Money in the mobile space

The mobile space is currently a vibrant ecosystem where the word “impossible” virtually holds no water. Yet, in this free-for-all, adoption remains constrained because of remuneration issues. The current de facto mode of payment for most online transactions in the Philippines is credit card and cash on delivery. The issue with the former is that most Filipinos remain in the margins of the formal economy, undocumented and unbanked. Meanwhile, the latter is a risky proposition for merchants who are sitting ducks to miscreants in the virtual space.

Thus, to bridge the wide gaps in online transactions, the mobile operator could step in as a mediator between cold hard cash and online currency. Since it is the middleman in the delivery of applications, games, software, and services, it would serve its interests to build a robust and secure infrastructure that will support mobile transactions. One way of going about this is expanding the current charging system to cover the delivery of other services through its network.

For instance, while most of the applications in the online stores are free, there are a number of premium services, and upgrades that are worth procuring, but the mass market could not do so due to payment mode constraints. For the mobile prepaid subscriber, this could be easily addressed by charging transactions against their current load credits. For instance, a 299 peso monthly subscription to Hooq could be charged against a 500 peso load upon enrolment to the movie service. Or a 100 peso application could be charged against a 300 peso load balance upon purchase of the app. Doing so provides a remuneration scheme that is convenient and well within the comfort zone of the user, since load debits is something they are already used to.

The same scheme could also be applied to postpaid subscribers, and given that users are watching their bills, “budget shields” could be adopted to protect against overcharging during the cutoff periods.  For instance, a user on a 3,500 peso plan could have a shield that only allows extra charging up to 4,500 pesos. This service will be greatly appreciated, especially by those who operate on a strict budget  and are watching their online spending.

But to penetrate deeper into online commerce, a more sophisticated and secure mode of payment is needed. Enter G-cash. The potential and possibilities for this service is virtually endless. It could be linked to a brick and mortar bank account that could be replenished or redeemed through the Internet. It could be converted to other currencies for offshore transactions. It already has the necessary elements in place. It is the sister company of Bank of the Philippine Islands, which is networked with such international finance heavyweights as Visa, Cirrus, and Mastercard, which could easily facilitate such transactions.

One potential service is remittances. OFWs can send their remittances through the Gcash facility, which could then be redeemed not only through banks, but through non-traditional channels such as pawnshops, cooperatives, even grocery stores as well.

Potential revenue streams are as seemingly infinite: from traditional forex charges, transaction facilitation charges, et cetera. It could partner with online merchants and cut commission based revenue streams based on the business they promote and bring in through their myriad services delivered through the network infrastructure.

However, the operator should be extra vigilant against security breaches, such as identity theft and online pilferage. While the medium is admittedly convenient and easy to use, it also opens itself up to a myriad of potential issues and challenges, but which could be easily addressed with a healthy degree of paranoia, and security measures delivered through technology.

Off the top of my head, I can think of five figure encryption technology (which will take 2,000 years to unscramble, give or take a few, even with IBM’s Watson, if done properly); access levels to sensitive information, PIN safeguards, virtual private networks, and data segregation.

Thus, before full rollout, it would be prudent to conduct pilot tests to ensure the scalability, stability, security, and reliability of the service. A PR nightmare, after all, is better prevented, than cured.