Executive Summary

E1. Mobile Remittance and m-transaction - Unexpected Adoption and Benefits for Developing Economies

E2. Reducing costs to help growth

E3. Providing Favourable Regulatory Frameworks

1. Introduction

1.1 What Exactly Is Mobile Remittance?

1.2. Focus of the Report

2. The Remittance Market

2.1 The Critical Macroeconomic Role of Remittances

Chart 1. Remittances as a Share of National GDP in 2006

2.2 Behind Global Growth Trends in Remittance Flows

2.2.1 Growth in Global Migration

Chart 2. Growth in Global Migrant Stocks, 1960-2050

Chart 3. Average Annual Net Migrants to More Developed Regions

2.2.2 Remittance Flow Growth

Chart 4. Growth of Global Remittance Flows 1990-2007

Chart 5. Financial Flows into Developing Economies 1990-2007

2.2.3 Analysis of Flows into Recipient Countries

Table 1. Top 30 Formal Remittance Receiving Countries 2007

Table 2. Top 30 Formal Remitter Countries 2007

2.3 Migration Patterns and Remittance Corridors

Figure 1. Major Bilateral Remittance Corridors and Estimated Flows, 2007

2.3.1 Growth of the UK-Poland Remittance Corridor

2.3.2 Remittance Corridors and Operator Market Strategy

2.4 Remittances as a stable source of external finance

2.5. The multiplying effect of remittances: consumption, savings and investment

2.5.1. Enabling additive and transformational approaches to banking

3. Drivers towards Implementation

3.1       Financial Infrastructure

Chart 6. Market Share of P2P Money Transfers 2006

3.1.1        Inadequate Servicing of Remittance by Existing Mechanisms

Table 3. Global and UK Remittance Transaction Fees Comparison

3.1.2        Poor financial infrastructure in developing economies

3.1.3        Participation in the formal vs. informal economy

3.2       Mobile Infrastructure

3.2.1    Global Mobile Penetration

Chart 7. Global Telecoms Subscriber Growth, 1982-2013

Chart 8. African Mobile Subscriber Growth 1999-2013

Chart 9. Asian Mobile Subscriber Growth 1999-2013

3.2.2    Technological Developments

3.2.2.1 The Development of M-transaction

3.2.2.2 Convergence

3.2.2.3 Convergence Embraces Mobile Transaction

3.2.2.2 Low-cost handsets

3.2.2.3 Mobile Subscriber Growth in Emerging Markets

Chart 10. Top Ten Countries for Net Additional Subscribers 2007

3.2.2.4  SMS Banking

Figure 2. Basic SMS banking transaction flow

3.2.2.4.1          Prime Disadvantages of SMS banking

3.2.2.5   STK-enabled Mobile Transaction

3.2.2.6   IVR Banking Service Delivery

3.2.2.7  USSD/USSD2

3.2.2.8  WAP Service Delivery

3.2.2.9  Service Delivery via J2ME Apps

3.2.2.10                      mWallet

4.         Mobile Remittance: Operator-Side Types of Implementation

4.1  Business Models

Figure 4. Mobile Remittance Value Chain

4.1.1 Mobile Operator as Bearer Channel Provider

Figure 5. MNO as Bearer-only Business Model

4.1.2 Mobile Operator as Bearer and Banking Application Host

Figure 6. MNO Banking Application Host Business Model

4.1.3 Integrating Banks/Financial Institutions into Mobile Operator Hosted Platforms

Figure 7. Business Model for an MNO as a Banking Hub

Figure 8. Topology of the MNO Banking Hub Model

4.1.4 MNO Adoption of Financial Institution Status

Figure 9. Financially-licensed MNO model with MNO positioned as beneficiary

Figure 9. Financially-licensed MNO model with MNO positioned as remitter

4.1.5 Summary of MNO Business Model Options

4.2. Business Model Options for Financial Institutions

4.3   Service Models

4.3.1 mWallet to mWallet

4.3.2. mWallet to Cash

4.3.3 Cash to mWallet

5. Financial and Mobile Industry Convergence: Control Points and Requirements in Implementation

5.1 Regulatory

5.1.1 Addressing Boundaries between financial and telecoms regulatory frameworks

5.1.2. Aligning Developing Economy Mobile Remittance Models with KYC and AML/CFT Regulations

5.1.3. Developing Economy Mobile Remittance Models and the Application of Prudential Regulation

5.1.3. Developing Economy Mobile Remittance Models and Access to Clearing Systems

5.1.4 Formalising Remittance Flows

5.2. Transaction Processing

6.         Mobile Operator and Financial Institution Partnerships:

Mobile Remittance Case Studies and Emerging Developments

6.1. Smart Telecom mWallet Services, Philippine

6.1.1 Smart Padala Remittance: 4 years of success

Tables 4a and 4b. Smart Padala Remittance Partners and Locations Overseas

6.2. Globe Telecom, Philippines

6.2.1 GXI - Globe's M-Commerce Subsidiary

6.3. Vodafone's Strategies

6.3.1 Safaricom and M-PESA: m-transaction as a precursor to wider cross-border mobile remittance

6.3.1.1 M-PESA Adoption Curve

6.3.1.2 M-PESA Adoption Drivers

6.3.1.4 The M-PESA Service Model

6.3.1.5 M-PESA Expansion and International Implementation by Vodafone

Figure 10. Advertisement for M-PESA

6.3.1.6 Delays and Barriers for the International Implementation of M-PESA

6.3.2 Vodafone and Citigroup/Citibank global agreement

6.5. Bharti Airtel and Western Union Pilot Project

6.6. The GSM Association Mobile Money Transfer (MMT) Initiative

6.6.1 MMT: Attempt at creating a Multilateral Remittance Framework

Table 5. Options for the Implementation of Multilateral MMT Hub Platforms

6.6.2 Partnerships

6.6.2.1 GSMA-Western Union Partnership

6.6.2.2 GSMA-MasterCard Partnership

7. Remittance WASP Vendor Profiles

7.1 Utiba

7.2 aKos Technology Corporation

7.3 Cointel

7.4 Monitise

7.5 GFG Group

8. Conclusions

8.1 A necessity for economic development equals high consequential take-up

8.2  The need for regulatory harmonisation and accommodation

8.3. Standardisation as an achievable goal

8.4. Which form of mobile remittance will emerge as the most common?

8.5. The Danger of the Two Tier Mobile Economy

8.6. Forecasts

Chart 11. Comparison of Forecasts for Remittance Channels By Value

Chart 12. Forecasts for Remittance Channel Volume

Table 6. Operator revenues generated from transaction costs

Chart 13. Comparative Mobile Remittance Forecast for Recipient Countries

Table 7. Forecast for Mobile Remittance Transaction Volumes per Country (US$million)

LIST OF COMPANIES/ORGANISATIONS MENTIONED IN THE REPORT

aKos Technology

Aktel

Alliance & Leicester

AT&T

Belgacom

Bharti Airtel

Cable & Wireless

Citigroup

ClearTalk Wireless

COAI

Cointel

CSL

Deloitte

DFID

Dialog

Digicel

Du

Enitel

Etisalat

EU

Financial Services Authority

GFG Group

Globe Telecom

Grameenphone

GXI

HSBC

Hutchison 3G

IMF

Indosat

Inter-American Development Bank

LG Electronics

Life

Link

MasterCard

Maxis

Mobilink

MoneyGram

Monitise

Motorola

MTC Bahrain

MTN

Nairobi Stock Exchange

NatWest

Nokia

Orange

Orascom Telecom

Polkomtel

Royal Bank of Scotland

Safaricom

SingTel

Smart Communications

Softbank

Sony-Ericsson

Swisscom

Telefonica

Telenor

Tesco Mobile

TIM

TMN

Touch Mobile

Travelex

Turkceli

Ulster Bank

UNCTAD

United Nations

Utiba

Vigo

VimpelCom

Virgin Mobile

Visa

Vodacom

Vodafone

Western Union

World Bank

Zantel