David Luther
David Luther

Mobile breaks barriers to global pay solutions

LAS VEGAS, Nev. — David Luther and Mozido came into last month’s Money20/20 conference in Las Vegas on a bit of a roll.

On the conference’s first full day they announced a payment gateway platform facilitating trade between the United States and China.

Later that day they announced the global availability of Mozido HCE, its host card emulation (HCE) product, and Mozido HCE’s first client, a consortium of 27 Taiwanese financial institutions.

David Luther
David Luther

Mozido’s Executive Vice President David Luther said the continued development of the mobile phone enables the growth of solutions in global commerce and payments, especially in developing regions.

“It is an equalizer. They don’t need to have a bank account in a traditional sense, or to go to an ATM or even a point of sale.”

Mr. Luther and I began speaking about Mozido’s partnership with the Taiwanese consortium. Mozido was selected by Taiwan’s Mobile Payments Company (TWMP) to provide the HCE and tokenization services to the consortium.

Mozido’s solution was a hybrid mobile wallet capability that supports customers possessing different technologies. It supports Taiwan’s goal of becoming a cashless society, an aim also declared by Sri Lanka and other countries that have strong central government control, Mr. Luther said.

Taiwanese officials wanted a solution that utilizes the near field communication (NFC) wallet capabilities available on some devices, Mr. Luther added. But the solution also had to accommodate users with devices that did not have the NFC availability and the Taiwanese did not want those users to have to get an NFC-enabling chip.

“Mozido HCE emulates the software but there is nothing new with the phone,” Mr. Luther explained.

Does Mr. Luther envision the concept of a cashless society quickly spreading to other nations?

He believes we are already at the tipping point. Many countries have the infrastructure in place, including Poland and Australia.

Adoption may be driven by banks, who are strongly in favor of the concept.

“What they (the banks) are doing is essentially what Android Pay and Apple Pay are doing,” Mr. Luther explained. “They are saying ‘why should I give control of my customers to someone else?'”

“I’ll allow people to start paying with an online account just like Apple Pay and Android Pay.”

Banks in many countries run such systems through Visa, but Visa’s technology is not even available in parts of some countries, Mr. Luther said.

“In some places entirely new options are needed.”

Access to China not a gimme

Getting access to China’s more than 1.3 billion people took some effort, Mr. Luther conceded.

The initial steps were taken by the Chinese government a decade ago before the initiative was taken private. Mozido purchased it last December, Mr. Luther said.

It allows U.S. merchants to sell in China through e-commerce sites. Mozido helps companies create a Chinese version of their website through its Mozido PayEase service, market it, and most importantly facilitate payment between banks and merchants.

Virtually all of Chinese payment accounts are participating in Mozido PayEase, including China Union Pay, Visa, and MasterCard. An additional 26 nationwide and 80 provincial Chinese banks are also in the fold. Twelve different currencies are accepted.

Key features are a multilingual platform, standard APIs, recurring bill pay process simplification, and customizable loyalty program capability.

Important to Mozido’s approach was constant communication with the Chinese government, Mr. Luther explained. They use the government data center and it is Beijing’s fiber optic system which connects the banks.

Mozido had to obtain five licenses, Mr. Luther said. Permission to conduct cross border commerce was the most difficult, he added. Mobile payment licenses were also granted.

The route between the US and China is the primary corridor, and it is exclusively used by Amazon, Apple, Burberry and others, Mr. Luther said.

Mozido recently introduced a Russia to China corridor, an event so significant Beijing created a stamp to commemorate it, Mr. Luther said.

Because Russian products are not as well known in China as major American brands are, Mr. Luther said warehouses have been opened in major Chinese cities. Shoppers can go to them to view Russian products, which they still have to order online.

Early results have been positive, Mr. Luther said.

“We have received calls from Japan, South Korea, Nigeria, and other countries saying they want to do the same thing.”

Mobile could democratize finance

The potential for mobile technology to democratize financial services is significant, Mr. Luther said.

“If people have no bank accounts and no credit cards, they cannot pay on a website. It is hard to participate in commerce, and it is hard to save.”

For people in developing regions like India and Africa such capability is a necessity, when in reality, it is a “nice to have” in North America due to the many different payment options we have, he added.

Many people live hours away from the nearest physical bank or utility payment office, Mr. Luther explained. But because so many have mobile phones, they can pay bills, top up airtime, or transfer funds from wherever they are.

Because physical bank branches are so rare, merchants play an important role.

“People can go into a merchant and either pick up or drop off money,” Mr. Luther said. He added that in August 2014 India became the first country to license payments between bank branches and merchants, with every transaction conducted with a mobile phone.

I commented on the similarities between the reasons behind such solutions in developing worlds and those targeting the underbanked in major American cities. Both employ mobile technology and popular merchants to save customers both time and money.

Mr. Luther agreed.

“The 60 million people in the United States who can least afford to pay for financial services are paying the most.”

Mozido’s technology also has applications for microloans, which are key financial empowerment tools in many developing regions, Mr. Luther said. This can be a great equalizer for women, who are the most reliable financial figures in many cultures.

“African women are the least likely to default on a loan. They’ll pay it back.”

If African women have the ability to walk into a merchant where they live and where they are known, they have the ability to create a small business that can bring more prosperity to the family, he explained.

“In many places, there is no easy way to save to buy a kiosk and move up,” Mr. Luther said.

Such mobile finance services are just beginning in many regions, Mr. Luther explained. An interesting note is they usually begin with one unique pain point.

In Zimbabwe it was prepaid electricity. People would have to walk, often for long distances, to the nearest utility center to buy more electricity. They receive a four digit code which they entered when they returned home sometimes hours later.

Now they can pay for the electricity and receive the code on their mobile phone.