Thanks to rapid technological advances and the equally fast evolution of the wireless ecosystem, the mobile phone has emerged as a multi-purpose platform, serving as a communication device, a navigation device and even as a virtual wallet. Today, mobile subscribers across the world use their mobile phones to send, receive and spend money. The trend has gained momentum in Southeast Asia as well, and the region has seen significant growth in the past few years, with all major telecom operators and banks coming together to offer low-cost and easy access to financial transactions on the mobile platform. However, due to the diverse telecom markets in the region, picking a standard growth model – and sticking to it – has been difficult.

The success of mobile-enabled financial transactions in technologically advanced markets such as Malaysia, the Philippines and Indonesia can be attributed to the convenience of conducting money transfers while on the move. Cambodia and Thailand are seeing increasing use of mobile money services because of growing wireless penetration and because large sections of the population do not have easy access to banks. As a result, the mobile phone is emerging as the foremost platform for gaining access to financial services.

Regional initiatives

Operators across Southeast Asia have packaged the mobile money service as a value-added offering. They allow prepaid top-up services and digital content purchases through their billing platforms. The adoption of contactless payment services has helped operators to extend their reach to cover broader retail transactions and micro payments.

Operators generally seek bank assistance in fulfilling these transactions. However, there are cases where such services are managed solely by the operator. For instance, G-Cash is a stand-alone account managed by Globe in the Philippines, and is not associated with bank accounts. Globe plays the role of a bank, as a provider of a payment solution. It assumes the responsibility for the financial aspects of the transaction and has to comply with the country’s financial regulations.

Banks have yet to extend their core banking products over the mobile platform. The majority of solutions have so far been in the form of simple mobile banking facilities that permit account enquiries or a transfer of funds.

The Philippines: The country was among the first to adopt mobile money services over a decade ago. In 2001, SMART Communications launched SMART Money, which uses a SIM tool-kit to allow customers to buy airtime, and to send and receive money domestically and internationally through mobile services. Globe Telecom launched G-Cash in 2004, which provides a cashless platform to facilitate remittance of money, settlement of loans, disbursement of salaries or commissions, and payment of bills through text messages. The country currently has over 3 million mobile money users. High SMS literacy and strong regulatory support from the central bank, the Bangko Sentral ng Pilipinas, have helped ensure widespread acceptance of such services.

Indonesia: Mobile money services were introduced in 2007 with the launch of TCash by Telkomsel. Indosat followed with the launch of Dompektu in 2008 and XL launched XL Tunai in 2012. The services have received an encouraging response over the years, and the provision of a mobile wallet service has become an integral part of operator offerings. TCash leads the pack, with over 8 million subscribers in its fold. Further, several non-telecom players have entered the cashless payment market. Bank Andara has launched a B2B service, AndaraLink, aimed at micro finance institutions. Other banks such as Bank Rakyat Indonesia, Bank Mandiri, Bank Tabungan Pensiun Nasional, Bank CIMB Niaga and Bank Sinar Harapan Bali launched branchless banking trials in 2013. In February 2013, BlackBerry, in partnership with Monitise and Bank Permata, launched a commercial pilot of BlackBerry Messenger Money.

The year 2013 proved to be a landmark one for the mobile money segment in Indonesia, with the country’s three key operators – Telkomsel, Indosat and XL – coming together to allow real-time money transfer among themselves. They have jointly developed a protocol that allows transactions directly among the three of them.

Malaysia: Maxis was among the first operators to launch mobile money services in Malaysia in 2007. Today, Celcom offers Aircash Wallet to its customers, and Digi offers DiGiREMIT virtual wallet to its clients. Besides offering bill payment and mobile banking, there is an increased focus on facilitating inbound and outbound remittances. Maxis, in partnership with Western Union, had launched one of the world’s first services for sending international remittances via mobile. Further, Celcom’s Aircash Wallet can be used for domestic money transfers as well as to send money abroad.

Thailand: True Money was launched by True Corporation in 2005. The service consists of an e-wallet that can be loaded through cash card, bank account or credit card to buy airtime, to pay for True Group services, to pay bills and to transfer money. True Money has received an overwhelming response. An estimated 300,000 downloads of its e-wallet application took place in 2013.

AIS’s Advanced mPay was launched in 2008 and has also seen significant use. According to the company’s website, over 27 million AIS customers, together with over 40 million customers of the five leading banks of the country, can perform their transactions through their mobile phone on the AIS network. The five banks are Siam Commercial Bank, TMB, Krung Thai Bank, Bangkok Bank and Kasikorn Thai Bank. The operator is working on an near-field communication (NFC) mass transit payment solution in collaboration with the Bangkok Mass Transit System that will allow customers to use their NFC-enabled smartphones to pay train fares.

Cambodia: In 2009, the Australia and New Zealand Banking Group, with assistance from the International Finance Corporation, launched a mobile money initiative called WING in Cambodia. The key objective of the project is to give those who do not use banks access to financial services through their phones. The service allows transfer of money to someone within the country for a small fee via the mobile phone or by visiting one of the company’s WING Cash Xpress outlets. In urban centres, WING has focused on the large student population. The service has seen a significant increase in use in the past five years. The network has grown to about 1,000 WING outlets across the country, covering 90 per cent of Cambodia’s districts and serving over half a million customers. The transaction volumes of domestic remittances stood at $1.5 billion in 2013.

Singapore: StarHub launched a mobile wallet application called SmartWallet in 2012. It was developed in collaboration with DBS, EZ-Link and MasterCard. SmartWallet allows StarHub customers to use three contactless payment cards on an NFC-enabled smartphone. Customers can use these cards to make tap-and-go payments at about 20,000 DBS and MasterCard PayPass merchant partners in Singapore, in addition to several EZ-Link transit touch points.

Further, in 2013, SingTel introduced mCash services as well as an mWallet smartphone application available to all mobile subscribers across any network in Singapore. The service allows consumers to shop online and to pay their bills using funds stored in their virtual mCash account. Banks have become active in the mobile money space in Singapore and a slew of deals has been signed with key banks to provide these services.

In November 2013, Maybank Singapore launched a person-to-person mobile payment service that allows a user to send money to anyone using a particular Singapore-registered mobile number. The funds can then be collected via any Singapore bank account. This was followed by the launch of a mobile wallet application called PayLah! by DBS and the introduction of Pay Anyone by OBC in April-May 2014.

The most recent initiative, launched in June 2014 by Standard Chartered Bank, is an application called Dash, which allows the bank’s account holders to download cash into their phones. The application also allows users to make contactless payments through their phones at participating retailers.

Challenges and the way forward

The success of mobile money depends on the level of user acceptance of these services. Ease of use, reliability and security are paramount considerations that play an important role in determining consumer readiness to carry out mobile money transactions. However, a rise in cases of fraud and money laundering while performing financial transactions through the mobile platform has made users wary of such services. The challenge has become more difficult with the emergence of global mobile money remittances, which are generally outside the purview of traditional regulations pertaining to financial institutions. In addition, the growing adoption of mobile commerce brings with it the challenges of increased instances of spam, malware and theft of personal financial information.

Lack of technical interoperability and the absence of relevant business models are other key obstacles in the large-scale, mass-market launch of mobile payment services. Most countries are yet to achieve clarity on revenue sharing issues between banks and operators. Further, mobile money services are currently being deployed through proprietary point solutions, leading to a one-bank, one-solution or a one-operator, one-solution model. The recent move by Indonesian operators offering account-to-account interoperability among mobile wallets is a step in the right direction.

Going forward, overcoming the barriers to mobile money services across the region will be crucial in increasing the use of these services. To this end, the identification of best practices and continued engagement with regulators will create an enabling environment for mobile money services to flourish in the region.