Swift white paper_mobile_payments

Mobile payments
Three winning strategies for banks
Executive summary
Mobile payments are a hot topic in the
financial industry and a top priority for
banks, because:
— The ever growing ubiquity of the
mobile phone: on a world population
of 7 billion, there are 5 billion mobile
phones, but only 2 billion people have
a bank account;
— Consumers are using their mobile
phones to make payments in over 130
deployments with a 100 more planned
and several new initiatives announced
each week;
— It is a growing market predicted to
increase to 900 million users and USD
1 trillion in transaction value by 2015.
Many banks have launched a mobile
payments service or wallet, but this
opportunity also brings specific
challenges:
— There are many new entrants investing
heavily in mobile payments: mobile
network operators like Vodafone,
e-commerce companies like Google,
retailers like Carrefour, payment
service providers like PayPal, as well
as money transfer operators and card
companies;
— It is still an immature business where
only a few initiatives have succeeded in
attracting a significant user base;
— It is an unclear business case for many
banks who wonder what is the up-sell
when a payment becomes mobile and
who may see little value in a telco-led
model;
— It is a complex matter where legal
frameworks are not yet harmonised,
technology is evolving with a need for
partnerships, and where banks may
feel they lack the expertise.
This competitive and fast evolving
landscape creates doubt. Many banks
wonder what to do: just stand by and
watch or respond more pro-actively?
What is our bank’s mobile payments
strategy?
Our recommendation to banks regarding
mobile payments is two-fold:
1. Play to your strengths. Double-
guessing under these circumstances
can be costly. The path to success
is to use clear criteria: respond to
an obvious customer demand, use
technologies that satisfy that need, and
decide based on a clear business case.
2. Use mobile payments to bring your
customers closer to your bank, in a
new “experience banking model” (cf.
SWIFT’s white paper on Correspondent
Banking 3.0).1
We see three areas of strategic
opportunity for banks:
— Mobile banking: using a mobile
phone to access a bank account
and make payments - can provide
more convenience to customers.
Banks should actively invest
and expand this channel now, in
particular for corporate treasurers;
— Mobile commerce: using a mobile
phone to buy products. This is
driven by e-commerce companies
looking to uplift their product
sales and generate revenue from
advertising. This is more a 3-5 year
play as the customer/retailer value
still needs to mature. Banks should
Highlights
Mobile payments are a top
priority
There is competition from non-
banks
Banks can use mobile payments
to get closer to customers
In particular for mobile money
transfers, banks should
collaborate to develop a global
service
White paper
Seize the opportunity
— 1

partner with these companies to
learn and offer their financial services
as part of that shopping experience;
— Mobile money transfers: using a
mobile phone to send money to
someone. This can provide a basic
payments service to the un/under-
banked in a developing country
by converting cash to electronic
transactions. Such services are
currently often run on a domestic
basis by mobile network operators,
but they are now interconnecting
to capture the higher margin
international person-to-person
remittances. Here, banks should
consider bolder moves, individually
set up a joint venture with a telco,
as well as collaborate to launch their
own global mobile money transfer
service.
Each area may present opportunities for
collaborative solutions: offer a serviced
platform for mobile banking connectivity,
provide a hosted application to distribute
payments services onto a mobile
commerce wallet or develop a mobile
payments service for international money
transfers.
In conclusion, mobile payments are a
strategic opportunity for banks, both as
a defensive play against new entrants, as
well as a growth prospect to convert cash
into electronic transactions.
A top priority
Mobile payments are a top investment
priority for banks.
In fact, the world’s biggest banks continue
to focus most of their announced IT
initiatives on mobile financial services
(including payments) and online banking.2
This is not surprising given the ever-
growing ubiquity of the mobile phone.
Out of a world population of 7 billion, over
5 billion or 70% have a mobile phone,
whereas only 2 billion or 30% have a bank
account. Take India: on a population of
1.2 billion over 800 million have a mobile
phone and only 250 million have a bank
account.
Consumers are increasingly using their
mobile phones to make payments. A
global inventory lists over 130 live mobile
money deployments and nearly 100 more
are planned.3
Several new initiatives are
announced every week.
This is a growing market. Mobile is the
payment technology that will have the
greatest growth over the next five years.4
Growth predictions for mobile payments
vary from 350 to 900 million users
generating USD 430 billion to 1 trillion in
transaction value by 2015.5
Specific challenges for banks
Many banks have launched a mobile
payment service or wallet.
This is a very competitive and fast evolving
battlefield with specific challenges for
banks.
New entrants
Many non-banks have entered the mobile
payments market, often with innovative
solutions. Mobile network operators like
Vodafone, MTN, Orange and airtel have
deployed mobile payments services in
several countries or have set up joint
ventures between them, like Isis in the
US or project Oscar in the UK. Money
transfer operators like Western Union and
MoneyGram, as well as card companies
like Visa, MasterCard and Amex all have
multiple mobile payments initiatives.
Payment service providers like PayPal
are throwing their full weight into mobile.
E-commerce companies like Google are
deploying wallets for contactless payments
using NFC (Near Field Communications).
An immature business
Only a handful of these mobile payments
services have succeeded in attracting a
significant user base (over 1 million users).
New initiatives may fail to go beyond pilot
trials and some services (like Nokia Money
in India) have ended altogether.
Unclear business case
For many banks the business case to
do mobile payments is not clear. Mobile
payments and linked commerce will
represent USD 20-25 billion in revenue by
2016 from new revenue opportunities and
potential loss mitigation.6
But this a very
different kind of payments opportunity for
banks to pursue as most of the revenue
may be advertising related. Banks will need
to compete for these new mobile value-
added services and revenue streams. In
addition, banks need to determine which
role to play in these new value chains. In a
telco-centric model for example, the bank’s
revenue share from providing the trust
account function may be limited to 10%
whilst 55% goes to the mobile network
operator and 35% to the distributor.7
A complex matter
Deploying a mobile payments service is not
straightforward as legal frameworks across
countries are not harmonised, technology
is still evolving, there is a need for multiple
partnerships, and in general banks may
feel they lack the expertise.
Three strategic opportunities
For many banks this competitive and fast
evolving landscape creates doubt. They
wonder what to do: just stand by and
watch or respond more pro-actively?
We see three strategic areas of opportunity
and actions for banks to use the mobile
phone to forge closer relationships with
their customers in a new “experience
banking model” (cf SWIFT’s white paper on
—— 2
Figure 1: Non-banks leading innovation in mobile payments

Correspondent Banking 3.0)1
:
— Mobile banking: using a mobile phone
to access a bank account and make
payments;
— Mobile commerce: using a mobile
phone to buy products;
— Mobile money transfers: using a mobile
phone to send money to someone.
Let’s examine this in more detail as each
area comes with its own opportunities
and challenges.
Mobile banking
Mobile banking is using your mobile
phone to access your bank account;
receive debit/credit alerts and statements
via SMS; check balances and recent
transactions by browsing a simple
mobile-enabled website; conduct basic
operations via a menu; or transfer funds
and pay bills using an application on a
smart phone (see box 1). Many banks
offer one or more of these options, like
ICICI for example.
Box 1: Technology options
— SMS: communicate with payments
services via short messages; can
work with short codes. If a menu is
required, access from a SIM card
(after replacement) or an application
folder (loaded from Micro SD card).
— USSD (Unstructured Supplementary
Services Data): conversation-like
telecom protocol to access menu
on server by sending short code
(e.g. dial *525#).
— WAP (Wireless Application
Protocol): to access simple text-
only web page (online).
— IVR (Interactive Voice Response):
menu accessed by calling toll-free
number (“to transfer money, press
1”).
— Application on smartphone typically
downloaded.
Mobile can fundamentally change the
retail banking experience and strengthen
customer-bank relationships.
Some banks also have mobile banking
services for corporate treasurers8
,
but these are often basic services to
initiate and approve payments, receive
transaction alerts and view account
balances.
The good thing here is that the bank is
in total control: the mobile phone purely
acts as a channel to access the financial
application that is owned by and runs at
the bank.
Our recommendation: Banks should
actively expand their mobile banking
offering, which today is often still
underdeveloped particularly toward
corporates. A unique value proposition
can turn mobile banking into a cost saving
(instead of contacting a call centre) and
revenue generating channel (increase
loyalty, target marketing to cross-sell core
banking services). This means banks
should invest more in resources: a survey
of 150 banks across Europe indicates
that 70% are planning to add more
functionality, but the majority have fewer
than 10 people dedicated to mobile.9
Collaborative opportunity? Many smaller
and medium-sized banks will be looking
to deploy a mobile banking channel to
connect their customers. Rather than
build one, they are more likely to buy a
product. In that case, it could make sense
to provide a serviced mobile platform that
can be white labelled.
Mobile commerce
Mobile commerce is using your mobile
phone to buy digital or physical goods
and services, remotely from a website or
in proximity like a shop, metro station or
vending machine.
Not considered here as mobile payments
are:
1. Direct carrier billing, where purchase
of e.g. digital content like ringtones
is charged to a mobile phone bill and
that bill is paid by a traditional payment
method like credit transfer or direct
debit. This practice is very successful
however. Examples of companies that
facilitate this are boku, Zong, mopay
and PaymentOne, each servicing 200
million to 3 billion customers for 250-
300 carriers in 60-80 countries;
2. Mobile point of sale, where a card
reader is attached to a mobile phone
or tablet to swipe a credit card. Whilst
it has the potential to significantly
increase the number of points of sale,
the resulting payment is a traditional
credit card transaction. Such card
readers are provided by companies like
Square, Intuit and iZettle;
3. Mobile product scanning, where
a mobile phone is used to scan a
product’s bar code at an Apple store
for example and links it to your iTunes
account. In that case, your iTunes bill is
settled by a credit card payment.
There is currently a buzz around NFC
payments (see box 2). Used for example
in Japan: 65 million enabled handsets,
15 million customers initiating 30-50
million transactions/month with 750,000
merchants; excluding transit.10
Several
projects have been launched in some 35
countries in Europe, the US and China11
,
but many have a long way to go to reach
a mass market. Google Wallet is one
example.
Here, consumer and e-commerce
companies are better placed than banks
to develop these solutions since they own
the product or can enhance the shopping
experience: browse the web to find and
compare products, locate a store nearby,
select the product from a smart poster,
—— 3
Figure 2: Three strategic opportunities for banks in mobile payments
— Access bank account(s)
— Receive debit/credit alerts
— Check balance, receive statements
— Conduct bank transactions
— Remote payments (web site)
— Proximity payments (NFC)
— Physical/digital goods and services
— Airtime top-up
— Person-to-person remittances
— Cash-in/cash-out
Mobile banking
Mobile commerce
Mobile money
transfers

receive a discount, and pay for it –all
with a mobile phone, in one experience.
Their interest is in generating an uplift in
business from a higher average ticket
spend and visitor frequency or from
selling advertising, rather than in the
payment itself.
Box 2: NFC
(Near Field Communications)
— Two-way contactless
communication over short distance
(few centimetres), between NFC-
enabled phone and reader (e.g.
POS terminal or smart poster).
— To enable a phone: 1) embed
NFC chip, 2) glue NFC sticker at
back, 3) insert Micro SD card (for
iPhone e.g. Wireless Dynamics or
DeviceFidelity provide a case).
— NFC vendors: e.g. Innovision/
Broadcom, NXP Semiconductors,
INSIDESecure, Gemalto, ViVOtech
— NFC itself does not make a
payment, still need to load virtual
credit card(s) on phone.
— NFC-enabled phones to grow from
7 million in 2011 to 203 million in
2015 (Yankee Group),
— More in developed markets as
emerging markets generally have
basic handsets.
— More resources: Wikipedia NFC
page, NFC forum.
Several telecom companies have started
mobile wallet initiatives, but some
have had to open up to reach a larger
audience, ask for regulatory approval or
delay projects12
. Handset manufacturers
may play a leading role by embedding
their NFC chip in the phone.
However, there is a large degree of
uncertainty about wide-scale adoption.
Retailers and users need to be convinced
of its value over existing payments
alternatives. There are concerns about
security: we must make sure that account
and credit card details will be safe if the
mobile phone is lost or stolen. And there
is a high degree of technology evolution:
where, for example, does the secure
element sit to NFC-enable the handset
and store the financial application? A
whole new business has emerged for
banks to distribute their payment and
credit card services over the air onto
the mobile phone via a Trusted Service
Manager.13
Our recommendation: A few banks have
engaged in mobile commerce, but in
general banks should remain realistic.
This is not an easy area to get into as it
requires a considerable investment that
may not produce immediate returns. On
the other hand, early involvement can
develop a good understanding of how
this all works. Banks should therefore
look to partner with e-commerce
companies to gain experience, insert
their financial services in the commerce
transaction, and then enhance the
business of their payments products
with better consumer insights. Another
strategy for a large transaction bank can
be to provide the back-end payments
infrastructure to these e-commerce
companies.
Collaborative opportunity? If this business
further develops, many banks will need to
use a Trusted Service Manager. Instead
of each bank operating such a system, it
could make sense to deploy a set of such
applications as a hosted service in the
cloud to provide more choice and reduce
the total cost of ownership.
Mobile money transfers
In developing countries with a low
banking and high mobile phone
penetration, mobile wallets14
can bring
basic payments services to the un/
under-banked. Often starting with money
transfers, these services become more
sophisticated over time to include paying
for bills and goods, pre-paid debit cards,
ATM withdrawals, salary disbursements,
etc.
These are typically provided by mobile
network operators using a mobile wallet
(see box 3). Two examples are SMART
Money in the Philippines (launched by
SMART in 2000, over 9 million wallets,
connected to 9,000 ATMs, over 4,000
cash-in/cash-out centers, 15 partner
banks and 95,000 agents) and M-Pesa in
Kenya (launched by Safaricom in 2007,
30,000 agents, 14 million users, 70% of
all electronic transfers in Kenya, USD 1
billion transferred/month).
Mobile network operators see this as
an up-sell, a value-added service. Their
business case comes from transaction or
subscription revenues, reducing mobile
subscription top-up distribution costs and
increasing customer retention. They have
a large agency network that can be re-
used. They also have a better marketing
and consumer deployment experience
than many banks.
Whilst successful in some developing
countries, these cannot be replicated
as such in developed markets because
of specific success factors: 1) a strong,
latent demand for remittances; 2) in a
country with low banking, high mobile
penetration; 3) with a legal framework
that enables easy customer registration
and is in proportion to the risk of very low
value payments; 4) starting with domestic
remittances and mobile top-up; 5) by a
dominant player, motivated to establish a
leading position in a closed system; and
6) supported by a large agent network15
.
This agent network is key for people to
pay cash into their mobile wallet and to
cash money out. The service provider
must make sure the agents support
its product and that there is sufficient
—— 4
Box 3: Key mobile wallet/platform
vendors
— Comviva: Ex-Bharti Telesoft;
provides value added services to
mobile operators; deployments with
Orange in Africa, Tigo in Africa and
Latin Americas, and South East
Asia.
— Fundamo: HQ in South Africa,
acquired by VISA; mobile financial
services provider; deployments with
MTN in Africa.
— Gemalto: HQ in Amsterdam;
provides digital security solutions,
incl. for NFC; platform for mobile
money transfers.
— Monetise: HQ in London; delivers
mobile banking, payments and
commerce networks; VISA
partnership.
— Oberthur: HQ in France; provides
smart cards; partnership with Utiba;
deployed by e.g. airtel in Africa.
— Sybase 365: HQ in the US;
SAP company; provides mobile
messaging and commerce including
remittances; bought paybox.
— Utiba: HQ in Singapore; pioneer
in mobile financial services with
G-Cash, deployments in Asia
Pacific, Latin America.

liquidity in the network (if a person wants
to cash out their salary, but the agent
does not have any money, the SMS on
their phone has no value, except to make
other mobile purchases).
So where is the next big opportunity?
Several readiness and condition
frameworks, as well as detailed country
analyses are available.16
These, combined
with population size (to develop a
significant business), lead us for example
to Nigeria, India, Pakistan, Brazil, Mexico
and Colombia.
Our recommendation: Banks should
consider making a bolder move in mobile
money transfers. They should take an
opportunistic approach and individually
partner with a mobile network operator for
a specific deployment in one country, as
well as work together to deploy a global
mobile payments service for international
money transfers and remittances.
Collaborative opportunity? If banks are
to develop a global mobile payments
service, it could make sense to develop
this collaboratively.
Obstacles to growth in mobile
money transfers
Let’s have a closer look at mobile
money transfers. Whilst there are several
domestic deployments, many still need
to build their customer base or create the
basic service. We see three obstacles to
further growth and global adoption:
Regulation
In several countries there is already a
regulatory framework for e-money and
mobile payments, while in others it is
still evolving. Conditions vary between
countries on who can operate such a
service, the transaction and wallet size,
and the type of transaction allowed (see
box 4).
Regulators are concerned about
mobile payments being used for money
laundering and fraud. Several have
adopted a proportionate approach,
balancing advancing financial inclusion
with ensuring the stability and soundness
of the country’s financial system.
Cooperation
Not one single bank or mobile network
operator covers the whole world, so
there is a need for cooperation and
partnerships.17
Joint ventures between
mobile network operators may not be
obvious as they are very competitive
on their core voice and data business.
Joint ventures with banks may not be
obvious as parties have different business
objectives, different perspectives on
revenue sharing, and different mind sets
(mobile operators are more agile, banks
focus on robustness).
Examples include Equity Bank with
M-Pesa, State Bank of India with airtel,
Banamex with América Móvil, Alfa-Bank
with VimpelCom, Garanti Bank with
Turkcell and Avea.
Interoperability
Today, most mobile payments services
are closed-loop systems whereby one
customer cannot send a payment to
a customer in another system, even
within one country. Interoperability is the
metaphorical elephant in the room: all
agree it can boost volumes, but with their
own company’s interests taking priority,
nobody wants to let anyone in whilst
expanding market share.
Still, interconnectivity is growing. For
example: G-Cash has bilateral agreements
with several other systems. Western Union
links to M-Pesa; BICS’ HomeSend is a
hub that includes communication protocol
as well as FX conversion; India’s IMPS is
multi-bank by design and underpinned by
the country’s ACH18
and we also see this
model in the UK supported by VocaLink.
By and large however, mobile systems do
not interconnect on a global basis.
—— 5
Box 4: Differences in legal
frameworks (examples)
— MNO friendly: Philippines (MNOs
can perform banking functions),
Kenya (wallet seen as transaction
accounts), Nigeria, Malaysia,
Thailand, Indonesia.
— Flexible: Europe (e-money directive
– often taken as example, MNO
can get PSD license), US (MNO
to register at FinCEN as money
service business), Japan (non-
discriminatory rules, MNO to
deposit money in bank account)
— Banks only: South Africa (bank-led
except for agents, lower KYC/AML
requirements), India, Bangladesh,
Tanzania, Uganda.
Figure 3: Options to achieve interoperability across mobile payments services
Multiple bilateral
agreements
— Multiple point-to-
point connections;
integration effort
depends on power
— Multiple bilateral
business
agreements
— Hub provides
connectivity,
protocol conversion
and value added
services
business
agreements
— Each end-point
connects to Hub,
using common
spec
business
agreements
— Each end-point
integrates with Hub,
using API
— Each end-point
signs into common
agreement, but can
be brand neutral
and allow for
differentiation
Conversion
hub
Common
communication
protocol
Common
service
Not scalable Costly Complex Opportunity?

—— 6
The ideal model for
interoperability
Interoperability may be required, but
what does it actually mean and how
can it be achieved? For end-customers
interoperability simply means that it works
and is easy, fast, safe and cheap.
For service providers, interconnecting
means a lot of acrobatics behind the
scenes:
— Technical: establish secure real-time
connectivity between service providers,
conversion of communication protocols
(from SMS in one system to USSD in
the other);
— Customer product features: the cost
of making a mobile payment, the
maximum amount allowed, product
types supported (just payments or also
micro-credits), feature compatibility
(send payment or also beneficiary
initiated, possibility to include
notification text, specific features
present in one system but not another,
possibility to create a viral wallet or
not);
— Commercial conditions between
service providers: split of revenues
and costs, FX conversion, charges
to customers (deducted from initial
or received amount), providing
transparency upfront of these charges,
amounts and execution timeframes to
customers;
— Legal: contractual agreements,
responsibility and liability, ensure
minimum level of KYC and AML by
each party, recourse procedures;
— Clearing and settlement and related
liquidity and risk management.
There are several options to achieve this,
ranging from multiple bilateral agreements
to a conversion hub, a common
communication protocol, or a common
service where companies adhere to the
same set of rules.
It is not clear which model will prevail, but
it is worth exploring the opportunity of a
common service.
The case for a global bank-
owned service
Today, most domestic mobile money
transfer services are run by mobile
network operators that have begun
to target the international remittance
market. For example, Vodafone Money
Transfer in Qatar, which has nearly 1.7
million expatriates, can send money
transfers to 10 countries. Mobile network
operators also link together or connect
with money transfer operators and credit
card companies: e.g. G-Cash and Maxis,
MoneyGram and SMART Money, Western
Union and M-Pesa, MTN and VISA.
Card companies are also creating their
own international P2P services: e.g. Visa
acquired Fundamo, American Express
created Serve.
Should banks stand by and watch? Aren’t
money transfers, mobile included, the
business of banks?
A sustainable business for telcos?
In the long run, mobile money transfers
may not be as profitable as some mobile
operators thought:
1. Not a core activity: mobile network
operators see mobile payments as a
value added service, whereas for banks
it is a core service. This will impact
resource allocation.
2. Limited revenues: the business case for
a telecom company to deploy a mobile
remittance corridor can have a quick
and strong payback albeit with limited
revenue. Only 10% of mobile operators
see this service as accounting for more
than 10% of their bottom line.19
3. Increasing costs: as volumes rise and
become systemically important or go
cross-border, regulators will impose
higher KYC/AML checks, compliance
conditions, business continuity, more
frequent and detailed reporting, etc.,
thereby increasing the operator’s cost
and reducing margins. For banks, this
cost is already part of their operating
model.
4. Increasing competition: a regulator
may initially facilitate one operator
to thrive in order to develop a basic
payments infrastructure, but before
long the system will be opened up
to other providers to avoid excessive
market power, drive further financial
inclusion and allow customers the
choice of service provider. Over 70%
of mobile network operators expect
3-5 competitors in their market in 3-5
years.20
Some have applied for a bank
or payment service provider licence,
such as Rogers in Canada or O2 in
the UK. They thereby become bank
competitors.
5. Interoperability: to further grow
volumes, telecom companies will have
to interconnect their mobile payments
services, but making them globally
interoperable is quite complicated.
A good business for banks?
International money transfers are a core
business of many banks. Banks have
reason to protect and grow that business
with innovative services, mobile payments
included:
1. This is a sizeable business for banks.
Over 215 million people live outside
their country of birth. Worldwide
recorded remittance flows are
expected to reach USD 536 billion by
2013; detailed information about top
emigration countries and migration
corridors is available.21
Banks currently
have 30% of this business; there is
market share to be gained.
2. This is a high margin business, where
willingness to pay is much greater than
in domestic or face-to-face transactions
at point of sale. In addition to person-
to-person (P2P) payments, banks can
use their existing relationships to attract
additional volumes from businesses
(B2P) and governments (G2P) for salary
and social payments.
3. Instead of playing a secondary role in
a telco-led model, banks can capture
65% of the value if they run the mobile
payment service (still likely needing
an agent network). For banks, the
transactional payments business may
not be the end-game, but a way to
build relationships and up-sell more
banking products, such as savings,
credit and insurance.

—— 7
4. Research shows financial institutions
have the most trust, consideration and
preference for mobile payments among
consumers versus mobile network
operators, hand manufacturers or
mobile ecosystem/OS providers.22
A bold yet pragmatic approach
Rather than trying to achieve
interoperability between multiple mobile
ecosystems, which will take forever
and can be quite costly, banks should
consider developing a global service for
mobile person-to-person payments that
each bank can plug into.
Key characteristics of such a service
would be:
— Transparent and compelling. Not
built on a platform that converts a
patchwork of multiple bilateral systems,
but a single and consistent offering;
— Open. An API allows banks to insert
their mobile money transfer services,
may be open to other providers as
well;
— Simple to use. Money is sent to the
receiver’s mobile phone number, rather
than to an account number and bank
code;
— Work off existing bank accounts
replenished via ACH or direct debit.
This is similar to PayPal, but now the
money is kept in the banking system;
— Brand neutral, allowing for
differentiation. Whilst providing a
common infrastructure, each bank can
brand and differentiate the service for
its customers;
— Include agency networks and cash
out capabilities. In particular at the
receiver’s side, typically in a developing
country without bank accounts but
with mobiles (e.g. HDFC Bank in
India’s partnership with Vodafone).The
mobile wallet can be combined with a
pre-paid card to make a POS purchase
or withdraw money at an ATM;
— Buy instead of build. The service
does not need to be developed from
scratch, as there are several wallet
systems and providers out there to
choose from;
— Adopt a pragmatic approach. Although
bank-owned, the service could be run
as a commercial company to have the
necessary execution and deployment
agility.
Who can bring banks together?
“Let’s just all use SWIFT, because it
works”. That was a proposal in the
opening of a conference panel discussing
the interconnectivity of mobile payments
services.
There are some initiatives where banks
collaborate on a domestic level, like
clearXchange in the US or IMPS in India.
Who can bring banks together to work on
mobile payments on a global level?
— The mobile network operator
community? The GSMA, for example,
has global coverage and is actively
driving mobile payments, but as it
represents the interests of mobile
operators, banks at large may not be
willing to join.
— The interbank world? SWIFT, for
example, operates globally and has a
track record of interoperability. Mobile
payments initiatives, however, tend to
be driven by banks’ retail organisations
which are not very familiar with SWIFT-
related transaction processes.
— A mobile payments association?
Mobey Forum, for example, is bank-
led, but can it gather a global execution
capability?
— An international standards body?
ISO, for example, has a global, cross-
industry representation, but as they are
chiefly concerned with standardisation,
could they drive commercial adoption?
— A platform vendor? Can they ever be
inclusive enough?
A shaping role for the banking
industry
In conclusion, mobile payments have a
strong growth potential.
Many banks have developed a mobile
payments service or wallet. But many
non-banks have also entered the mobile
payments market, often with innovative
solutions.
Banks can seize mobile payments as
an opportunity, provided they define a
clear strategy and invest accordingly. To
that purpose, we recommend a series
of actions for banks to pursue in mobile
banking, mobile commerce and mobile
money transfers.
In particular regarding mobile money
transfers, banks should look to make
a bolder move and develop a global
person-to-person payments service that is
mobile-enabled.
In doing so, banks will pro-actively shape
the future of mobile payments.

SWIFT © 2012
00000-APR2012
Legal Notices
Copyright
Copyright © S.W.I.F.T. SCRL (“SWIFT”),
Avenue Adèle 1, B-1310 La Hulpe,
Belgium, 2012. All rights reserved.
Reproduction is authorised provided the
source is acknowledged.
Trademarks
SWIFT, S.W.I.F.T., the SWIFT logo, Sibos,
Accord and SWIFT-derived product and
service names – such as but not limited to
SWIFTNet, Alliance and SWIFT Standards
– are trademarks of S.W.I.F.T. SCRL.
SWIFT is the trading name of S.W.I.F.T.
SCRL.
All other product or company names that
may be mentioned in this document are
trademarks or registered trademarks of
their respective owners.
Contact
Wim Raymaekers
Head of Banking Market
+ 32 2 655 33 29
wim.raymaekers@swift.com
Disclaimer
This white paper is provided for
information only. If a customer or any
third party decides to take any course of
action or omission based on this report
and/or any conclusion contained therein,
they shall do so at their own risk and
SWIFT shall not be liable for any loss
or damage, arising from their acts or
omissions based on this report and/or any
recommendations contained therein.
Some additional resources
— Global M-Payment Report Update – 2009, Arthur D.
Little (a bit dated but still a good read)
— Mobile Payments: How can banks seize the
opportunity, 2011, Capgemini
— White Paper Mobile Payments, 2nd edition, February
2012, EPC (on mobile payments in SEPA)
— Mobile money 2011, Ernst Young
— Green Paper - Towards an integrated European
market for card, internet and mobile payments,
January 2012, European Commission
— Mobile Payments in the United States – Mapping
Out the Road Ahead, March 2011, Federal Reserve
Bank of Boston and Federal Reserve Bank of Atlanta
— Mobile Payments Adoption in Developed Markets,
March 2011, IBM
— 2011 KPMG Mobile Payments Outlook, KPMG and
Monetizing mobile, June 2011, KPMG
— Mobile Payments Market Guide 2012 – Insights in
the worldwide mobile financial services, March 2012,
The Paypers
— http://www.paymentscardsandmobile.com/index.
php
— Mobile Commerce Guide 2012, Sybase
— GSM Association
— Mobey Forum
— CGAP, IFC
Footnotes:
[1] SWIFT white paper Correspondent Banking 3.0,
January 2012
[2] Top Banks and Their IT Plans and Investments,
2Q11, September 2011, Gartner
[3] http://www.wirelessintelligence.com/mobile-money
[4] Global Payments Survey 2011, Edgar, Dunn
Company
[5] See
— https://www.iemarketresearch.com/Members/
Reports/3Q-2011-Global-Mobile-Payment-
Market-Forecast-2009--2015-Global-mobile-
payments-users-to-hit-893-million-in-2015-with-
945-billion-in-transaction-value-RID2639-1.aspx
— http://yankeegroup.com/about_us/press_
releases/2011-06-29.html
— https://www.visiongain.com/report_license.
aspx?rid=443
— http://www.juniperresearch.com/
viewpressrelease.php?pr=250
— Market Trends: Mobile Payment, Worldwide,
June 2011, Gartner
— Issues Monitor, Sharing knowledge on topical
issues in the Technology Industry, KPMG,
February 2012
[6] Dialing Up a Storm: How Mobile Payments Will
Create the Most Significant Revenue Opportunities
of the Decade for Financial Institutions, October
2011, PwC and Where is your wallet? The looming
battle for information and profits in mobile and
emerging payments, February 2012. BCG
[7] Greenwich consulting, October 2010
[8] Corporate Mobile Banking: Revolutionizing Cash
Management, December 2011, Celent
[9] The current state and future of mobile banking in
Europe, August 2011, McKinsey Company
[10] Mobile Payments: Cooperate, Collaborate, or
Abdicate, September 2011, Edgar, Dunn
Company
[11] See
— http://www.nfcworld.com/list-of-nfc-trials-pilots-
tests-and-commercial-services-around-the-
world/
— http://en.wikipedia.org/wiki/Near_Field_
Communication#Project_trials_and_full-scale_
deployments
[12] http://www.finextra.com/news/fullstory.
aspx?newsitemid=23221
[13] For more, see http://en.wikipedia.org/wiki/
Trusted_service_manager or for instance http://
www.gemalto.com/nfc/tsm.html and http://www.
gemalto.com/technology/tsm.pdf, or eg http://
www.firstdata.com/downloads/thought-leadership/
fd_mobiletsm_whitepaper.pdfsee, see http://www.
europeanpaymentscouncil.eu/documents/EPC220-
08%20EPC%20GSMA%20TSM%20WP%20V1.
pdf for specifications within the context of SEPA
[14] For a more elaborate definition, see Mobile Wallet
– Definition and Vision Part 1, November 2011,
Mobey Forum
[15] For more on this, see: Bank Agents: Risk
Management, Mitigation, and Supervision,
December 2011, CGAP
[16] See
— The Mobile Financial Services Development
Report, 2011, World Economic Forum
— Mobile payments 2012 – my mobile, my wallet?,
September 2011, Innopay
— Market Trends: Mobile Payment, Worldwide,
June 2011, Gartner and Banks Shouldn’t Try to
Copy the Mobile Payment Success of Kenya and
the Philippines, November 2010, Gartner
— Mobile Money Toolkit: Framework for Assessing
Market Opportunities Developing The Business
Case, IFC
— M-Payments in M-BRIC, 2010, Arthur D. Little
[17] Mapping and Effectively Structuring Operator-
Bank Relationships to Offer Mobile Money for the
Unbanked, January 2011, GSMA Mobile Money for
the Unbanked
[18] http://www.npci.org.in/aboutimps.aspx
[19] CGAP Mobile Money Expectation Survey,
September 2010, CGAP
[20] CGAP Mobile Money Expectation Survey,
September 2010, CGAP
[21] Migration and Development Brief #16, May 2011,
World Bank; Migration and Remittances Factbook
2011, World Bank
[22] Mobile Payments: The importance of trust and
familiarity and the need for co-operation, May
2011, GfK; Wallet Wars, October 2011, Lexis;
Mobile Moving Forward in 2012: Insights from Top-
Tier Financial Institutions, 2011, Fiserv; The Mobile
Shopping Revolution, March 2012, AlixPartners.

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