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Fast fact:
'HiPAAS is the only on demand mobile payment service on the market'

Visa goes after $20 billion mobile market with automatic pre-payment top-up.
Source : Global Telecoms Business

Global Telecoms Business logo (01 February 2004)

One of the world's largest payment card groups is approaching mobile operators and banks in some of the fastest growing markets in the world to work together for automatic top-up of prepayments. And the scheme could be expanded later to include payment for goods and services, says Hilary Mitchell, Vice President of new payment solutions at the division of Visa that covers central and eastern Europe, the Middle East and Africa. 'We are thinking of bill payment, person-to-person transfers, transport, road tolls and fuel', she explained.

Visa has already gone ahead with its first project, with Moroccan operator Méditel and a local bank, Banque Marocaine du Commerce Extérieur. Even though the scheme was launched only in November 2003 she is already pleased with the early results: 'usage is higher, at $18 a month compared with $7.50-10 which is the average for Morocco'. Most users have debit cards rather than credit cards, she added.

The attraction to Visa is that in many countries mobile phones are more popular that payment cards. 'There are six million mobile phones in Morocco, but 1.3 million Visa cards', said Mitchell. She wants to win them over to payment cards in the hope that this will build up the user base for cards, and the new customers will use them for a wide range of services.

Ashley Ward, CEO of Upaid, which is supplying the technology to Visa to link it to mobile operators, says that operators will benefit from card payments because users will be able to top up more easily. 'At the moment users are like cigarette smokers', he said. When they have topped up the credit on their phone, they make more calls, but usage tails as the sum is used up.

With the Upaid system, users need only send a text message to authorise a Visa card payment into their phone account. 'Customers will be able to top up 24/7, even if they are roaming out of the country', he said. And paper vouchers, used by operators now, 'are costly and inefficient' he added. Typical costs are 10-30% of the value of the voucher.

Visa takes a percentage of the top-up payment, though Mitchell would not say what it would be. 'Lower than 10-30%, much lower', she said. Visa estimates that mobile phone users in its central and eastern Europe, the Middle East and Africa region will spend $10.5 billion on prepaid services next year – implying an opportunity for Visa to earn $200 million even if it takes a modest 2% share.

Visa's member banks in the region already have more than 50 million cards, and the rate is growing at 40% a year, said Mitchell. 'Our members want to bring the unbanked in these areas into the banking sector', she added.

Expanding the Moroccan scheme across the region will be a country-by-country effort, in which Mitchell and her colleagues will try to get most of the operators and most of its member banks to coordinate. 'We're going to each market and seeing all the key players', said Mitchell. 'It works better when you have all the operators and banks. We know there’s a lot of interest.'

Mitchell is keeping her colleagues in Visa's Asia-Pacific and European Union divisions informed. 'This is a service that is of interest to many markets, regardless of the sophistication of their banking markets', she said. Payment for goods and services other than prepaid phone calls will follow later, she added. 'We're focusing on getting the entry level services launched first.'

IBM has contracted with Upaid to use its e-business centre in Montpellier, France to transmit data between mobile phone operators and Visa's member banks.

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