecom crisis of 2001-02 and the following financial pressure among the telecom operators led Managed Services to gain real traction and prominence as a distinct service offering. And, thus the potential cost saving and operational efficiencies pushed the telecom providers to enter into Managed Service agreements.

    The pressure for the mobile service providers to reduce the costs is ongoing, especially owing to the fact that competition is rising. Managed Services possess potential operational efficiencies, generating scale-based synergies as increasing number of managed service contracts are agreed.  The greater the scope of the agreement, the larger the potential of Managed service providers to maximize the efficiency and in turn reduce costs.

    The telecom operators now witness a multi-technology scenario that keeps changing quickly. The accompanying risk of technology choice, the challenges associated with transitioning between technologies alongside the operational challenges of maximizing the potential of various co-existing add up to the substantial requirement of a single operator.  As the number of end-users and technologies grow, the telecom environment is becoming more and more IT oriented.  Managed Service providers possess the potential to extend support to the mobile service providers in this regard, providing necessary for managing existing technologies as well as transition between them.   Also, the managed services support the telecom operators in executing necessary changes by acting as an agent to achieve strategic goals.

    Are there any managed services related challenges one can expect?

    Managed services are increasingly being considered as an alternative in most of the telecom operators’ procurement process. However, still there are many operators who have not yet adapted Managed Service engagements. This could be owing to the concerns regarding the potential loss of control and competence, fear regarding financial exposure to some Managed Service provider or a belief that a third-party may not be able to handle the operator-specific circumstances aptly.

    Telecom operators can significantly reduce risk and maximize potential with successful adaption of Managed Services. The below given points may help them.

    • An operator should decide well in advance on which areas of his business can be outsourced as a part of their strategy, alongside deciding what level of control they would like to maintain.
    • A business case detailing the telecom operator’s cost structure and internal performance needs is an elemental part of any outsourcing strategy. A service provider that can explain its business to this extent is placed better for evaluating the ability of the managed service provider to meet performance and cost commitments.
    • Providing sufficient freedom to the Managed Service Provider so as not to hinder the extraction of complete business value for both the parties is quite crucial. Cost savings should be maximized developing mirror functions leading to no duplication of work.

    A thorough evaluation could help the telecom operators to establish trust and co-ordination with the Managed Service Providers.

    Future of Managed Services

    The growing number of Managed Services has and will over the coming time create a virtual circle leading to increased service competence, even greater efficiency and economies of scale. Looking forward to the future of the Managed services market, the most important aspect to analyze is the continued evolution of the market drivers. Additionally, it becomes quite interesting to continue the analogy to IT industry and accordingly draw conclusions on its importance to the rise of the managed services in the telecom industry.

    It is clear that the key drivers of Managed Services till date will continue to apply over the coming years. The increasing popularity of Managed Services will drive these service providers to continue improving competence and continue to realize synergies in service provision. This will lead to a higher potential for cost savings backed by the maturing market which will perpetuate the Managed Service growth.





    April 4, 2016 0 comment
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