Avia Collinder, Business Writer
Telecoms provider Digicel this week announced what appears to be the first digital merchant payment system which does not require the use of a bank account, credit card, nor a smart phone.
The product, called Beep & Go, was launched in the tiny Pacific Nation of Tonga in mid-May.
Digicel Pacific Limited, a mobile network operator across the Pacific and a division of the Digicel Group, deployed the VeriFone mWallet services and Near Field Communication or NFC-enabled payment systems to facilitate mobile money transactions.
The service was launched in partnership with VeriFone, and New Zealand-based currency exchange company, KlickEx.
Annie Smith, the head of Mobile Financial Services at Digicel Pacific, told the Financial Gleaner on Tuesday that Digicel Tonga launched the contactless NFC merchant payments application for any mobile phone user on any type of handset.
The VeriFone mWallet digital payment service allows the instant creation of a wallet in exchange for cash at authorised agent points.
It is expected that Tongans should be able to access their wages, purchase groceries, top-up on phone credit, as well as do payments for utility bills and government services.
"The service is cash-based, not top-up based," said Smith.
"A recipient can withdraw the funds in cash, pay utility bills, buy goods and services, buy or send 'top up' or keep the funds in their mobile wallet. The online service is available only in the UK."
Banks are not necessary as intermediaries for the service. However, the Tonga Development Bank is an agent for Digicel's services, offering deposit and withdrawals to Digicel Mobile Money users' mobile wallet accounts, she said
No timeline was given for expansion of the product to other markets.
"Digicel looks forward to providing the contactless payment services - called Beep & Go in Tonga - to our users across the Pacific where we have established Digicel Mobile Money solutions. We are looking to offer similar mobile money services in the Caribbean in the near future," Smith said.
She anticipates the terms will vary based on the requirements of central banks in each market.
The digital wallet is accessible to all citizens of Tonga, whose population numbers 105,000, whether they have a bank account or own a smartphone.
"This service is also completely independent of whether the user has a credit card or bank account," Smith said.
"You may have heard of apps like Google Wallet that offer the same type of service. However, all other services require users to have a smartphone and either a credit card or bank account. The only requirement to using the service is that users must be registered to Digicel Mobile Money. What makes the service unique and a world first is that it is completely accessible to the mass market of mobile phone users."
For Digicel's remittance service - currently available only from New Zealand and the UK to Digicel users in Tonga, Samoa and Fiji - a two-step process is required to send an initial transfer.
The customer must register to the service by providing all required information necessary to meet KYC - Know Your Customer, and AML and CFT - Anti Money Laundering & Combatting the Financing of Terrorism guidelines.
"These are internationally accepted standards in the financial services industry. The registration details are kept online or via biometric fingerprint identification via a retail agent," Smith said.
In New Zealand, a customer either transfers funds via his or her online bank account to a designated account, or can visit a retail agent.
With either method, a user identifies the intended recipient's mobile money account number - which is their mobile phone number.
When the funds are received in the designated online account or by the retail agent, they are converted to the destination foreign currency equivalent at the prevailing foreign exchange rate and sent immediately to the recipient's mobile money wallet account.
"Future transfers do not require additional registration, only user identification through their online log-in or biometric fingerprint identification at an agent location," said Smith.
In relation to fees for the mWallet, the mobile services manager said it is classified as a domestic merchant payment service, and as such is free to Digicel users.
Digicel, however, "receives a small transaction fee from participating merchants," said Smith.
She declined comment on the revenue potential of the new service, saying it was against Digicel company policy to disclose financial information.
A release from the company notes that many Tongans are unbanked and credit card penetration is extremely low, and that Digicel plans to introduce international bill payments and other new services within weeks.