2. CONTENTS
Introduction................................................................... 3
The Opportunity for Corporate Mobile Payments................................... 3
Mobile Payments Ecosystem....................................... 4
Ecosystem Development ......................................................................... 4
Corporate Mobile Payments.................................................................... 4
Corporate Mobile Payments ........................................ 5
Business Case........................................................................................... 5
Driver for the Payments Industry ............................................................ 5
Roles And Advice for Industry Participants............... 6
Corporations ............................................................................................ 6
Banks........................................................................................................ 6
Mobile Operators..................................................................................... 7
PSPs and Platform Vendors ..................................................................... 7
Government, Development and Multilaterals Agencies ......................... 8
Conclusion................................................................................................ 8
3. Page | 3CORPORATE MOBILE PAYMENTS INTRODUCTION
INTRODUCTION
THE OPPORTUNITY FOR CORPORATE MOBILE PAYMENTS
The cost of collecting and distributing cash is a major overhead for many corporations throughout the world
and can be as high as 20% in some markets. The emergence of mobile technology offers a unique opportunity
to eliminate much of that expense.
Consumer mobile payments leading the way…
Mobile technology is revolutionising financial services the world over. Often it is consumer-led, whether it is
P2P transfer for the financially excluded in emerging markets or smart-phone enabled merchant payments in
more developed markets. To date businesses have been slower to adopt mobile as a method of payment.
However corporate mobile payments offer major potential for the business sector.
…with significant opportunity for corporate payments
In particular, there is significant opportunity for mobile corporate collections and disbursements
to replace cash as a method of payment and to substantially reduce the cost of cash handling.
Managing payment processes with cash introduces numerous inefficiencies into the payments
supply chain and can be a major overhead for those that do so (such as companies specialising in
consumer goods). The business case is especially strong in emerging markets where upwards of
75% of corporate receivables and disbursements can be in cash
1
. Even in more developed
markets this can be as high as 25%. However in those emerging markets where financial inclusion
remains low many small businesses may not have had an alternative payment method to cash –
until now.
Cash is still King in many markets but mobile now offering a serious alternative
With the near ubiquity of mobile phones and the launch of mobile
transfer, mobile payment and mobile banking services in most
markets, an alternative payments infrastructure is being created that
both bypasses cash and reaches beyond more traditional electronic
payment methods. This new ecosystem brings in the multitude of small
retailers and distributers that sit at the bottom of the payments supply
chain. Corporations in these markets now have the opportunity to
leverage off of this infrastructure to eliminate inefficiencies in their
payments processes and thus to make substantial cost savings which
will ultimately benefit both shareholders and consumers alike.
This White Paper introduces the concept of corporate mobile payments and sets them in the context of the
overall mobile payments ecosystem, examines the business case for their adoption by corporations and looks
at their potential as a driver for the mobile payments industry overall. Finally, with insights and thoughts from
industry leaders, it explains the role that each type of participant should look to play in the industry.
1
IFC Mobile Money Study 2011
75% of
receivables in
cash in EM!
4. Page | 4CORPORATE MOBILE PAYMENTS ECOSYSTEM
MOBILE PAYMENTS ECOSYSTEM
ECOSYSTEM DEVELOPMENT
Examining the development of a model mobile
payments ecosystem within an emerging markets
setting (such as we are seeing in East Africa),
payments starts out as peer to peer (P2P) transfers.
Then, providing the service is competitively
positioned and marketed, new users are recruited
to the service and the number of payments will
begin to rise exponentially
Building a critical mass of
consumers at the base of the
pyramid attracts businesses to
the service, both in the form of
accepting payments (e.g. bill
payments; merchant payments
(P2M), corporate receivables
(B2B)) or initiating payments
(e.g. salaries, corporate disbursements (B2B) etc).
At the same time this critical mass brings the
public sector and bilateral agencies to the service
to distribute social welfare and relief payments or
receive tax payments (G2P).
With the network effect now firmly in place,
banks, card companies and other financial service
providers are attracted to the service as a vehicle
to offer their products and payment services,
which in turn attracts existing banked customers
and the new mobile payment ecosystem is now
firmly established
CORPORATE MOBILE PAYMENTS
Within a developed mobile payments ecosystem
Corporate Mobile Payments are a part of B2B
payments:
As the payment flow for mobile receivables above
demonstrates, corporate mobile payments touch
every part of the ecosystem. The consumer (whose
own wallet may have been funded by a transfer –
P2P), transacts and pays a merchant via mobile
(P2M) who in turn pays his own supplier via mobile
(B2B) who in turn may pay his supplier or
corporation by mobile (B2B).
Today many markets are beginning
to reach beyond P2P as their
payments ecosystems evolve. As
we shall see corporate mobile
payments have the potential to
speed up this evolution, change
conventional thinking on ecosystem development
and revolutionise the mobile payments sector.
Corp payments
natural part of
mobile ecosystem
development
Market opening
up for corporate
mobile payments
5. Page | 5CORPORATE MOBILE PAYMENTS OPPORTUNITY
CORPORATE MOBILE PAYMENTS
BUSINESS CASE
The business case for corporate mobile payments
is compelling. Taking the example of corporate
receivables, the cost of cash collection is
significant including as it does the cost of
collection, transportation, securing, insuring,
manual reconciliation, plus the time delays that
result from these processes.
In emerging markets, the cost of cash collection
can be as much as 20% of the amount collected.
Even in more developed markets the cost can be
between 5-10%. For consumer
goods companies where cash can
represent up to 75% of receivables
this overhead is significant –
potentially $10m-$15m for every
$100m in sales. Corporate mobile
payments present the opportunity
to eliminate these inefficiencies
and make substantial cost savings to be passed on
to consumers and shareholders.
DRIVER FOR THE PAYMENTS INDUSTRY
Corporate mobile payments can be an important
driver for the mobile payments industry
by encouraging acceptance at the
merchant and distributor level. In the
traditional P2P-led model the assumed
thinking is that consumer demand
drives merchant P2M payment
acceptance, which in turn drives acceptance of B2B
payments by distributors and corporations.
Merchants’ mobile wallets can also be loaded
independently of consumer P2M transactions by
topping up directly or linking to a bank account.
However by incentivising mobile receivables via
methods such as invoice discounting etc,
corporations can encourage mobile payments
acceptance by merchants and distributors. This in
turn encourages consumer mobile payments
(perhaps through further consumer discounts)
thus acting as a driver for the industry and turning
the consumer-led model on its head.
Cost of cash
collection up to
20% of sales
Drive
acceptance at
merchant level
6. Page | 6CORPORATE MOBILE PAYMENTS ROLES
ROLES AND ADVICE FOR INDUSTRY PARTICIPANTS
In this section we will examine the roles that
different members of the corporate mobile
payments ecosystem should play, along with
insights and thoughts from industry leaders.
CORPORATIONS
Corporations, especially those dealing in consumer
goods, have the most to gain from the adoption of
corporate mobile payments and it is in their best
interest to promote the practice within
their supply chain. Understanding the
business case and value proposition for
customers and merchants is crucial. For
instance, is it best to incentivise mobile
payments through invoice discounting
or should registration in a mobile
payment scheme be compulsory? An
awareness and education campaign for merchants
could also be coordinated with partner banks,
mobile operators or even PSP’s. A close
relationship with these participants is essential
and choosing the right partner for mobile
payments is an important first step.
BANKS
For banks, offering corporate mobile payments as
part of a suite of corporate treasury services needs
to be a core part its strategic offering as the
industry grows. Facilitating that growth not only
improves those important corporate relationships
but also allows banks to get a foothold in an
industry that is developing fast and coming under
increasing competition from non-bank players.
Offering secure access to payments, risk
management and automated back office systems
is a banking-industry core strength, and is
something corporations will actively seek out
when embarking on mobile payments. Ensuring
that these are in place for mobile payments will be
the key to success.
For banks about to embark on corporate mobile
payments, Citibank has the following advice:
“Banks are in a unique position to play a central
role in Corporate Mobile Receivables through
having strong relationships in place
with many of the partners in the
Mobile Ecosystem. Keys to success
are:
Keep it simple! – User friendly
graphics and easy to use, logical UX for end
users.
Adoption, adoption, adoption! – Most critical to
success, motivating end users requires well
thought out planning and execution, can be
highly customizable and is a joint exercise with
the provider and the corporate
Value add! – Modelling the savings can be a
great tool to show a Corporate CFO savings
across his or her enterprise” , Joseph Alonzo,
Director, Global Receivables Product
Management, Citi.
Mike Walters, Head of UK Corporate Payments at
Barclays highlights the importance for banks of not
just focusing on consumers when developing
mobile solutions for customers:
“Financial institutions and corporates alike need to
keep pace with changing consumer
behaviour and the increasing use of
social media sites and mobile phone
applications. Banks must
understand what this means for
their clients in different segments
and develop technologies that
facilitate these interactions in an easy, fast, simple
and affordable way. Banks should look to develop
solutions that take these trends and seek to make
the lives easier for consumers and corporates alike.
Banks with a significant global retail and corporate
franchise will need to develop scalable mobile
platforms to service their wide range of clients,
from individual customers all the way through to
the largest multinational. That way they will be
well positioned to help their clients in this exciting
area."
Research
business case
and partners
carefully
“simple,
customizable &
value-added
solutions”
“focus
on consumers and
corporates alike”
7. Page | 7CORPORATE MOBILE PAYMENTS ROLES
MOBILE OPERATORS
Payments should be central to every MNOs
corporate solution product set. MNOs can facilitate
payments in the corporate supply chain and
leverage off of this to offer other value added
mobile-centric data and location services, such as
inventory and logistics management. MNOs also
have proven success in mobilising wallet
deployments throughout the world. Those skills
will be crucial in ensuring the corporate mobile
payments ecosystem is successfully built up by
placing wallets in the hands of consumers,
merchants and distributors alike, all of which will
drive payment volumes in the industry. Mike
Ritchie-Cox, Head of Consumer Goods Industry at
Vodafone Global Enterprise Ltd recommends that
MNO’s look to work as broad a range of ecosystem
partners as possible to take advantage of the
sector:
“Large corporates in developing countries often
feel that their revenues are exposed
through the costs and risks of
handling cash. Mobile payments
solutions can significantly mitigate
the risks and successful services like
those in East Africa enable funds to
be transferred securely, simply and in
real-time, between consumers and
businesses of different sizes. Entire value chains
can be made more efficient. The risk of fraud, theft
and loss reduces significantly when payments are
made or collected via mobile. Staff safety is
increased and the costs of handling cash (including
security costs) significantly diminish.
There is strong demand for this service in
developing markets and MNO’s should look to
work with a broad range of businesses to ensure
that they are taking advantage of mobile payment
platforms. To give you an idea of the scale of the
service, in Kenya alone last year mobile P2P
transfers were used to send the equivalent of more
than three times the World Bank’s estimated value
of remittances flowing into the country – that is 15
million customers generating more than 165
million transactions per month”
Chidi Okpala, Director & Head of Airtel Money
Afirca takes up the same point to advise that MNOs
can also look beyond consumer P2P transfers to
take advantage of and to facilitate growth in the
industry:
"Corporate mobile payments offer significant
opportunities to both corporations and
the wider mobile payments industry.
Mobile operators should look to
facilitate this by putting wallets in the
hands of consumers and merchants
and to offer corporates a dedicated
mobile payments product. MNO’s can
champion that agenda by providing integrated
payments services for governments, businesses,
NGOs, embassies, schools and other types of
institutions with solutions that meet their everyday
payments administration and processing needs”.
PSPS AND PLATFORM VENDORS
To facilitate corporate mobile payments platform
vendors need to move beyond the offerings that
were sufficient for P2P transfer and look to
introduce agile and scalable solutions that offer
‘bank-grade’ security to protect transaction and
client data and prevent fraud. Payment Service
Providers (PSPs) shouldn’t forget the financial
inclusion angle either, a point taken up by Visa:
“I expect mobile money technology to become
more and more relevant, as it helps
overcome some of the historical
challenges to delivering financial
services to more than 2.5 billion
consumers worldwide who do not
have a formal banking relationship.
PSPs and platform providers should
look to deploy their technology and
capabilities in markets where
electronic payments don’t exist today and to focus
on the needs of the corporations, merchants and
consumers in those markets to build a payments
infrastructure that both drives financial inclusion
and increases efficiency and economic output.
For these reasons, I believe Corporates will begin
using mobile payments and related technology to
forge more connections with consumers and with
each other.”, Hannes Van Rensburg, Group
Country Manager, Visa Sub Saharan Africa and CEO
Fundamo – a Visa Company
Payment Service Providers can look to facilitate
interoperability for corporate mobile payments.
Vodafone:
“work with a
broad range of
partners”
“provide
integrated
payment
services”
“adapt
solutions to
needs of
developing
markets”
