Background – Mobile Payments, FeliCa, NFC and bCODE
The prospect of using a mobile device to transact electronically has generated significant interests in the Mobile Technology and Financial Services sectors over the past few years. Leading analyst predictions ranges between a $200 Billion industry and a $1 Trillion by 2015.
The general vision in the industry to date had been to replicate the working model in Japan globally. Launched in 2004, the Japanese system FeliCa has grown to 10% user adoption and tens of billions USD in transactions per year, and expected to exceed USD$100 Billion by 2015. The reason for Japan being the only successful FeliCa / NFC market to date (contrast with mobile payment volumes in the US, with a mere $2.2 Billion this year, mainly for games and music) is because of NTT Docomo’s commanding market share and influence in the Japanese market. NTT Docomo, together with Sony, equipped the majority of mobile handsets with FeliCa technology, enabled them with back-end services and then spent in excess of USD$100,000,000 to subsidize the FeliCa scanners for retailers to freely adopt.
bCODE was founded in 2004 as well, upon the similar vision of replicating the Japanese model globally, except with an SMS-based, chipless and platform-agnostic technology that does not require a gigantic monolithic industry force, like NTT Docomo in Japan, to own and push the entire ecosystem in order to gain successful adoption. Such an environment does not really exist outside Japan.
Concurrently the NFC consortium was also formed in 2004, in an effort to commercialize and deploy the FeliCa technology globally under the new brand name (NFC = Near Field Communications). However, now some 7 years later, it still has not gone beyond pilot tests. The eco-systems involved are extremely large and complex, with many interlocking industries and incumbent players To-date, no one company, consortium, industry group or entire industry had been able to move past those obstacles to get to a commercial deployment.
CLICK HERE for a technology comparison between NFC and bCODE
Consumer Value Proposition & Market Opportunities
Within the Emerging Markets, which accounts for nearly 3 out of 4 mobile phone users on the planet, the value proposition is simple, clear and compelling. Mobile Payment presents itself as the main viable alternative to Cash, because of low bank accounts penetration and lack of access to credit cards. The convenience and security over Cash is significant. There is therefore a large opportunity in providing some 3 billion people with electronic payment services using their mobile device.
As for the Developed Markets, where there are abundant existing electronic payment services and point of sale infrastructure, the Mobile Payment opportunity is more complex. Adoption will most likely result from different niche value propositions that provide consumers motivation to use different Mobile Payment systems, or Wallets, in different market segments and different applications. Prior examples from online payments include PayPal and BillMeLater, each with its own value proposition to carve out significant markets away from VISA and MasterCard. In the Emerging Markets, mobile operators and banks in each market are racing to the winner‐takes‐all position. The Developed Markets are unlikely to develop this way, due to legacy POS infrastructure and multiple competing technologies and approaches. It is likely to be fragmented with different business models. However, the Developed Markets have far larger volumes, which provide an equally exciting opportunity for market entrants.
Integrated Mobile Commerce Applications
One of the key differentiating features of the bCODE MediaPlane-based platform is its ability to support multiple, feature-rich applications at POS and Self-Service locations. Typical NFC-enabled payment processing terminals, due to its requirement to have to support card-based payments and PCI compliance, is unable to extend much before basic payment processing. bCODE’s application architecture which is front-ended by an Adobe-Flash enabled touchscreen, cloud-connected and a token architecture that supports multiple company branded bCODEs on the consumer’s device, allows for far more exciting application possibilities such as Mobile Promotions, Loyalty, Ticketing, Digital Content, Games, Points, Rewards, Bill Payments, Social Networking, etc.
A mobile payment that is merely an extension of a credit card or debit card payment by tapping the phone instead of a card, without any additional value add, does not generate enough value increment for consumers to get excited about. Consumers are going to carry their mag-stripe cards for the foreseeable future, so any successful mobile payment service is going to do a lot more than just that. bCODE’s Mobile Commerce platform architecture has been specially designed to tackle this hurdle.
bCODE Mobile Payments – Value Proposition for Mobile Operators / Carriers
bCODE empowers your Mobile Carrier organization with the technology to build, own and rollout its own pervasive mobile payment network across retailers nationwide in any given territory, today. There is no need to wait for NFC handsets to become pervasive, as bCODE supports 6 billion existing mobile phones in the market. Owning your own mobile payment network will bring your organization many important business benefits:
1. Additional revenue stream – generate additional billing and cashflow on existing subscriber base and network infrastructure
2. Brand affinity – generate significant branding benefits and improved customer satisfaction on providing a much demanded service by consumers in the emerging markets, where there are little alternatives to cash
3. Loyalty and reduced churn – a mobile payment network that is branded and powered by your organization will cement customer loyalty through mobile wallet integration, marketing communications and brand recognition
4. Integrated applications and value-added services – utilize bCODE’s open mobile application architecture to deploy additional related services onto the platform (eg. digital content, money transfer, bill payments, games, loyalty points redemption, etc)
CLICK HERE for press announcements for bCODE-powered Mobile Payment networks.
Globe Telecom announced the deployment of a bCODE-powered mobile payment network based on its GCash platform, in the Philippines. Globe has over 25 million subscribers in the Philippines, and is part of the SingTel group, which has 383 million subscribers worldwide.
Smart Communications announced the deployment of a bCODE-powered mobile payment network based on its Smart Money platform, in the Phillippines. Smart is the leading mobile operator in the Philippines with over 45.6 million subscribers.
Qtel announced a major agreement with bCODE Middle East and Africa which will transform the way payments can be made and services delivered in Qatar. bCODE will provide a network of their innovative, interactive, 3G-enabled terminals across Qatar. Qtel has more the 68 million subscribers globally.
How Does It Work?
If your organization is already provide mobile wallet / mobile money services to your subscribers, activation of Mobile Payment is simple. You will need to get an explicit opt-in from that subscriber to activate their mobile wallet / mobile money services for retail payments. This could be in the form of a text-message opt-in, e.g. SMS “GCash” to 22633, or via other methods such as USSD, WAP, call-center operation or registration on-screen at the bCODE MediaPlane.
If your organization has not yet setup mobile wallet / mobile money services yet, bCODE can recommend its preferred Mobile Wallet / Mobile Money technology providers so that we collectively will be able to provide you a turnkey Mobile Payment solution for retail.
Once a personal PIN has been set and activation happens, your subscriber will receive a Mobile Payment bCODE that identifies that person’s Mobile Wallet. He/she is now bCODE Mobile Payment enabled and is ready to start making payments from its mobile phone at participating retail locations on your Mobile Payment network.
At the participating retailer, instead of paying cash or credit, your subscriber will simply retrieve the bCODE from his/her mobile phone, scans it on the bCODE MediaPlane, enters the personal PIN and the transaction will be authorized and cleared.
IT & Operational Considerations
Your IT & operational departments are concerned with having to support an unfamiliar device in the POS and retail environment. Your CTO is concerned with security, and understanding how the different technology standards will shake out before considering technology investments. Your marketing department is concerned with negative brand impact from a failed deployment attempt, which has plagued many mobile payment and mobile commerce pilots worldwide.
bCODE’s MediaPlane platform has been designed to maximize inclusiveness as far as technology standards are concerned. The bCODE itself is based on plain-text SMS, the most pervasive mobile services platform in the world next to voice. The bCODE MediaPlane is backwards compatible as it can print UPC barcodes that are accepted by existing POS systems, as well as emulate a conventional barcode scanner via RS232 or USB. It is also forwards compatible with software and hardware plug-ins to support emerging technologies such as 2D barcodes and NFC.
Operationally, the MediaPlane scanners are cloud-based devices. They are connected to the cloud via 3G or Wi-Fi. Its architecture allows for significant server-side monitoring, reporting and systems management services, enabling bCODE to remotely support the infrastructure without over burdening your operations staff. The MediaPlane units are hardened devices for retail environments. They depend on your wireless network to function so between device features and network availability is where the technical support hand-off point will be.
In terms of security, the unique an encrypted nature of each bCODE “instance” ensures no consumer will be able to create its own valid bCODE or guess another customer’s. Our PIN-based second factor authentication protects customers from stolen phones.
Finally on consumer adoption, bCODE as a technology and as an organization has been successfully scanning mobile phones from millions of consumers worldwide since 2006. Being the only mobile phone scanning / mobile commerce technology that has ubiquitous device support, it is many product iterations ahead of competing technologies.
At bCODE, we place usability, consumer adoption and repeat consumer use the highest product design priorities. We are proud to say that the vast majority of consumers that have used bCODE, anywhere in the world, commented on the great user experience and nearly all of them will come back and re-use.
CLICK HERE to contact bCODE to learn more about building a Mobile Payment network.
The value propositions bCODE’s Mobile Commerce platform bring to Mobile Operators are not limited to Mobile Payments. Other Mobile Commerce Services, such as Mobile Ticketing and Mobile Promotions, services that consumers welcome, can be offered to your subscribers, or subscribers of competing carriers, on a branded-basis (branded your carrier) to create brand affinity between these innovative services and your brand. Overlaid on these services are customer retention or customer acquisition programs that are designed to lower churn, increase customer satisfaction and drive new subscribers.
These initiatives are synergistic to the Mobile Payment network and can be run side-by-side, integrated or independently to your bCODE Mobile Payment initiatives.
Click here for a media gallery of Mobile Carrier sponsored Affinity Marketing activities on bCODE’s platform.