Exclusive interview with Anne Bouverot, Director General of GSMA

Anne Bouverot, Director General and member of the Board of GSMA, will give the keynote opening at the EPCA Payment Summit 2012, which takes place in Rome 18—20 April 2012. Speaking in the morning of April 19th, Ms. Bouverot will lay out the GSMA vision and call to action for the transaction services industry in setting the Digital Agenda.

The Paypers sat down with Anne Bouverot for a pre-conference interview to discuss the mobile payments opportunity for MNOs, consumers and retailers, as well as the

As the Director General of the GSM Association, which represents the interests of nearly 800 mobile operators across 219 countries, you are ideally placed to have a “bird’s eye view” on the place of mobile payments among the wide spectrum of consumer mobile services. How are mobile payments currently perceived by both MNOs and consumers globally? Are they really “the next big thing” in transaction services for both parties?
I think that payments are just one part of a larger trend towards transactional services conducted via mobile, and include both remote m-payments and proximity payments. Remote m-payments are generally made through the Internet or through premium SMS services which are billed through the mobile operator.

Proximity payments typically are made at the point of sale - Near Field Communication (NFC) is the leading proximity technology available today. While NFC is perhaps most closely associated with mobile payments, it goes far beyond; NFC will facilitate a wide range of new applications for consumers, such as mobile ticketing to board public transportation, the exchange of information and content, control access to cars, homes, hotels, offices and car parks and more. This is just the tip of the iceberg - the possibility for innovation is endless.

Near Field Communication is an area that the GSMA and its members are especially focused on, stimulating the successful global deployment of interoperable and secure services for mobile payment, as well as many other applications.

The growing hype surrounding mobile payments has made the mobile phone increasingly valuable not just to consumers, but also to merchants, who have started using it as a POS tool to drive sales volumes. How does the GSM Association regard this particular development?
For operators, NFC is a crucial enabler for a whole array of new services that will become indispensable in people’s lives. Mobile payments is probably the first opportunity that comes to mind.

We are all familiar with contactless bank and transport cards. These contactless cards have created interest in the NFC space and are encouraging merchants to put in place point of sale terminals. In the UK, McDonald’s offers NFC payments in restaurants across the country, and other merchants are following suit.

Customers with a mobile phone will have the advantage of getting eCoupons from merchant terminals. Mobile NFC will be able to read smart tags in and outside of stores and get up-to-date information and offers, creating a whole new shopping and information experience. Because mobile can enable more targeted offers to consumers, it will spur more merchants to have terminals ready to receive payment for those offers.

People ask me why the mobile phone is at the very centre of this NFC revolution, and there are many important business and technical reasons behind this. But really, it’s about the end user. Synovate has found that 75 per cent of people will not leave home without their mobile phone. In fact, people are more likely to leave their keys or wallets at home than their mobile phones.

In the UK, the UK Internet Advertising Bureau conducted research that UK consumers now see NFC as a positive move for mobile, with 74 per cent of consumers reacting favourably towards using NFC services. These statistics underscore the importance these devices have gained in our lives, and why mobile is the ideal platform for these new services.

The mobile phone means different things to consumers in different regions of the globe. For sophisticated consumers in developed markets, it is mainly an alternative tool whose value lies in its ability to provide access value-added services. For consumers in developing economies, it is a channel for financial inclusion and oftentimes it means better quality of life. Can the global mobile financial industry reconcile these two very different trends and still achieve significant consumer adoption?
While different regions of the world may have very different requirements for mobile money solutions, the unifying factor here is “mobile” – mobile is changing the way people work and live around the world.

In developed markets, mobile Near Field Communication (NFC) offers new conveniences and ease of use to consumers for services such as mobile payments, but also information services, couponing, secure access to homes, offices, cars, hotels, etc.

In developing markets, mobile money is a sustainable, scalable approach to providing convenient and affordable financial services to the unbanked. More than one billion customers in developing markets have access to a mobile phone, but do not have a formal bank account.

We believe that having access to financial services, and somewhere safe to save, greatly improves the lives of people around the world. It’s true that, historically, financial institutions have been unable to reach low-income customers adequately, especially in remote areas, given the cost of bricks-and-mortar branches.

Through mobile money, customers can perform financial transactions where they buy airtime. How? Because typically, the largest mobile operator in a developing country has 100-500 times more airtime reseller outlets than banks have branches. Clearly, through initiatives such as the GSMA’s Mobile Money for the Unbanked programme, there’s a huge opportunity to impact the lives of millions of financially excluded people by leveraging mobile network operators’ expansive distribution networks and trusted brands to deliver financial services.

As the global mobile financial services market is extremely fragmented, how does this fragmentation impact innovation and development in the field?
Differing approaches to NFC will fragment the market, and potentially stifle the growth of NFC. There are a number of potential methods of deploying NFC being explored in the market - we’ve seen stickers, we’ve seen micro Secure Digital (SD) cards, we’ve seen technology embedded in the device, but the Subscriber Identity Module (SIM)-based approach offers the best solution. SIM cards are provided by the same manufacturers who provide secure chips for credit cards, and offer bank-grade security.

The connection between the NFC chip and the SIM card is industry standard, utilising the Single Wire Protocol. The SIM can support multiple services, it can be updated over the air and provides portability between devices and operators. The SIM is certified and standardised, and is also tamper-resistant, providing greater security over other NFC form factors. Further, because SIM-based mobile NFC services can be remotely provisioned over the air, they can also be terminated in the event of handset loss or theft.

Standardisation in the wallet is also critical. We need to establish a set of standard processes for the provisioning, activation, usage, delivery of updates, and importantly, the de-activation of card details stored on the wallet. We need to agree standard interfaces to enable coupons to interact with the wallet, transport systems to utilize the wallet for ticketing and access controls systems to use the credentials on the wallet to gain entry to cars, offices, hotel rooms and more. The mobile operator community will release its specifications for a standard mobile wallet during 2012.

The GSM Association supports and promotes the interests of mobile operators – one side of the mobile payments equation. In your opinion, what (more) is needed from the other side of the spectrum – namely, from banks and financial institutions – to make mobile financial services a successful reality?
The GSMA and its members are focused on stimulating the successful global deployment of interoperable and secure NFC services for mobile payment, as well as many other applications. As you can imagine, there are many elements that must come together on both a country-by-country basis, and then on a global level, in order to drive NFC to mass-market scale.

Mobile industry – Mobile operators have a central role in the deployment of NFC services, but they cannot do it in isolation. They must engage their value chain, by specifying and ordering appropriate handsets, compliant SIM cards and developing the necessary applications to enable these services.

Financial industry – Mobile operators recognise the critical role of banks and card issuers in the development of this market, particularly because of their trusted relationships with customers, and operators are focused on building strong partnerships here. It’s critical to engage as many players as possible to create a ubiquitous solution that is widely accessible and simple for consumers to use.

Adjacent industries – We must engage with adjacent industries as we look to NFC to provide ticketing for transport or entertainment services, access solutions for hotel or rental cars, or information exchange services in areas such as retail or museums.

Public sector – And of course, government, regulators and local authorities are a critical piece of the NFC puzzle. We need effective regulation to encourage the deployment of NFC services, and engagement with local authorities who typically run transport infrastructure or public information services to support NFC technology to create a seamless experience across a city or region.

The importance of building a strong ecosystem cannot be understated; NFC can only succeed through collaboration across the entire value chain.

In your opinion, is near-field communication (NFC) technology likely to be a key component of the global effort to develop secure, flexible mobile payment services in the coming years? Or can we do without NFC and will this be replaced (even before take-off) by other technologies (e.g. QR codes)?
There is incredible excitement around NFC today, and the news has been awash with service launches, NFC-enabled devices and new alliances. The market potential for NFC is significant - nearly 1.5 billion SIM-based handsets will have been sold worldwide between 2010 and 2016, supporting transactions of more than $50 billion globally over the same period according to Strategy Analytics, and momentum is growing.

More than forty-five of the world’s leading mobile operators have committed to support and implement SIM-based NFC solutions and services. Commercial NFC deployments are already underway in France, Japan, Korea, Turkey and the UK, with trials in many other countries around the world, and we expect to see many more commercial deployments coming in 2012.