Visa India

Have you heard of Visa India?  I came across a news article today referring to such a company.  When you visit the Visa site and select India, you go to Visa South Asia section.

I am not trying to make a big deal of this innocuous article.  Given the background about NPCI, quite a few folks whom I interact with suggest that a Visa India (similar to Visa Europe) is a reasonable market response. 

Interview with Prof Das re: Cashless Payment System in India

The response and discussions triggered by Cashless Payment System in India - A roadmap has been marvelous.  Discussions among payments professionals [in India] have invariably gravitated to debating either suggestions in the report or the broad press coverage the report received.  For sure, the report has helped bring the spotlight to the niche area of electronic payments and its role in an emerging market.

While Prof Das, the author of the report, has been understandably busy, he took some time off to talk with Mr Manju Murthy.  Please find below the excerpts of the conversation:

MM: Why did you feel there was need for this report?

Review of report: Cashless Payment System in India

This post reviews Cashless Payment System in India - A roadmap authored by Prof Ashish Das, IIT Mumbai and Ms Rakhi Agarwal.  This report is a well researched and comprehensive report which is a must read for payments professionals, those who focus on India and others as well.  The report is unbiased and credible as the authors objective has been to identify factors to deliver an effective and efficient retail payment tender for India.  As a professional addressing opportunities in India, I have been waiting for this report for a while now.  The 104-page report did not disappoint.  While I normally do not have much patience (or attention span) for long documents, this report was an easy and quick read.  I encourage you all to read this report.

The summary of the findings are:

Broadening electronic payments coverage in India

Electronic payments industry requires the government to motivate laying the rails (aka necessary infrastructure).  It is heartening to note that government in India is using RBI's bully pulpit to get there.  Public Sector banks in India have signed up to bank the unbanked over the next 5 years.  I am sure the skeptical readers have been hearing about such good intentions for many years without any perceptible change in ground realities.  I think that this time it is going to be [marginally] different

• Back to back governments of the same party is providing adequate time to focus on and deploy infrastructure
• Political parties in India have figured out how to benefit from government sops being distributed electronically.

 Having said that, it will take time (5+ years) and effort to see electronic disbursements and financial inclusion (FI) make a difference in the lives of the poor, and change behavior (reduce use of physical cash).

Reserve Bank of India (RBI is the Indian Banking/Payments regulator) Deputy Governor Dr KC Chakrabarthy, among other RBI officials and Bank management shared their Financial Inclusion plans at the 23rd SKOCH Summit on Financial Deepening in Mumbai:

• 
  
  

King of grand vision and bold strokes

Reliance (RIL) led by Mr Mukesh Ambani re-enters the telecom market in India by acquiring Infotel (source) for about $1B.  Infotel, in the recently concluded auctions, won the pan-India Wireless Broadband license.  Why would a blog about payments and commerce care about this development?

Overview of RIL: As you might be aware, RIL is a major player in India's growing retail space.  RIL has been aggressive in experimenting with different formats of stores, business models, locations...  RIL, under the leadership of the older Ambani, has used a wide canvas and made bold and audacious strokes.  When RIL started Reliance Infocomm (since renamed to Reliance Communication), they were amongst the first telco to have Java on all their handsets.  RIL has been generating a lot of cash (cash surplus of $25B over the next 4 years [Source]) from its petrochemical business and needs new projects to deploy this cash.

RIL and Commerce: RIL's vision in communication is to make broadband-based TV, Internet and Phone affordable and ubiquitous (as they did with mobile phones/service in 2003 [Source]).  They plan on having

It is all about inexpensive convenience

In India, banks are making a serious and sincere attempt at serving the unbanked / underbanked.  However, progress has been slow and restricted to the margins.  G2C not withstanding, domestic remittance is one of the litmus tests of whether formal channels (banks & post office) are relevant in the lives of rural Indians.  Elsewhere in the emerging/developing world, remittances have been the killer app to start the process of digitization of cash in rural settings.

A survey conducted by IFMR, indicated the following as the top reasons (not in any particular order) that drive choice of channel for [domestic] remittances:

• Lines / queues to send / receive money
• Time taken [by service provider] to deliver the money
• Price (fees/commission charged)
• Proximity of deposit and withdrawal points
• Business hours of deposit and withdrawal points (should be open during hours when they are free)
• Minimal paperwork as a significant percentage of migrant workers are marginally literate

Bridging the gap in Branchless Banking

This post is the final part in the series on branchless banking, and will provide an overview of the innovations (or gaps that need to be filled) necessary for branchless banking to be viable.  The introduction of this series set up the context.  The first part of this series provides statistics about the industry as is today, which is essentially in a fixed-cost and money-loosing phase.

The following structural changes are recommended to help the industry move from an early-adopter opportunity to a sustainable market which has the green shoots of sustainability and stability:

•  Use of Commercial Off The Shelf (COTS) hardware as a POS device.  This would preferably be a device which the agent already uses, for e.g., a mobile phone.  
• This will reduce the cost of entry for an agent
• Standardized devices will have higher uptime and lower maintenance costs
• Such devices will be interoperable with other service providers' infrastructure
• 
  

State of Branchless Banking in India

This post builds on the previous post which setup the context of this series, and will provide an overview of branchless banking as they exist today.  The next post in the series will discuss bridging gaps that exist and will provide recommendations for service providers.

Below are some of the key performance measures of branchless banking in India (based on many sources including CGAP articles from G Chen and K Krishnaswamy et al):

• Account Opening Fees paid by banks for No-Frill accounts, a major revenue stream, does not exist.  Presently, No-Frill accounts are a loss-making proposition.  Consequently, I don't see banks pushing for new no-frill accounts in their current avatar
• Custom hardware devices are provided, as POS terminals, by service providers (e.g., FINO, ALW, Eko) to their agents (e.g., merchants), in lieu of a deposit (typically INR 5000 / $115)
• 
  

Analysis of Branchless Banking in India

It is easy to agree that branchless banking is a preferred way to serve rural India.  However, I have been trying to get my business mind to arrive at the same conclusion by looking at the numbers.  I would like to go thru' such an exercise here at the risk of getting beaten up.

I am starting this exercise by leveraging the wonderful work done by CGAP, notably these two publications:
    ○ BC Banking Channels in India - G Chen
    ○ Building Viable Agent Networks in India

Visa getting into acquiring business

SBI is teaming up with Visa International and Elavon (Source) to jump start SBI's acquiring business.  It is a critical win for Visa.  In light of SBI being the 800# gorilla in the India, their choice of Visa is intriguing.  Is this the beginnings of Visa's aspirations in the acquiring space?  When Visa decided to acquire CyberSource, Visa was expected to be measured in its interaction with the merchant community so as to not offend its partners, the acquiring banks and processors.  With Visa's intentions of taking CyberSource international, and its move into acquiring business in emerging markets, we might seeing elements of Visa's strategy for the coming decade (at least in emerging markets).  With SBI's interests in mobile payments (primarily driven by financial inclusion and branchless banking initiatives), Visa's JV with SBI becomes even more significant.

What does this mean for NPCI's aspirations and the IndiaPay initiative?

Look forward to your comments on the implications of the SBI-Visa JV.

Electronic Cash in India: A conversation with S Fareedi

I spoke with Mr Seemab Fareedi, Senior Manager, Smart cards division, Sodexo India to understand the opportunity for electronic cash instruments for micro/small payments in urban India.  India is a fast growing market holding promise for a lot of industries.  I wanted to find out from Seemab whether the broad based optimism holds for electronic cash as well.  Below are the excerpts of the conversation:

Manju: How much of a problem is cash handling for small merchants in quick serve restaurants (QSRs)?
Seemab: Merchants like to handle cash.  This is as much cultural as it reflects the high interest rates that merchants have to pay for short-term loans for informal sources.  Additionally, labor is cheap to both handle cash with customers as well as to process cash at the back end.

Manju: How practical / attractive is cash displacement (use electronic cash [payment cards] instead of physical cash) in QSRs?
Seemab: The cost of handling physical cash is not as high as it is in the west (primarily due to low labor costs).  Additionally, the special place that cash holds in the culture of small merchants far outweighs the benefits of electronic cash

Manju: How attractive is the business of acquiring transactions from QSRs?
Seemab: The MSC is pretty low in India (1.25%-1.5%).  When combined with low ticket values in QSRs of $1-$6, QSRs are not very attractive / viable to payment processors.

Editorial Note: While the interview was around QSRs, the points made are as applicable to other similar use cases, including paper/magazine stands, coffee shops...

Manju: Prepaid telecom service plans revolutionized the telecom industry in India with over 95% of all consumers using prepaid plans.  Does this success usher in similar innovation trend in the payment industry?
Seemab: Indian regulators have been very proactive in regulating the prepaid industry.  They are very specific in what a service provider can and cannot do based on the role they play in the payments value chain.  Additionally, they expect sizable balance sheets from service providers.  While this is good for consumers, it virtually eliminates startups from innovating in this space.  It is debatable whether consumers would have been the beneficiaries if startups were allowed to bring innovative products to the market (though some of them would have failed).  In addition to this, telecom operators in India are yet to gain that level of trust which a bank enjoys for handling money and subsequently payments. However there are few instances where telecom operators and banks have team-up and synergized to create very promising payment instruments like m-wallets or SMS-enabled payments.  We need to wait and see whether it is really successful.

Manju: How attractive are prepaid cards for consumers?
Seemab: While prepaid cards, like other payment cards, are attractive to consumers, the chore of loading funds into the prepaid wallet is inconvenient.  As internet penetration is still not universal, consumers have to use physical kiosks to load value which significantly reduces the utility of prepaid instruments. Indian population is fairly under-banked and it can be a hindrance & could impede the prepaid proposition here.  Sometime back India had around 403 million mobile users. About 46% of them, or 187 million, did not have bank accounts.

Manju: Mass Transit services are being deployed in a massive scale across large cities in India. Does this trend impact the perception of electronic cash?
Seemab: Mass transit has the capability to change behavior, both consumers and merchants.  Innovations coupled with transit wallets is the silver lining in the cloud.  Only time will tell how regulations will affect/impact this opportunity.

Manju: Seemab, thanks for your forthright comments and perspectives on the Indian market.  I am sure that the readers will benefit from your experience.

Note: The views expressed here by Mr Seemab Fareedi are purely personal and does not reflect company's stand or viewpoint.

Look forward to your comments, questions and observations about the above perspective and insights.

Payments Innovations: India 2010

Innovating in payments systems is hazardous anywhere in the world.  In India, the risks can be significantly heightened.  PayPal stopping P2P operations in India brought this hazard out in spades.  This established juggernaut had to apply the brakes as it is not a licensed payment systems operator in India.  This may not have been a major issue in most other countries (ask for forgiveness), but not in India.

After the financial meltdown of 2007-2008, it is abundantly clear that the regulator / government is where the buck stops.  Therefore, a proactive regulatory environment is expected and understandable.  RBI being a no-nonsense enforcer is an additional wrinkle in India.  This manifests itself in India as the bank being the only entity allowed in the payments space [in dealing with user accounts].  The RBI has been prodding banks to innovate by making noises about allowing non-banks, but nobody is taking 'RBI's threats' seriously.

In APAC (e.g, Philippines) and Africa, payment innovation has been taking place adjacent to the banking system.  CGAP states that an additional growth of 1% to the GDP contributed by financial inclusion (aka payments innovation).  Compared to the leaders, India has been a laggard in financial inclusion.  Does this mean that India is losing out because of its conservative regulatory oversight?  Alternatively, innovators need to be a little light on the gas pedal to manage burn consistent with market development (easier said than done) which gives innovators a better chance of success.  Would this throw cold water on VCs interest in this space?  If so, which is the right funding source for startups where gestation periods are long, regulatory risks are high and funding requirements are non-trivial?

Too many questions, but a lot of time to ponder as the Indian market is focused on the long term.

Happy Chinese New Year.

Higher transaction limit breathes life into a comatose market?

 Over the holidays, RBI (the Federal Regulator in India) raised mobile transaction limits to Rs50,000 per transaction (source).  A gripe by the mobile payments industry has been that the prevailing limit of Rs5000 per transaction was not sufficient, for e.g., to pay for an air ticket. What is the impact of RBI raising the limit for mobile payments in India?  I'll look at this question in the context of urban India.



A quick survey of the possible demographic segments that the new regulation would appeal to:
a. The 80% of urban India who carry cell phones were held back because of the low transaction limits
b. The upwardly mobile tech savvy Indian (early adopters) did not have access to mobile payments
c. Those who are already paying for their sundry expenses using their mobiles phones, but couldn't pay for their airline tickets though
d. None of the above

As you might have realized, this is a rhetorical question.  Mobile payments in India has been a big yawn.  Mobile payment service providers in India are struggling, or are re-inventing themselves to stay alive / relevant (related post).

In India, the dominant perception (Cash Culture) is that cash is a preferred way of living, leaving no trail behind, being anonymous and not attracting attention of the government.  This holds true for purchases related to both durable goods and consumables.  Let's look at the traditional factors driving mobile payments, cash handling costs / cash displacement) in such an Indian context.

• Merchant's perspective: Other than in exceptional cases, merchants prefer cash as they control / manipulate what is reported as sales, primarily for tax purposes (euphemism for tax avoidance)
• Consumer's perspective: Do not want to leave a trail of purchases [for tax authorities to follow]
• Significant part of India's retail economy lives in a parallel black market, some say as much as half of the economy!
  

Who would use mpayments in India
- Consumers who have and use credit cards and bank accounts, and merchants who accept them
- Organized retail
- Those interested in reducing customer service costs via self service channels

When you look at mpayments from the above perspective, there is a significant overlap between payment card users and mpayments target market. While this insight is not a revelation, in the context of India which has very few active card users (20-30 million active card users), the increase in transaction limits will do very little to the mpayment industry in India.  The change in the transaction limits has not raised the mobile payments market size which continues to be 20-30 million card holders (not the 500 million mobile phone users).

The above undercurent does not bode well for the industry.  If mobile payments changed the market size from 20 million to 500 million you get people's attention.  If the pie is only going to grow marginally bigger, there is little incentive for the various ecosystem enablers to invest resources and do the heavy lifting to deploy mobile payment technology. 

Look forward to dissenting or concurring opinions.  Have a wonderful 2010.

Indian credit card industry looks black

I have been looking at the profitability of online card payments in India, specifically from a card issuer's perspective.  This post is following up on a related post (Oct 09).  A couple of trends triggered this post:

• 2FA (Two-factor authentication), mandated by the RBI, deployed since Aug 09 seems to be a success.  The timing of this deployment is helping increase the size of the ecommerce pie in the nascent Indian market, at just the right time.  Early indicators are that both merchants and issuers are seeing reduced fraud.
  
• Stung by the credit defaults during the [temporary] recession of 2008-09, card issuers are offering credit backed by a card holder's asset (e.g., a fixed deposit / CD)
  

Recognizing that the main cost drivers for card issuers are credit risk, fraud risk and transaction processing costs, the relatively high interchange fees (3% and higher) and lower costs must be making the balance sheets of Indian credit card issuers look nice and black.

What are the implications of the above trend/development as we step into 2010? 

• Aggressively pursue new markets [in India] to get credit cards into more hands?
• Migrate to EMV [finally]?
• Any other suggestions?

Looking for dark clouds on the horizon.  India Pay initiative is a major development which could have far reaching impact.  A possible course for card issuers would be to milk the current profits while not growing the market until the picture clarifies around India Pay, and MasterCard's and Visa's reaction to it?

Though the above post has focused on the online payments space, the dynamics of the F2F / payments at stores are similar leading to the same conclusion.

This is to wish all a wonderful holiday season and a great 2010

Impact of Nokia Money on India's mobile commerce landscape

In light of the announcement of Nokia Money, I would like to analyze this development in the context of mobile commerce in India.

Nokia Money is an attempt by the world's largest mobile phone vendor to deploy mobile commerce commercially. Before we dive deep into this post, let's have a quick background on this topic. Nokia invested $70 million in Obopay (analysis). Leveraging their investment in Obopay and the infrastructure that Obopay offers, Nokia brings Nokia Money to market. Also, you may recall that Obopay powers MasterCard Mobile MoneySend (link).

I suspect that Nokia Money will be available on every Nokia mobile phone. Considering that the mobile operator does not subsidize handsets (and consequently control mobile phone configuration) in India, Nokia will be able to take its mobile payment product to market directly.

Financial regulations are a critical piece of any mobile payments puzzle. It is no different in India. RBI, India's financial regulator, unvieled their policy on mobile payments (link). They allowed a fund transfer limit of INR5000 (approx $100) and a daily transaction limit (for goods and services) of INR 10,000 (approx $200). Considering that the biggest sector in India's ecommerce is Online Travel (over 2/3 of ecommerce market), the mobile commerce industry was up in arms claiming that these limits were too constraining [to buy air tickets?].

mChek is the leader in mobile payments in India. Airtel, India's largest mobile service provider, is mChek's first partner. mChek has been used for bill payments, charging airtime (mobile topup)... mChek crossed a million subscribers in January 2009 (link). Airtel SIM cards have mChek on its menu. Other Indian telcos are following this trend.

Obopay does not seem to have crossed the critical 1 Million subscriber mark (otherwise we would have heard about it, right?). By that measure, Obopay / Nokia Money is the challenger. Other service providers in this space include PayMate, ITZCash and NGPay.

A study (June '09) commissioned by Paymate and AC Nielsen estimates the mobile commerce market in India at 5 million users, and is primarily urban and male-centric.

Now that you are updated on history, let us look at the future. How does Nokia Money change the landscape of mobile payments in India? Is the entry of Nokia Money going to change the dynamics of mobile commerce and create a thriving marketplace for small payments (similar to what Nokia did for mobile phones in India)? Are operators better positioned to offer mobile payments?

Will this competition create confusion? For example, to an Airtel subscriber using a Nokia phone, there will be two mobile payment choices and the user can't differentiate the subtle differences between a phone offering and an operator offering. How will the message be packaged in such cases? Will Nokia Money choose to go rural and Aitel/mChek focuses on urban audience? For all the promise of mobile payments in emerging countries, 5 million users in a userbase of over 350 million is dismal.

Who and where will the mobile commerce battles be fought in India? What are your thoughts?

Card acceptance infrastructure in India: A perspective

I have been scouting Bangalore for innovations in the payments industry. Bangalore is as good a place as any in India to deploy new offerings. The economy is vibrant, consumers willing to try new things, retail space is hyper-competitive with enough investments coming in...

Let me first take a step back and frame the merchant payments space (to help provide context). Retail payments are characterized by:

• It is customary to see a retailer have card acceptance devices from multiple acquirers. Depending on the card provided by the consumer for payment, the retailer decides to run the card thru' the acceptance device that provides him the most favorable terms (which typically results in an 'On-Us' transaction)
• Though there are third-party acquirers (e.g., Venture Infotek), leading card issuers are also acquirers (e.g., ICICI, Citi, HDFC...)
  
• Smaller retailers will charge a fee of about 2% (surcharge) for purchases paid using payment cards. Some of these retailers may also share their POS terminal. They will run the card transaction thru' the neighboring retailer's terminal!
  
• Benefits of India's cash economy (by some estimates, about 50% of India's economy) handily overcomes cash-handling costs borne by the merchant
  
• As multiple acceptance devices are the norm at retailers, deploying new payment products is not as much of a challenge as you do not have to displace incumbents.
• Over 70% of sales are cash-based (based on my informal spot surveys; will update this blog when I am better figures and support links)
  

Quite a few of the high-end retailers accept chip-n-PIN (EMV) cards, though very few card issuers in India have deployed chip-n-PIN cards. This is primarily to cater to tourists and visiting Indian diaspora (high-end high-margin clientele). Indian card issuers seem to have bought time till 2011, by which time they are expected to have rolled out EMV cards. I am keeping my fingers crossed regarding this target date.

It was a pleasant surprise to see PayPass readers at retailers. However, the excitement was tempered after finding out that the deployments were part of a trial. I hope that commercial deployments follow (both by card issuers and acquirers).

[Updated Aug 20 '09] First Data is continuing to push into India, first with their relationship with Kotak Mahindra (link), and next with their association with Yes Bank (link). First Data also offers a payment gateway (Merchant Solutons), in association with Standard Chartered Bank.

While I started off the post talking about Bangalore, I would like it to end talking about Delhi. As you might be aware, Delhi is having a coming-out party of sorts next year. It is hosting the Commonwealth Games 2010. Watch out for unveiling of new payment products next year around this event.

If you are interested in following trends in the Indian Payments industry, this is the conference for you (Digital Payment Conference, Mumbai, Aug 21 2009)

Disruptive innovations in payments - BoP style

In emerging markets, often the growth opportunity in the payments industry lies in addressing the un-banked. While addressing opportunities at the bottom-of-the-pyramid is challenging, financial inclusion empowers the un-banked to be both producers and consumers, thereby unlocking a viable business opportunity.

While looking at payments opportunities in India, addressing the unbanked / under-served forces its way into any brainstorming session. This could be because of innovations around branchless banking, novel methods of handling KYC mandates, reducing documentation/paperwork associated with opening a new bank account, zero-cost bank accounts, leveraging technology without being encumbered by legacy… When you are trying to create a profitable business from millions of customers who earn less than $100/month, you think thru’ the problem in a very different way. Resulting in a raft of innovations can be truly disruptive. CGAP has been successfully promoting this cause for a while now. I've enjoyed participating in the CGAP group on LinkedIn as well.

It is in this context that I ran into Sanjay Bhargava, who has been championing Universal Financial Access. He brings a lot of energy and enthusiasm into a daunting initiative, and makes it seem achievable. His attitude is so infectious, that I figured a lot more space needs to be devoted to the Universal Financial Access project (subject of another blog).

Is BoP a lost cause? Is Universal Financial Access an oxymoron? What are your thoughts?

Obama effect on payments innovations?!

At a personal level, Obama's victory provides hope and optimism of a new tomorrow. Given the prevailing mood, hope and optimism are the engines that will get the US back on its feet again and restore its place as the leader of the free world. However, the expectations on President-elect Obama and his administration might be a little too much for any mortal to bear, even though that mortal might be Barack Obama

I was keeping this post for the new year. As all of us are being carried away by the developments of this week, I figured it is appropriate to gaze into the crystal ball (and again in the New Year).

Positive Trends

• More use of debit cards, resulting in a cheaper tender for merchants (PIN Debit).
  
• Alternative payment systems to reduce cost of accepting payment cards
• Consolidation among players in the P2P and alternative payments space
• Government use of payment cards to distribute social security and other benefits to citizens
  
• Initial usage models of Android phones-based applications to bridge online and retail
  

Negative

• Commercial deployments of NFC will be delayed
• Delay in deployment of contactless readers at retailers
• Mass transit, the beneficiary of high gasoline prices, might be collateral damage as cities struggle to invest over the next couple of years. The reason this aspect shows up here is because Mass Transit payments have led the deployment of contactless acceptance infrastructure
  

Initial indicators suggest that markets, such as, India have not been affected very badly. It will be interesting to watch for any innovations in the payments space from emerging markets.

Could banks take the lead in ushering in NFC phones?

Innovative and aggressive banks are trying different approaches in the marketplace to break the deadlock that has stalled NFC mobile devices getting to market. Banks with strong acquiring/merchant and card issuing business have an incentive to deploy NFC mobile devices, while not waiting for the MNOs to show up. These approaches include:

1. Bank sets up MVNO. e.g., Rabo Mobiel
2. Bank issues / distributes NFC phones, might start off this journey by distributing NFC tags. E.g., Garanti Bank, Turkey. The user retains their MNO
   
3. Bank subsidizes phones with separate secure element
   

Bank sets up MVNO and offers cutting edge financial services, including NFC phones. Example: Rabo Mobiel. Rabo Bank is a Dutch-based bank. Rabo Mobiel is a MVNO which offers value-added retail and financial products and services, in addition, to traditional telco services

Advantages:

• Bank can offer subsidized phone with optimized features (e.g., SIM but no separate secure element)
  

Disadvantages:

• To keep costs down, the phones offered by the MVNO would be basic no-frill devices. This may not appeal to early adopters or to niche audience
• Bank may not have core competence in being a MVNO
  

Where could this work: Europe

Why:

• MVNOs have been more successful in Europe
• Smaller markets with reasonably homogeneous demographics
• Aggressive banks could use this tactic to challenge incumbents
  
• MVNOs have had a tough record in the US, as it is difficult to appeal to a broad enough range of audience to reach critical mass. After the events of this week, I do not see any US bank having an appetite for such risk
  

Bank offers bank-branded NFC phone (separate secure element), with the user retaining their existing MNO/service provider. An early variation of such an offering could be Garanti Bank, Turkey providing NFC tags to its customers

Advantages:

• Bank has access to secure element on phone to provision cards...
• Bank does not have to get into a MVNO business, which typically is not the bank's core competency
• Bank can optimize the mobile device to suit its requirements
  

Disadvantages:

• Phones offered by the bank could be basic no-frill devices, which may be rejected by the larger audience
• Users not anxious to give up their existing phone as this is a personal device /statement
• Bank issued phone may not be a good enough phone (neither fish nor fowl)
  

Where could this work: Asia

Why:

• Users in Asia typically buy their own phones. This offering might appeal to the burgeoning value-conscious middle-class in China and India
  
• A weak MNO in the US could work with a strong Bank and an open phone (did somebody say Android) to help MNO's sales and perception in the marketplace.
  

Bank works with device vendor (e.g., Nokia) to offer co-branded phone: Bank partners with device vendor to subsidize NFC phones (with separate secure element)

Advantages:

• Consumers get choice of phone. No compromise in device features
  
• Cost of separate secure element not passed on to the consumer

Disadvantages:

• Would not work where consumers typically get their phones from their MNO (tied to a contract) as the MNO controls the BOM/configuration of the phone. E.g., US
  

Where could this work: Asia

Why

• Consumers buy their own phones.
  
• Device vendor has better brand presence and distribution channels