September 4, 2013
To accept payments on the go, either remotely or in proximity is a huge opportunity area. Payments is fast becoming a popular finTech venture in the entrepreneurial world. Investors are going ga-ga over it. We have seen Square (Jack Dorsey of the twitter fame) like offerings come up in various countries in Asia.
There is a marked difference in how they are looking at working in their respective markets with such card reader solutions. While the technology solutions seems similar to Square but business model varies a lot.
Square focused on merchant acquisitions on its own (reminds me Jack said in an interview that he spends 8 hours on Square and 8 on twitter). In developing countries one of the biggest challenges in merchant acquisition is that there is no credit history or checks you could do for merchants. So what is the result? lets see below:
India - Ezetap
Ezetap accepts mobile card reader model payments. Apart from magnetic stripe credit cards, it has gone ahead and implemented Chip and pin type payments as well on its mobile card reader. It counts Myntra, Bookmyshow, Insurance companies, Ola, Redbus as its customers. Chamath Palihapitiya is an investor in the company. Their strategy is not to go and directly do SME merchant acquisition. They are tying up with banks such as Citibank, who in turn will offer it to their SMB clients. They are also approaching large retailers directly, specially internet, E- commerce players.
India - Mswipe
Prizm Payments' "m|swipe" a card reader that works with web-connected mobile devices be it Java-enabled feature phone or any smartphone running on iOS and Android platforms. Prizm Payments will also be using its existing relationships with India's top banks to facilitate implementation of the devices throughout India. Initially the service is being implemented with Axis Bank.
Australia - Mint Wireless
Mint Wireless has also adopted a similar strategy to that of Ezetap. They have tied up mostly with banks in Australia and also a few telcos, airlines, retailers etc. Banks don’t want to lose out on the transactional side of banking and are tying up with local players like Mint Wireless to offer mobile payments to their customers.
China - Wo Shua
China Unicom is owned by the Chinese Government. The company plans to grow the usage of Wo Shua (mobile card reader and app) by investing in marketing and promotional efforts which include discount policies and other promotional policies. It appears like a direct model.
Singapore - Swiff
Swiff’s strategy is to focus on B2B business and not on B2C. Swiff has tie ups with banks and acts as a facilitator for payment made between the merchants (or consumers) and the banks. Swiff has made it easy for the banks to set up their own transactional fees making it easy for the banks to partner with Swiff and reach out their consumers.
Malaysia - MoLCube Sdn Bhd
MoL Cube Sdn Bhd’s mobile card reader is priced below $100 (USD) they are tying up with banks and government to roll their product out to the public in Malaysia and other Asian countries. They are mostly targeting SMB’s.
Japan - Rakuten
Rakuten has introduced Smartpay (card reader based payment service) which will be integrated with its online banking service and loyalty points system. Through this approach Rakuten plans to focus on Japan. Smartpay’s users are charged a low transaction fee and an upfront sign up fee.
LTP view: The challenges with merchant acquisitions in developing Asian countries are forcing them to re-invent the model. They don't want to go into the merchant acquisition and burn their hands. Most of the mobile card readers are using channels like Banks to go to market. But there are couple of areas where they have gone ahead of the innovation curve. First is the multi-device platform wherein you can use mobile card readers on any java enabled phones apart from smartphones. Thats a big Yes-Yes for emerging economies. Secondly players like Ezetap have also enabled Chip & Pin card transactions. Some of them tap into unique opportunities like Ecommerce. Ecomm players in India provide cash on delivery which is being replaced by cards-on-delivery using Square like devices.