Organising stakeholders and working with mobile network operators This was presented at Central Banking Publications training course,Effective Oversight of Mobile Payments 3, 4 & 5 December 2013 Kuala Lumpur This session focuses on the building blocks that are critical for central banks to bring their oversight plans into effect. The speaker will discuss the fundamental components of the oversight programme, identifying what needs to be produced and when. The question of what resources need to be allocated to generate the desired output and outcomes will also be considered. Two oversight methods will be discussed, one dealing with continuous monitoring and evaluation of the payment system; and a change-driven approach that considers risk analysis triggered by the occurrence of various events.

1. Organizing stakeholders and
working with mobile network
operators
Mahesh Amarasiri
Central Banking Training Series
Kuala Lumpur, Malaysia

2. Agenda
 Mobile Commerce Eco System
 Overview of the regulatory system in Sri Lanka
 Deploying the Mobile Account Product and the right
products
 New Business Models
 Discussion on regulation and emerging Business
Models

3. MOBILE COMMERCE ECO SYSTEM

4. m-Commerce is a broad and sometimes misunderstood
concept; three broad service categories can be defined
M Commerce Service Overview

5. Mobile Commerce Eco System and the
Stakeholders
Service Provider
Regulator
• Telco
• Bank
• Central Bank
• TRC
• Other Regulatory Bodies
Mobile Commerce Eco
System
Partners
Partners
• Financial Institutes
• Sales and Distribution network
• Merchant Network
• Utility Billing Entity

6. OVERVIEW OF THE REGULATORY
SYSTEM IN SRI LANKA

7. Regulatory and Supervisory
Provisions
Basic Type Facility to
obtain information
Customer Account
based Mobile Payment
systems 1
Basic type + payment
services 2
Guideline-1
Extended Type
Licensed Commercial
Bank (LCB)
Operation Through
Agents 3
Custodian Account
based Mobile payment
systems
1.
2.
3.
4.
Standard Type
Will be operated
through Mobile
payment service
providers
Guideline-2
Services can only be offered to the customers of LCB
Payment services include fund transfers, stop payments, utility bill payments, on the basis of instructions transmitted through the mobile phones
Facility to withdraw / deposit cash through agents appointed by the LCB. Specific Transaction limits will apply
Mobile Payments : information exchange between a bank and its customers for financial transactions through the use of mobile phones

8. Banking Regulatory ProvisionsGuideline 1
• Currency shall be in LKR and only be used for Domestic
transactions
• Guidelines of KYC, CDD, AML, and CFT will apply and the
banks shall restrict the provisioning of services to the
customers who are not complied.
• Interoperability : When a bank offers a mobile payment
services it should be offered to any network operator
• Banks who already established mobile payment services
shall review its position according to the guidelines
issued
KYC : Know your customer
CDD : Customer Due Diligence
AML : Anti-Money Laundering
CFT : Countering the Financing of Terrorism

9. Custodian Account based system
Cash in
Customer
• Deposit Physical
Money
• Receives e money
Mobile Operator/
Agent
• Issues E money in
return to physical
money
• Deposit Physical
Money Custodian
account
LCB
• Accept funds
from the mobile
operator to
Custodian
account
Cash Out
Customer
• Receives Cash in
return to e money
Mobile Operator
Agent
• Issue cash for e
money
LCB
• Transfers funds to
the Mobile operator
from the custodian
account

10. Custodian Account Based system-Operation
• Service provider should maintain separate e money account for
each customer
• Airtime account and the e money account need to be maintained
separately and money in the air time account cannot be transferred
to e money account
• However, customer may purchase airtime using the balance in the e
money account
• Customers need to be informed about the changes taking place in
the e money account on real time basis
• Service provider shall not
–
–
–
–
Grant credit to the e money holder
Pay interest / profit to the e money account holders
Issue e money at a discount
Any other facility that increase the monetary value of e money
• Individual stored value limits, transaction limits, Merchant’s limits
and day limits shall be decided with the approval of the CBSL.

11. Custodian Account Based systemOperation
• LCB is responsible for monitoring its Licensed
service provider
• LCB is authorized to invest the money in the
custodian account in an interest bearing
instrument or open a interest bearing
custodian account
• Licensed service providers can appoint
merchants to perform authorized functions of
the mobile payment system

12. DEPLOYING THE MOBILE ACCOUNT
PRODUCT AND THE RIGHT PRODUCTS

13. Frequency vs. Transaction value
High
• Convenience
• Availability
• Low cost
M/E Transactions
Frequency
• Trust
• Reliability
• Privacy
• Security
• Assistance
OTC
Low
Low
High
Transaction Value

14. Right Products
High
• Airtime Transfer
• Ticketing ( Travel)
• Micro Savings
• Cash in/out
M/E Domain
OTC Domain
• Local Remittances
• Utility Bill Payments
Frequency
• Ticketing ( movie)
• Doctor Channeling
• International
Money Transfer
Low
Low
High
Transaction Value

15. The successful deployment involves
focus on
•
•
•
•
Micro Transactions
Frequent Transactions
Round the clock availability
Unique P & S
– beyond payments
– Relevant
– Understanding pain points

16. MOVING BEYOND BASIC
TRANSACTIONAL PRODUCTS

17. Enabler for Mobile Money…Sri Lankan
Perspective….
Account at a formal financial institution (% age 15+)
Sri Lanka
69
Analysis of Enablers
35
Nepal
Afghanistan
20 mn

2. Banked
Population
70%

3. Urbanization
27%. Relatively
lower

4. Remittances
$ 5bn, 10% of
GDP

5. High Mobile
Penetration
Over 100%
40
India
Pakistan
Description
1. Population
Bangladesh
Enabler
25
10
9
Status


18. It appears Sri Lanka is not a case for
mobile money………………
• Yes and No
• Yes…if we discuss the basic transactional
services
• No… if we talk about innovative business
models that goes beyond basic transactional
services
• There is room for innovative business models

19. Moving Beyond Transactional
Services…leveraging “telecom assets”
• Telecom Assets
– Reach
– Customer information
• Beyond Transactional services
– Micro Savings
– Micro Insurance
– M Cheque/ imaging
– M Swipe
– NFC Enabled Payments
– Mobile Advertising and Purchases

20. Discussion on
regulatory aspects of new
business models

21. Thank you

22. Backup Slides

23. m-Commerce Segments / Service Map
Mobile Trading
Consumer Credit
Micro Credit
P2P Credit
Revolving Credit
Micro Insuarance
Mobile Savings Accounts
Utility Bills
Retail Purchases
Mobile Top Up
Salary Accrual
Local Remittances
International Remittances
Cash Withdrawals
Cash Deposits
Mobile Bank Account
Affluent
Mass
Market
Banked
Mobile Wallet
Mass
Mass
Market
Market
Unbanked
Unbanked
Card Linked Mobile
Affluent
Trading
Lending
Savings/Ins
uarance
Transaction Integrated
al payments Payments
Transfers
Mobile Finance
Mobile Banking
Mobile Payment