20 August 2017
Nick Ogden

71326

Nick Ogden - ClearBank

45Posts 169,425Views 31Comments

Is eMoney now real money?

17 May 2010  |  4514 views  |  0

The latest version of the EU eMoney directive comes into force in April 2011. Having attended the World Roundtable on Electronic Money Management, hosted by the Malaysian Central Bank, Bank Negara in Malaysia on Saturday, it was a fascinating topic to debate. The meeting was held at the start on the two day OMFIF meeting, and attendees included regulators and central bankers from around the world. There were some interesting thoughts bounced around as you would expect, but an overview of where we are is probably something like this:

There are currently 4.7 billion debit cards in use worldwide which by some coincidence is also around the same number of mobile phone handsets in use. If that is a 1:1 relationship then the link between mobility and payment capability to bank accounts already exists, and when SEPA finally gets off the ground across Europe it gets really interesting since it could effectively bypass the local niche debit card products making services provided by some Internet Payment providers obsolete.

Open loop stored value eMoney has worked very well, in fact in Japan, they pass one person a second through their railway ticket authentication booths, something I’ve seen evidence of kindly shared by JP Morgan. Tesco would kill for a similar checkout system, and yet it could be just around the corner. Of course in Japan the stored value limit is set by the consumer, and is not restricted to £15, and if you lose your card you don’t lose your cash because the data is stored and maintained centrally. Mass Transit card payment applications were initially planned to hold the value locally, but the Japanese model beats that. What’s more, you can also buy a coffee or pay for a round of beers or even gold with the same system.  Interestingly, the operator is not the telco but the transport operators and if you don’t want to use them there are a few others to chose from which all will work simultaneously on your mobile phone. Lose your phone? No problem, get your new phone, download the app and your cash balance arrives automatically and away you go. It’s the same story in Hong Kong with Octopus.

We also touched on M-PESA, the Swahili word for money that is used to promote the Kenyan eMoney system. Here a combination of lack of infrastructure and the unbanked has created a showcase, which satisfied the market but didn’t satisfy the regulators.  In the end common sense prevailed and M-PESA is the winner and now offers betting alongside its payment and money transfer services. M-PESA sought to help the unbanked population, who make up around 280million of the population which is around 8% of the existing market today (4.7billion).

Taken this all in to consideration - Europe must be the hotbed? It seems not. According to one EU central banker, there are only 20 Full eMoney licences granted and operational in the EU, excluding closed loop and the most active organisation is in Austria. Interestingly Thomas Capka from A1 Bank and I are both speaking at the keynote  session of the TM Forum in Nice tomorrow, and yes, no prizes for guessing,  on e-money, so the European update will follow!

TagsPayments

Comments: (0)

Comment on this story (membership required)

Latest posts from Nick

Negative Interest Rates - UK banks introduce plans to charge their customers

04 February 2016  |  2990 views  |  0 comments | recomends Recommends 0 TagsRetail bankingTransaction banking

Competition probe, your views count!

18 July 2014  |  2664 views  |  1 comments | recomends Recommends 0 TagsPaymentsRetail banking

Birth of a new Currency?

16 July 2014  |  2620 views  |  0 comments | recomends Recommends 0 TagsPaymentsRetail banking

Non Bank, Business Bank Accounts?

22 April 2013  |  3675 views  |  0 comments | recomends Recommends 0 TagsMobile & onlinePaymentsGroupInnovation in Financial Services

Politics, Payments and DNA

05 February 2013  |  2616 views  |  0 comments | recomends Recommends 1 TagsPaymentsTransaction bankingGroupInnovation in Financial Services

Nick's profile

job title Executive Chairman
location London
member since 2012
Summary profile See full profile »
I am passionate about business change and have been fortunate to have had some success with my various start up ventures. I am also fortunate to be a director of the UK Faster Payments Scheme.

Nick's expertise

Member since 2008
45 posts31 comments
What Nick reads

Who's commenting on Nick's posts