One of the primary reasons for this post on mobilePOS – is that we as a company are being inundated with requests from various mobilePOS start-ups from India, Europe and US, who seem to be replicating/inspired by the Square Inc. model and want to leverage , ‘Our network of merchants’.
To explain ‘Our network of Merchants’ a brief background might be in order – I am the founder of a five year old electronic payments company called Paytronic Network. What began in mid-2007 as a two member team has now grown to a team of over 300. We offer merchants/retailers the ability to electronically accept prepaid mobile & DTH payments – quickly and conveniently using their mobile phone with zero transactional cost. We have over 60,000 points across India & some 2,500 points in Panama (Latin America) who use our technology and are part of the Paytronic Network.
With mPOS , the first question that comes to mind is – Who is the target market for mPOS? Is it the traditional users of POS from the banks? – what is their incentive to move to mPOS? Or is it the pizza delivery guys – who will embrace mPOS? May be it will be the e-commerce players who offer cash on delivery – who can now offer card on delivery, using mPOS?
Once the target market is clearly defined the next significant question is, what is the revenue model? Is it taking a fixed monthly fee from the merchants? Or a share of the merchant discount? (Merchant discount – is the money charged to the store for each transaction. It usually ranges from 1.5% to 3% of the transaction value). Or both? Finally , can mPOS be a singular offering from a company to sustain itself ?
To the best of my understanding most of the mPOS solutions out there use smart phones (Android/Apple). How many merchants in India or the developing world use smart phones in their stores? Even, if they own a smart phone.
Some players claim J2ME ready mPOS, but I tend to take that with a pinch of salt. From our past experience of developing J2ME apps for the recharge app, we know the myriad of compatibility issues that we have faced, especially with the cheaper imported phones and their convoluted J2ME implementations.
The next question is – how many mPOS players are PIN & CHIP (EMV – EuropayVisaMasterCard ) ready? As per an RBI notification EMV is here to stay from June 2013.The traditional POS players are EMV ready as their equipment are already in use in Europe where EMV is mandatory. Entire LATAM is also going the EMV way in 2013. Are the mPOS players really prepared for EMV ?
Although I might sound like a doubting Thomas, at the end of the day in my opinion mPOS is really exciting part of the electronic payments space. The traditional POS players with their deep pockets, experience and expertise and definitely the Goliath in the arena. If someone has reviewed the PCI POS PED-3 security standards they will understand how well placed the traditional POS players are in order to play the mPOS game vis-à-vis the start-ups.
In the past many Davids have won against the Goliath of the world – will we see that in the mPOS game? or will it be the case of – When the giants learn to dance? – only time will tell.
Would love your opinions /feedback on mPOS.
P Thomas Abraham
- MobilePOS – a few questions - January 20, 2013
Very well said (or doubted) Thomas…! It’s always better to be paranoid than sorry.
Your first query on which is the target market, I guess it could be anyone with a mobile phone. Or rather, it should be – because with increasing requirement of stringent KYC norms, the traditional banking and credit card channels are retracing their earlier extended outreach after having burnt their fingers due to that indiscretion. But I have a concern here. The mobile phone user should not be asked to remember a login and a password which will be difficult for the householder because she already has too many passwords to remember. It should be something as simple as having to dial a 5 digit number, amount and click `pay’. That way, she may not have to expose her phone to a cloning machine or other such crafty con that cleans up her (husband’s) bank account.
The above as well answers your second question. It’s not dependent on the merchant using a high end smartphone at all. The merchant just need have an exclusive five digit number that enables him to receive money in his bank account when the shopper clicks `pay’. So is the case of Pin&Chip or EMV or such alphabet soup. Never bother the merchant or shopper with all these mumbo jumbo. You as an enabler, take care of all the boring tech stuff at your back end and just offer up a five digit number to dial. And then come and tell me if it’s worth the go.
It’s all about making things simple, Thomas. Never make the mistake your predecessors made and bog down the user with a login and a password. We’ve to move beyond Userid and Pw. Just give them a number to dial, period. After all, that’s what a phone has been for in the first place. All music and camera came much later. Keep it simple.