Mobile Payment Systems

The below article was published in @QatarToday Magazine - Feb 2012 issue.

The mobile network is evolving at a lightning speed and will thrive over coming years. Recently, introduction of mobile payment systems (MPS) has gained momentum and a greater attention from telecoms and financial institutions. Mobile phones are looked upon as an appropriate medium for supplementing existing payments and settlement procedures.

The cashless society is coming: American consumers now carry more than 750 million credit cards, while paper currency production continues to decline.

The phrase “mobile payment system” can apply to various mechanisms for initiating and accepting transactions using a mobile device.

According to Forrester Research MPS can be divided into two categories: -

• Payment systems that utilize a mobile network to initiate or authorize a transaction.

• Contactless systems that use a mobile phone in lieu of a traditional credit card.

In other words, mobile payment systems apply to: -

• How consumers pay for goods

• How merchants can process transactions.

Lets us look at some of the emerging mobile payment systems in the market that allow accepting credit card payments on mobile: -

Square

Started By – the San Francisco-based mobile technology firm is a startup from Jack Dorsey of Twitter fame.

How does this work - Square enables users to accept credit and debit purchases by swiping cards through a small dongle that plugs into their iPhone, iPad or Android audio jack. The startup has already released software for iPhone and Andriod devices.

Fees - Square charges a fee of 2.75 % on each swiped transaction, no contracts, monthly fees or hidden costs. Users who select to enter credit card numbers manually must pay 3.5 % and 15 cents per transaction. Service will only deposit up to $1,000 per week into the merchant’s account, the rest is deposited in 30 days.

GoPayment

Started By - It is a partnership between popular iPhone accessory maker Mophie and Intuit. Intuit is the company that provides business and financial management solutions and the creator of QuickBooks, Quicken and TurboTax.

How does this work - the pocket-size GoPayment reader plugs into the audio jack of any supported smart phone or tablet and supports the iOS Android and BlackBerry operating systems. Users can swipe cards or manually enter card data. GoPayment processes and authorizes payments in seconds, and funds are then immediately deposited into the merchant’s business bank account. Its 4 million QuickBooks users can sync GoPayment transactions with the most recent versions of QuickBooks for PC and Mac

Fees – Merchants who process less than $1000 a month need to pay 2.7% rate to swiped transactions and a 3.7% rate to manual transactions. A high-volume option, priced at $12.95 a month charges a 1.7 % fee on swiped transactions and 2.7% on manual entries

There are a few more payment systems like Pay Anywhere and Verifone’s PAYware Mobile, which work on a similar mechanism of attaching a card reader to your mobile.

Contactless Payment Technology called Near Field Communication (NFC) enables mobile payments by tapping your phone on the payment machine.

Google Wallet is an app that uses Near Field Communication (NFC) to make secure paments by tapping the phone on any PayPass-enabled terminal. Google Wallet being an app can store credit cards, offers, loyalty cards and gift card. Mobile phones will automatically redeem offers and earn loyalty points when a customer taps the phone on a terminal.

In the Middle East region, NFC mobile payments have already been introduced in UAE following a collaboration agreement between Etisalat, MasterCard and Research in Motion. People can pay for their purchase of cinema tickets, and in the future metro tickets, just by tapping their phone at a payment terminal. Nokia has also introduced the NFC enabled phones in UAE for the users.

As with introduction of a new technology, there are security concerns that need to be addressed prior to its commercialization. Merchants that use a personal mobile device as part of accepting payments from customers may not have direct control on the security of the environment in which the device is used. Some merchants feel this is the most convenient way of receiving payments, while some customers feel this is very insecure; any merchant can attach a customized scanning device on their mobile to collect the card info.

London 2012 Olympics will be the first global event where mobile payment systems using NFC will be on display. It could take years before many other merchants adopt this payment mechanism and customers start getting comfortable to use it. You never know next time paying at the local grocery store or buying a coffee with a smart phone may be a regular thing.

What did Middle East Search in 2011 on Google - Trends Part 1

This series covers Google Trends 2011 for UAE,  Saudi Arabia, Jordan, Egypt, Oman and Lebanon.

Google has once again released its annual Zeitgeist report, showing the fastest rising searches for countries all over the world. Saudi Arabia and Egypt were covered as part of the MENA region. I have used Google Trends to do the analysis of other countries in the Middle East. 

Part 1 covers - UAE, Saudi Arabia and Oman. 

Part 2 covers - Egypt, Lebanon and Jordan 

UAE 

The country has the highest Internet Penetration rate of 69 % (via - according to internetworldstats.com) in Middle East. Most of the search terms are in English. After ‘Dubai’, ‘Facebook’ remains the most search term. In the rising searches, ‘Al Jazeera’ and ‘Dubizzle’ are amongst the top 5 searched terms.

Cricket and related websites like ‘cricinfo’ are amongst the top emerging searches, giving credit to the world cup held this year.  

Saudi Arabia

Saudi Arabia – The country with the highest number of Internet Users (11,400,000 as of 30 June 2011 according to internetworldstats.com) in Middle East region. Most of the searched terms are in Arabic, which shows popularity of the language in the online world. ‘Facebook’ and ‘Youtube’ remain popular searches amongst the internet users. Photos and Game are some of the most searched categories in Saudi Arabia. Spongebob and Twitter are also popular keywords among the Saudi users. With the recent investment of $300 million by Prince Alwaleed bin Talal in Twitter, the website’s popularity will surge in the country. 

Oman

Oman – The country has an internet penetration rate of 48.4%. Facebook and Youtube are popular searches in the country. Al Sablah seems to be popular community forum in Oman, which appear in the existing and rising search trends. Hotmail is also among the rising searches in the country. Elakiri Community is another forum listed in the rising searches. 

Click here to view Google Trends for 2010.

Blackberry may not be banned in UAE

This is what we all would like to hear, don’t we? To put things in perspective, UAE and Saudi Arabia are not banning the BlackBerry device produced by Research in Motion Limited (RIM). But instead it is the BlackBerry mobile services like e-mail and text messaging by October 11, 2010.

The reason for this ban is a dispute between the UAE and RIM concerning RIM's encrypted data system. The system makes government monitoring of data more difficult. The problem for RIM is that the other GCC countries may follow suit, which will have a major business impact for the company. India has also been negotiating with RIM to access the encrypted information being exchanged on Blackberry devices.

Many countries including India claim that such moves are driven by national security. Many will suggest that this is simply an excuse to block data, but others suggest that this is a viable excuse to limit data. There can be a business reason to block the service, citing the possibility that service providers in UAE may come out with a similar service for the subscribers.

UAE's Telecommunications Regulatory Authority noted that "certain BlackBerry services allow users to act without any legal accountability, causing judicial, social and national security concerns for the U.A.E." Countries like Qatar have come forward and have announced that the service providers will not block the Blackberry service. Don't know if they also feel the security threat or not?

RIM will have to rethink its position on not sharing the data information, as potential business may be lost. UAE and Saudi Arabia has around 500,000 and 400,000 blackberry users respectively. Assuming the remaining GCC countries may comprise of another million users; RIM can’t afford to lose so many users while they are expected to unveil the new BlackBerry 9800 at a press event on 03 Aug 2010. U.S.-listed shares of Research in Motion (RIMM.O) fell 1.6 percent in early trading on Monday as the ban news spread across the world.

When discussing UAE’s adamancy with RIM to provide access to the data, it’s worth highlighting the fact that it had unsuccessfully attempted to install a application, rumored to be a spyware, on the devices of Etisalat users in 2009, informing the user’s that the patch would enhance the performance. The region has always attempted to block websites, which pose threat to the existing regimes.

Could this ban impact RIM’s business? The rumors are that RIM is already in talks with the Middle East governments to have a work around. There are more than a million Blackberry users in GCC and if even half of them change mobile devices, there could be major loss for RIM.

Facebook Penetration Rate in Middle East

UAE has the highest Facebook penetration rate followed by Qatar in the Middle East as per the data released by Facebakers. Saudi Arabia has the highest number of Facebook users but the penetration rate is very low.

The users in Qatar are growing rapidly and overall in the Middle East. Users in UAE have grown by 11 % and Qatar by 8% in the last 6 months. This illustrates the Social Media boom in the region.

Iraq also has a decent penetration rate considering its conditions, and this show the willingness of people to communicate with each other.

Male population dominate Facebook in the Middle East with a total of 4.3 million users and Females amount 2.5 million, almost half of the male users.

Interestingly, Iceland has the highest Facebook penetration in the world :)

Threat to Social Media in Middle East

This is the Part 2 of the post Death of Social Media. I decided to name it as above to highlight potential threats to this popular communication medium in the Middle East. Social Media is vibrant and booming in the region but the possibility of its sudden death cannot be overlooked. The political sensitivity and formation of agendas against the existing regimes has provoked many governments in the region to block popular social media sites.

Internet Service Provider (ISP) plays an important role in blocking/filtering these websites. In its role as a licensed ISP and in response to customer requests, ISPs have a clear policy that aims to prevent damage to the values of the community from harmful material on websites.

Interestingly enough, the blocked site message on Etisalat says “If you would like the classification on this site to be reviewed, please fill in and submit the Feed Back Form.” At least an opportunity to appeal, don’t know how many of them may have been heard though.

Below is a country wise summary of blocked social media websites and some figures. The information may vary as countries may decide to block/unblock the websites anytime.

Qatar

- According to one user of Qatar Living, popular site "Tagged" has been blocked by QTEL in 2009.

- Has got 265,000 Facebook users

UAE

- Etisalat banned Orkut.com in 2007 upon orders from the Telecommunications Regulatory Authority (TRA).

- The UAE also has a ban on a photo sharing website called Flickr ,

- Youtube is filtered and some of the videos are blocked

- Some popular blogs listed on Blogger like Secret Dubai are also blocked

- Rumors of blocking Facebook or Twitter are occasionally discussed on local forums and make rounds in the market. Many users joined a group called “Say no to blocking Facebook” to show their support last year.

- 1.2 million Facebook users

Iran

- Twitter, another popular and rapidly growing social-networking tool, also has been filtered out in Iran.

- Blogging websites like Blogger and Wordpress may not be blocked but a particular blog that may offend the officials is blacklisted.

- Iran Internet Service Providers Blocked Facebook in 2009 amid fears of users discussing about the most controversial Iranian Elections.

- Local social networking site Baltatarin.com is filtered

Egypt

- They blocked the website of the leading opposition party called Kefaya – Egyptian movement for change, in 2008.

- 2.3 million Facebook users

- Has highest number of Arabic Websites in the region

Syria

- Syria has taken the lead in blocking Facebook. The government feared that Israelis are enlisting on the Syrian Networks on the website. This was reported in Lebanese newspaper Al-Safir on 19 November 2007.

- Youtube and Facebook is blocked

Saudi Arabia

- Metacafe Partially Blocked

- Flickr and Orkut blocked

- Access to some of the popular blogs like Saudi Jeans is occasionally restricted

- 1.5 million Face Book users

- 2nd highest country after Egypt to have max. numbers Arabic Websites

- As per a recent survey by IQPC - this is the prime market for Digital Marketing tactics in 2010

Just imagine a hypothetical situation where the ISPs decide to block all the popular Social Networking sites in the region… down goes all the hype about Social Media.

The ad-spend in UAE was approximately 1.46 billion for 2009. Social media would form approximately 15% of this total spend. We know who would take the first financial hit…

-Marketing Agencies would suffer a major blow, as they would have lost a considerable amount of revenue in the form ad-spend.

-Many companies who have diverted funds to Social Media would not take any chances and marketing strategies built around this medium would go down the drain.

- People who interact with their friends/families would be frustrated, as social media has been one of the prime communication medium for them.

Most of the countries in the region block Skype and other VOIP services. As far as freedom of speech and press is considered, United Arab Emirates scores highest marks in the region for being quite liberal but it has a long way to go.

Recent alliance of Facebook with Connect Ads shows the confidence level of the social media sites in this region. I am a great fan of this medium and would like to see this thrive in the region.

Users in Gulf countries like the UAE and Saudi Arabia are worried that their authorities could follow suit after some countries have blocked these websites. So much for the political chaos in the countries….that the new medium of communication has to suffer.

Restaurants continue to levy Service Charges on Customers

Every one has made a hue and cry about this 10% service charge levied by the restaurants in UAE. Ministry says service charge is illegal and restaurants continue to justify the same. As quoted in the 7 days article “The committee, which is chaired by Sultan Bin Saeed Al Mansouri, the Minister of Economy, said that under Consumer Protection Law 26, issued in 2006, restaurants are not allowed to add any service charge to a bill.” If this rule is in the books past 3 years, was the Consumer Protection Committee sleeping or the restaurants were never awake?

I want my money back. A lot is being questioned and discussed about the charges in the local forums and newspapers, which causes further confusion. As per an article published in The National – most of the restaurants remain confused about this rule or rather are taken by surprise. Some of them justify the charge as a means to provide high service standards to their customers. The only question remains that do the restaurants continue to charge or not? As of today the restaurants maintain that if the Ministry insists then they would discontinue the service charge. I believe the statement made by Mr Al Mansouri has fallen on deaf ears – stop the service charge. Have you recently dined out at any restaurants in the past 2 days which levy a service charge?