Friday, March 1, 2013

BBM Money - BlackBerry Taking the Lead in Emerging Market Payments

The launch of BBM Money in Indonesia this week is interesting for a number of reasons. Using the BB PIN as a proxy for an account number that allows 'in-chat money transfers' to BBM contacts is one. Another is how the service uses elements of an unbanked mobile payments business model to provide services to banked customers. 

Before I discuss this it would be worth sharing some background of the environment in Indonesia where BBM Money was launched;  

BlackBerry is a premium product in Indonesia. It's even considered cool#. The large majority of its users are banked. In fact the premium nature of BlackBerry ownership is a prime indicator of an affluent customer. Launching a dedicated payment service in Indonesia for BlackBerry's 7 million economically active customer base is part of a very targeted strategy.

BB Messenger is king in Indonesia. BBM has 98% penetration of BlackBerry users. BlackBerry have combined with Indonesian MNOs to offer prepaid 'Biz-Social' plans for as little as US$6/m, providing unlimited emails & BBM access. BBM is the business and social communication tool in Indonesia. When I was working in Jakarta last year the ratio for business communications was 30 BBM conversations : 4 emails : 1 phone call. Before I got my BlackBerry, work progressed very slowly. Similar ratios would apply for social communications. Not having a BlackBerry in some Indonesia circles is akin to placing yourself on social death-row.   

Scheme credit & debit card (i.e. Visa & Mastercard) penetration in Indonesia's banked populations is low. However the electronic banking infrastructure is advanced and better than most developed countries. A payments service that uses Card-Data-On-File like Google Wallet will only have a limited application. However a service that allows transfers to a 'pre-paid account' will appeal to a greater number of users.

So the BBM Money service is smartphone based, is integrated into a widely used social/business communication tool and targets banked customers, what elements of the unbanked business models did it take its lead from and how was this achieved?  

1. Available To The Mass Market. BBM Money can be downloaded for free from BB App World. While not available to all of Indonesia's 250m population, it is available to 7m BlackBerry consumers. BlackBerry's has a significant 50% market share of smart phones in  Indonesia. BlackBerry's subscriber base growth is benefiting as consumers shift from feature phones (...and yes Android phones have impacted their share of the smartphone pie however BlackBerry still have doubled their subscriber base in the past 2 years).   

2. Simple On-The-Spot Account Opening. Once the BBM Money App has been downloaded from BB App World, a simple on-the-spot registration process opens an underlying Permata Bank e-money account and associates it to the users BB PIN. This uses Indonesia's e-money regulations that allow for limited-use account opening with no KYC checks.  

3. Multiple Points to Cash In & Cash Out. After the registration a user's BBM Money account can be loaded real-time from any bank's online, mobile or ATMs service. This utilises Permata's real time gross settlement through multiple ATM switch integration, connecting BBM Money to 100+ banks and 70,000+ ATMs. Effectively a user can download, register and load their account within 5 minutes, all from their lounge room.

Cash out is either a cardless ATM withdrawal at one of Permata Bank's 700+ ATMs or simple 'transfer to bank account'- real time to 100+ banks.
  
4. Remote KYC Checks: The Indonesian e-money rules allow for accounts to be opened without KYC check, however to send P2P or cash out a user must confirm their ID at an agent. BlackBerry has leveraged their handset sales retail networks to facilitate this process. This is a key asset to the service as they are located in every major and most minor shopping centres- a location where most affluent consumers spend their leisure times on evenings and weekends. 

5. Supports a payment proposition that solves a pain point. In additional to the heavy conversational traffic use of BBM, Indonesians also use BBM Groups as a channel to sell goods. A user will post a picture of items they want sell, which other group members bid for- effectively BBM Groups are used to run a private eBay service. What is lacking is an accompanying payments service, like PayPal is to eBay. A client survey revealed that  70% of BlackBerry users were aware of BBM Group selling and 50% had participated in it. The Groups are based on invitation-only principle so while BBM Money lacks the supporting Pay Pal structure like charge backs, the participants are 'known through contacts' and replaces the current settlement process of bank account transfers.  
   
Will BBM Money be successful when many new mobile payments have and continue to fail? Only time will tell. However the approach of utilising unbanked business model principles in targeting banked customers is interesting and I thought it was worth sharing.

- Paul Reynolds 

Paul Reynolds is an Associate Consultant with Mobile Accelerate. He previously worked for Monitise in Indonesia and was part of the team that designed and built BBM Money. 

In Indonesian marketing circles they talk about the 'The Three Bs of Cool' in youth aspirational marketing. This includes; BlackBerry, Black Mild (cigarette brand) & Braces.