Mobile Money Africa

Technology savvy fraudsters have stolen an estimated Sh21 million from Kenya’s revolutionary mobile phone-based money transfer system, M-pesa.

Michael Joseph, the chief executive of Safaricom — the telecoms operator that owns M-pesa — said the operation has reported suspected or actual fraud in 0.006 per cent total transactions since its inception three years ago.

“Suspected or actual fraud stands at less than 0.006 per cent of all recorded transactions with a downward trend,” said Mr Joseph.

He declined to disclose the exact figures, saying Safaricom had shared the data with regulatory authorities who have the mandate to receive such reports. M-pesa has handled an estimated Sh350 billion since it was launched three years ago.

Increasing attacks

The revelation of M-pesa’s loss comes in the wake of reports that the financial services industry has come under increasing attacks from cyber criminals since Kenya entered the world of high speed internet with the landing of fibre optic cables in the country mid last year.

The financial services sector loses more than Sh100 million to cyber criminals every month, according to the Central Bank’s anti- fraud department.

Anti-fraud experts have feared that M-pesa’s unparalleled success in the money transfer business would catch the attention of cyber criminals and expose the system to huge losses, but the revelation that the money transfer platform has lost less than one per cent of the total cash moved should help clear any concerns over its safety.

Industry sources said M-pesa’s extensive network of 16,000 agents and nine million customers presents a massive security challenge to its managers and that the low level loss is an indication of how far the company has invested in securing the system from cyber criminals.

M-pesa said the number of attempted fraudulent transactions has been rising since last year, but most have been unsuccessful.

“A month does not pass without a new form of fraud. These people are very innovative,” said one agent who declined to be named.

The latest form of fraud targets agents and Safaricom.

The criminals send themselves self-made M-pesa messages indicating that the recipient can withdraw up to Sh35,000, the maximum amount allowed for a transaction.

Subscribers, however, hold up to Sh50,000 in their virtual accounts.

The messages look exactly like the authentic M-pesa texts, but come with made-up codes that have helped agents expose the fraud.

Mobile Union Ltd announces the launch of its new online remittance service (http://www.mtxpress.com), mtxpress, which uses a secure SMS platform to provide a low-cost and convenient solution for people in the UK to send money to friends and family abroad.

According to the most recent DFID UK Remittance Market Report, the UK is one the top 10 remittance-originating countries worldwide, with approximately GBP2.4 billion recorded outward remittances annually from the UK to the developing world. Mobile Union is taking a new approach to remittance by focusing on a massive under-served market segment: people who want to send smaller amounts of money without being penalised with high fees. Mobile Union’s service enables people to send money safely and securely from their home or workplace without the need to visit a retail location; immediately stripping out the costs in time and money associated with a retail infrastructure and passing on these savings to customers. After registration online, with a user-friendly, simple and easy interface, customers can then send money securely using their debit card. Within seconds, the recipient is notified by SMS message that money is available for collection, leveraging the ubiquitous reach of mobile phones throughout the developing world.

Steven Faulkner founder and Commercial Director of Mobile Union commented:”mtxpress makes sending money home fast and convenient (http://www.mtxpress.com). A combination of simple pricing and exchange rates directly linked to the Central Bank rate makes it easy to understand the true cost of sending money home.”

Security is of paramount importance to Mobile Union and there are multiple bank-grade security checkpoints for both the sender and recipient of the remittance, enabling customers to have certainty throughout the transaction lifecycle leading to complete peace of mind. In addition, Barclays Bank is providing the day-to-day banking and merchant services and Cybersource, the world’s first online payment management company, processing debit card transactions.

This week’s launch focuses on the UK to Bangladesh market, where Mobile Union has collaborated with BRAC Bank, one of the leading banks in Bangladesh. This partnership will enable recipients, without the requirement of a bank account, to utilise the bank’s extensive network of locations across the country to receive money. However, it is also possible to credit accounts maintained at BRAC Bank.

This template is one that Mobile Union will continue to use as it rolls out its service to other parts of South East Asia and West Africa later this year, providing an accessible service to the underserved.

Speaking about the launch of the service, Randall Harper, CEO for Mobile Union said: “The UK’s remittance market continues to grow, but little attention has been given to people who want to send smaller amounts of money without incurring the high fees. Through our mtxpress service and its secure SMS platform, we are able to provide this under-served segment of the market with a world-class service that is convenient, instant and great value-for-money.”

Octopus Ventures Ltd , one of the UK’s leading investment companies in early-stage and expanding companies, has led an investment round of £3 million into Mi-Pay Ltd , a leading processor of payments for the fast-emerging mobile money sector. The investment round was also supported by existing institutional investor Albion Ventures LLP and management.

Mi-Pay’s existing service enables customers to ‘top-up’ their pre-paid mobile phone directly on-line, or via their mobile phone, rather than using indirect brand channels such as Paypoint or bank ATMs. Benefits of the direct service include cost reductions for mobile network operators and a more personal engagement with customers, removing the anonymity of customer relationships allowing substantial improvements in customer churn management.

This round of investment will enable Mi-Pay to roll out its new mobile money services, which are now fully developed and ready to scale with blue-chip launch customers. The additional mobile phone services include:
• International Airtime Top-up: Customers can top-up pre-paid mobile phones on behalf of friends or relatives overseas.
• Domestic money transfer: Enabling agent networks such as banks and mobile operators to run domestic money transfer services in emerging markets.
• International money transfer: A white-label service enabling money transfer networks to run direct (online and mobile phone initiated) money transfer services.

Mi-Pay currently operates throughout Europe, Africa and the Middle East, and has an impressive client list of well known brands including Tesco Mobile, The Carphone Warehouse, Vodafone, Du in UAE, KPN Telfort and Zain amongst others.

The allocated funds for Octopus were provided by the Octopus Titan VCT funds, together with the Octopus Eureka EIS and the Octopus Investor Group.

Alex Macpherson, Chief Executive of Octopus Ventures, said: “We are delighted to be joining the team at Mi-Pay. Octopus looks to partner businesses with exceptional management teams, innovative products, and large addressable markets – Mi-Pay has these elements to its business. We now look forward to working closely with the business and ensuring that it continues to build on strong foundations.”

Ed Lascelles, Partner of Albion Ventures, said: “We continue to be impressed by the team at Mi-Pay and the progress they have made in developing the Company’s leadership position. We are delighted to further support Mi-Pay as it takes advantage of the considerable market opportunity.”

Norman Frankel, Chief Executive of Mi-Pay, said: “Mi-Pay is delighted to have funding and support from Octopus Ventures as well as existing investors Albion Ventures. Their pedigree working with eCommerce related businesses will add significant value to our business and strengthens our list of blue-chip investors. With their help, we can develop the many significant opportunities in this dynamic market while continuing to deliver our award winning market innovation. The investment will enable us to achieve our strategic and operational goals which include driving International Airtime Top-up and money transfer solutions to a wider market in key remittance corridors in Europe, Africa, Middle East and Latin America.”

Alliott Cole led the deal on behalf of Octopus. Shoosmiths were legal advisers to Octopus. Ed Lascelles represented Albion Ventures. Miranda Morad of Berwin Leighton Paisner provided legal advice to Albion. Mi-pay received legal advice from Mark Lucas at Barlow Robbins. Corporate Advisory services were provided to Mi-Pay by Stuart McKnight of Ascendant.

Nancy Sudheer

Mobile payment solution companies are engaged in talks with the Middle East telecom operators to target the large immigrant population.

Many of them are talking to two to four operators in the region to meet the growing demand for mobile payment solutions. The companies see large-scale use of mobile phones for banking in Middle East and Africa. While some of them are finalising pilot projects, others are set for a wholesale implementation of their mobile payment solutions.

Gemalto, one of the largest in the mobile payments solutions segment, is already working with du and etisalat. Pascal Oromi, Vice- President for mobile financial services at Gemalto, confirmed they are also entering a tender for du, which is outside NFC (near field communication) transactions.

“There are already two to three deployments being made in the region – mainly in Pakistan and Iran. This year, we are targeting Dubai and already working closely in Egypt. In total, we are targeting five deployments in 2010 in the Middle East,” Oromi said. “The immigrant population from India and Pakistan in the Middle East is the target audience. The region is not unbanked like Africa, but [migrant workers] require to send money back home. Mobile payment solutions are largely required for transferring money and also, many a time, making big transactions in the Middle East.”

In Africa, Gemalto works actively in Nigeria and Uganda among others. Oromi was of the opinion that the UAE operators have a clear view of their requirements. “In terms of challenges in the region, it’s also about being clear about banks, regulators and operators. There are a lot of solutions available in the market, making it fragmented. India, Africa and Latin America are also potential markets for Gemalto. As we work with different operators in these countries, interoperability is essential.”

Currently, one third of Gemalto’s revenue comes from the Middle East which, according to Oromi, will increase in 2010.

Close competitor Fundamo has been talking to operators in the region for a long time and also failed in tenders made previously in the UAE. Richard Bailey, Product Manager at Fundamo, is, however, positive. He said: “Bahrain is an active market but in Dubai, we didn’t have much of success. The offering made was complicated at that time as the market was strongly led by banks and the solution did not suit them.”

The company has not given up and continues to see money remittances as big business. “Mobile money is a big opportunity and provides a ready access to migrants. Many of them still don’t have access to traditional banking services. Banks also have opportunities to offer services to the unbanked. Until now, we have focused on Africa, the Middle East, Pakistan, Indian Subcontinent, Indonesia, Malaysia and Latin and South America,” said Bailey.

Fundamo is currently talking to two telecom operators in the Middle East. “In Africa, we have worked closely with MTN, and also Yemen, Iran, Afghanistan and Syria. Currently, the growth is less than 10 per cent from the Middle East for Fundamo, and we expect it to grow up to 20 per cent in 2010. We are working with 40 operators in the MEA region.”

Even Bailey has seen an appetite for such kind of applications in the Middle East among telecom operators. “Operators are willing to take the risk, expand service offerings by extending beyond voice and data. Value- added services are in the limelight and therefore gained relevance.”

With mobile payment solution companies tapping the business potential in the region, smaller players in the mobile wallet solution segment are also joining the bandwagon. “In the Middle East, with the regulator getting tough on the immigrant population to create bank accounts, it has invariably increased business potential for mBlox. Our top-up systems doesn’t focus on mobile money, but there are vouchers, which can be bought from banks, and retail counters. It’s not restricted to airtime on prepaid phones but also transferring real time money,” Andrew Bud, Executive Chairman at Sweden based mBlox, said.

He also revealed that the company is currently talking to five operators in the Middle East. “The talks are focused on top-up systems and are pursuing opportunities globally. The high mobile penetration and also lack of banking infrastructure in some areas make it a top area for mBlox.”

Bud also stressed on the fact that security was not an issue on these systems. “Customers are already using credit cards or bank cards,” he said.

Mobile payments work on similar lines with either a barcode or an NFC phone or any established payment technology. The technology can be used to pay salaries using the ‘mollet accounts’ of mBlox. “It does not matter who services the bank and customers should not worry about security as even today’s banks cannot provide 100 per cent security,” he said.

The company plans to operate from Mumbai in India, covering the Middle East. It currently has its development centre in Kolkata with six offices across India and Africa.

Mobile payment technology has attracted money exchange centres as well. Khalid Fellahi, Senior Vice- President, Mobile Transaction Services of Western Union, said: “We are present in more than 200 countries, and a large amount of our business comes from remittances. Consumers are interested in mobile wallet solutions, wanting to transact differently. Our space in the value chain is to shoot money to these countries. As a company, we have also been building our connections with various mobile wallet solutions.”

Although Western Union has yet to make any announcement on its mobile wallet plans in the Middle East, Fellahi said, the technology has been a success in Kenya and Philippines.

Nokia, one of the world’s biggest and foremost mobile phone vendors, has officially rolled out its money transfer services in association with Yes Bank, which has managed to gain regulatory approvals from the Reserve Bank of India in order to act as the issuing bank and the custodian of funds involved in these services.

Currently, Nokia and Yes Bank have started a pilot in Pune, that allows the transfer of funds to another person by simply suing the person’s mobile phone number. Also, people will be able to pay utility bills and get SIM car top-ups.

“Looking ahead, there will also be the facility to pay for goods and services”, said Suresh Sethi, Group President, Transaction Banking Group, International Banking, Yes Bank.

Yes Bank has become the first Indian bank to partner with Nokia for the service.

“We will work in partnership with multiple network operators and banks, involving our wide network of distributors and merchants in an open ecosystem to provide the new services”, said D Shivakumar, VP and Managing Director, Nokia India.

YellowPepper, a provider of mobile financial services in Latin America, has launched YellowPepper Mony, a mobile financial product for the unbanked, as part of a strategic alliance with Fundamo.

YellowPepper said that the new YellowPepper Mony enables financial institutions and corporate clients to deliver secure accessible financial services to consumers, such as mobile money transfers, international remittances, mobile bill payments and pre-paid cell phone service.

In addition to YellowPepper’s current ability to connect banks, consumers and retailers through money transfers, bill payments, SMS notifications, and pay-as-you-go mobile transactions, this new offering will target the 80% of Latin American residents who currently have a mobile phone and the vast numbers of consumers that are currently unbanked.

Rafael Russ, YellowPepper’s CEO, said: “Now, more than ever, mobile financial solutions are critical to Latin America. We chose to partner with Fundamo because it is the leading M-wallet solutions provider, with more deployments than any other organization in the world. Together, we are creating solutions for residents of Latin America that will improve their daily lives.”

Hannes Van Rensburg, Fundamo’s CEO, said: “The launch of YellowPepper Mony represents the first deployment of a fundamental, transformational technology in Latin America, serving the unbanked population. This launch also signifies the collaboration between two strong mobile financial services companies, striving to provide life-changing mobile financial products to the people of Latin America.”

Oberthur Technologies, the world’s second largest provider of smart cards solutions announced today a partnership with Utiba, a leading supplier of mobile commerce platforms to create a complementary suite of secured Mobile Money Services and Money Transfer Solutions to mobile operators and financial institutions.

This offer combines Oberthur Technologies’ SIM OTA server, SIM browsing gateway and SIM secured gateway together with Utiba’s transactional platform in a global solution which can be possibly operated from any of Oberthur Technologies’ certified datacenters.

This Mobile Money Solution proposes a suite of secured end-to-end payment and money transfer services helping mobile operators and financial institutions to offer innovative financial services in mobility such as microfinance, domestic and international money transfer, airtime sharing, e-payment or e-banking.

This solution addresses both matures countries, where mobile subscribers are often banked with features phones, and developing ones where banking services and money transfer for under-banked and unbanked can be proposed to large populations through secured applications in the SIM card.

Xavier Drilhon, Managing Director of the Card Systems Division at Oberthur Technologies commented, “With 20 years experience in securing financial transactions and mobile operators traffic, we started a couple of years ago to secure mobile money transactions. With the technology provided by Utiba, who has a proven track record in mobile commerce, we expand further our range of Mobile Money Services for both mobile operators and financial institutions.”

Richard Matotek, CEO, Utiba says “Our objective is to enable the subscriber to remit funds to anyone, anywhere knowing only their mobile telephone number. Today, Utiba boasts of an exhaustive knowledge in creation of mobile finance systems. Utiba aims for an ambitious vision of “Empowering everyone to make Mobile Payments” and we see fostering this relationship with an industry expert like Oberthur as a giant leap towards achieving that aim.”

CellTrust Corporation, a provider of secure mobile messaging and applications, has introduced its SecureSMS Mobile Banking and Payment Pilot for the African region. Sometime back, the company had entered a partnership with a Nigerian company named Maxim-Pro Ltd. Under this partnership, CellTrust was to secure and mobile-enable Maxim-Pro’s banking platform so that the secure mobile banking and payment services can be extended to under and un-banked populations.

The company expects that the new Secure SMS/Text Mobile Banking program launched through its Global SecureSMS Gateway will be adopted at high rates within the first few months of operation. After the introduction of the platform in the region, end-users will be able to make mobile cash transfers, payments and securely access other microfinance banking products.

The Central Banks in Africa are very serious about fraud reduction, and according to the new security requirements for mobile financial management, both the financial institutions and their distribution networks must observe high levels of responsibility in protecting the end user from any fraudulent activity.

According to Samuel Ucheaga, managing director, CellTrust, Africa, the company is experiencing a clarion call for more security, and in the case of mobile text banking or SMS banking, Central Bank officials are legislating requirements for SecureSMS with multiple levels of authentication and encryption along with a clear audit trail for compliance.

CellTrust SecureSMS is an application that provides end-to-end privacy on the mobile device via a highly encrypted, tamper-proof process. It enables message sizes up to 5,000 characters, and turns a simple mobile phone into a secure communication device. Through the remote wipe functionality offered within the application, the users are able to wipe the handset if it is lost or stolen, which adds another critical layer of security.

In the words of Sean Moshir , CEO, CellTrust, microfinance banking institutions and cash agents will continue to play a major role in the successful implementation of the pilot and indeed the mobile branchless banking value chain. Moshir continued that securing the mobile branchless banking value chain against fraud is a major challenge for the region, and CellTrust’s SecureSMS Appliance puts these concerns to rest by providing a solution that delivers advanced security and unprecedented reliability.

The SecureSMS Appliance by CellTrust is reportedly the first global enterprise appliance that enables secure SMS communication between handsets and enterprise applications by ensuring highly encrypted end to end security in compliance with the guidelines of the Health Insurance Portability and Accountability Act or ‘HIPAA,’ the Federal Information Security Management Act or ‘FISMA,’ and Sarbanes-Oxley.

In October CellTrust launched its secure mobile government division with a dedicated team of governmental IT professionals and mobile security experts based at CellTrust headquarters in Scottsdale, Arizona. The secure mobile government division of the company is comprised of seasoned IT professionals with decades of experience in governmental agency information data management.

Prepaid Financial Services (PFS) announced the launch of its globally accepted prepaid cards designed to facilitate global remittance. Prepaid Cards have recently emerged as new opportunity for remittance between the UK and Africa, offering the ability to instantly and conveniently share funds between cards using a registered mobile phone from anywhere in the world.

The MoneyShare Card is a Prepaid MasterCard® Card that looks like a debit or credit card, but cardholders can only spend what they load onto their cards, similar to a pay-as-you-go (PAYG) mobile phone. The MoneyShare Prepaid MasterCard is an ideal way to share funds with family and friends at home in Zambia (www.mymoneysharecard.com).

The cards can be loaded using a debit or credit card online or at over 30,000 cash locations in the UK. Furthermore, cardholders can load their cards via bank transfer or standing orders and wage transfers from employers.

A significant benefit of the cards is the ability to share money with family and friends, by simply sending instructions by text message from a registered mobile phone or online via the website. In order to share money, friends and family members must have their own PFS prepaid card.

The range of self-service card management functions using a mobile phone includes the ability to initially load and top-up the card with funds, lock and unlock the card instantly and to obtain the card balance. These self-service functions are available at any time, globally and instantly, providing customers with enhanced control over their funds.

Noel Moran, Director of PFS explains, “In the UK, more people have mobile phones than bank accounts. The PFS prepaid MasterCard combines the safety of a payment card with the flexibility and convenience of a mobile phone. Cardholders can easily manage their money from anywhere in the world, by simply using their mobile phone. Once loaded with funds, the card can be used globally to make purchases at over 28.5 million shops or to access cash at over a million ATMs wherever the MasterCard Acceptance Mark is displayed.

“Our aim is to give Zambians living in the UK, the opportunity to transfer money back home at reasonable rates, without having to leave their home. Over the coming months we hope to have additional cash access points in Zambia where cardholders can withdraw cash and use the card for purchases.”

With PFS, businesses can introduce a prepaid card product without the need to commit to minimum card volumes or pay excessive prepaid programme setup fees. We create low-volume prepaid card programs on generic branded plastic within 14 working days. This enables companies to take advantage of opportunities in record time. Furthermore, our clients are not tied into minimum card orders which are common amongst many prepaid providers.

The business sector, mobile operators and banks are turning to prepaid card solutions to promote loyalty and drive revenues. The PFS mobile Money Share solution provides a simple and easy to use solution for both the banked and unbanked sector.

Cardholder benefits include:
• Cheaper: Less Commission than regular wire transfers.
• Save time: No queues, no paper work.
• Convenient: access your money nationwide 24 hours a day and 7 days a week.
• Availability: Available to all UK residents and Zambian residents in the UK.
• Fast: Funds are available immediately for withdrawal once loaded onto the secondary card.
• Simple: Easy to apply, no credit checks, no bank account needed, open to everyone.

The card also provides the security of a Chip and PIN MasterCard Card, making it a safer alternative to using foreign currency abroad. The cards are considerably more convenient than traditional Traveller’s Cheques, where travellers have the hassle of carrying around their passport and have to record their spent Traveller’s Cheque numbers.

To apply for a PFS Prepaid MasterCard or find out more about business prepaid card solutions from PFS, visit the PFS website at www.prepaidfinancialservices.com

For more information contact:

Prepaid Financial Services;
Office: +44 207 659 2429

Umniah – the fastest growing telecom service provider in Jordan – announced preparations to launch its new Mobile Money Transfer Service in the Jordanian market in cooperation with Eskadenia Software and a leading local bank partner.
Through this pioneering and innovative service, Umniah will utilize cutting edge technology to allow all Umniah subscribers to use their mobile handsets as portable wallet accounts to transfer money to local and international destinations; mobile and Internet subscribers to pay their monthly subscription fees; and prepaid subscribers to recharge their lines.

Through this unique service, Umniah will also present its subscribers at a later stage with the option of paying their utility bills, such as their water and electricity bills, as well as pay their shopping expenditures by directly making payments via their mobile handsets while shopping.

Commenting on this new and pioneering service in the local telecom market, Mr. Ihab Hinnawi, Umniah’s CEO, said:
“We are very pleased with this step, which reflects our interest in continuously developing our range of services and our dedication to ensuring that our services help make life easier for Jordan’s citizens. This technological advancement reflects the developments taking place within the Jordanian economy at various levels, as we have been witnessing the introduction of modern services and facilities within the Kingdom that are designed to encourage productivity and competitiveness and support the efforts being exerted towards following the latest global market developments.”
He added: “We are confident that the Mobile Money Transfer Service will meet great success in light of the added value it offers to our subscribers through our partnership with Eskadenia Software. The combined capabilities and expertise of both Umniah and Eskadenia Software will enable us to provide this service in accordance with the highest quality standards.”

Adding her own comments on this development, Ms. Duha Abdul Khaleq, CEO of Eskadenia Software, stated: “We take great pride in partnering with Umniah to launch this innovative service; this step coincides with our vision of providing technologically advanced products and services to the Jordanian market. We aim through our services to continuously remain abreast of global developments and advancements in our field and staying attuned to the needs of the local market in order to design effective software that caters to these needs. We are confident that this service will yield tangible benefits to both sectors and individuals, particularly Umniah’s subscribers, once they begin to utilize it to complete many of their financial transactions with ease and in a timely manner.”

During his closing remarks, Mr. Hinnawi further added: “We are pleased with this group effort that is aimed at providing a reliable, flexible and highly secure service. We understand the importance of cooperation between the banking, telecom and IT sectors to make this kind of service a success in Jordan. We are also confident that this type of partnership will increase customers’ trust and will positively change the way they deal with many of their daily transactions.”