I like QR codes and I have since the first time I saw one and wasted 2.3 hours figuring out how to scan it with my iphone 1. Since then @ hyperWALLET we’ve used QR codes as a training ground for rookie software developers and business analysts alike – to pitch new business plans in contests and theorize on what’s next at the POS.

From the payments industry perspective, there is a seductively subversive quality about a QR code: it is open sourced, the technology required to harness it is already in the hands of millions of consumers, and merchants are free to choose the application provider whom provides them with the most value, rather than an externally-imposed ‘value chain’ service order.

But the big bonus is: the travel industry is training consumers how to use QR codes, so the payments industry doesn’t have to. All over the smartphone world, travellers first try QR codes out  in order to save some precious time and personal dignity as they negotiate the queue-on-queue and checkpoint charlie hell of airline travel in the post 9/11 world. They tend to become enthusiastic and immediate prophesying converts, due partly to mobile boarding coolness.  After all there isn’t a whole lot to be smug about when you are 3 laps to go in the cattle cross queue;  holding your smartphone and pushing refresh obsessively on the screen snapshot you saved of your boarding pass is one of the few ways to pass the time and simultaneously look a little cooler than the loser with the paper in the slot ahead of you. While only nerds like me decode their Air Canada boarding passes on http://zxing.org/w/decode.jspx, (btw if you do this you will see to your horror that the whole thing is in plaintext), the public does know that if a trusted institution issues you one of these QR things, it will likely jet the job done when you need it to.

Even bankers are getting into the game – well not the payments people, its the marketing guys at least for now.  But this is awesome because real soon now DDA account holders will cease to be nonplussed when presented with a QR code to scan with their phone after they next login to internet banking. Maybe that QR would be an encrypted form of something like this, eh?

scan me or click me for a secret message.

On Septebmer 27^th the Washington Post ran an article which began: “The Obama administration wants to require U.S. banks to report all electronic money transfers into and out of the country”.

Setting aside its enormous privacy implications for anyone conducting cross-border payments, this proposed legislation is a terrible idea because it unfairly financially punishes US immigrants and their dependents around the world.

Burdening Financial Institutions with additional reporting requirements for cross-border transfers, or even considering the possibility that such requirements may come into play, results in Fear Uncertainty and Doubt in the minds of bankers. Regulatory FUD further erodes the already marginal appetite of banks to make low-value electronic remittance services available to their account holders.

From North America, the fee to send $200 abroad still averages over 10%. Even in high volume and high competition remittance corridors like USA–>Mexico, the average cost for individuals to send money has been going up over the past 3 years, not down. According to world bank’s online international remittances tracking tool, in 2008 the average USA–>Mexico cost was 5.8%; in the first quarter of 2010 it was 7.4%. As a sector, the payments community really can’t congratulate ourselves with data like these. Each 1% in fee represents $2 in lost economic benefit to the national economy of the beneficiary country.

Remittance service participation on the part of sending and receiving financial institutions is important in order for the costs borne by remittance senders and receivers to be meaningfully and permanently lowered. Legislative changes like the contemplated electronic money reporting act in the USA will reduce such participation and should be opposed by our industry.

The conference was notably more low key than previous events in Dubai, but my impression is that the potential to tap into the enormous USA-Mexico remittance flows through the mobile channel is bringing more than just ‘the usual suspects’ to the table.

I decided to speak on the lack of correlation between a project’s budget and its ultimate impact, using our field experiences with unbanked people here in Canada.

The flash movie (with audio) is below:

As most in the payments space are aware, the concept of mobilizing financial services has been around for many years now, and even successfully deployed in some key markets around the world (Safaricom’s M-Pesa service in Kenya being the most notable).  The dramatic uptake in mobile phone usage the past few years, particularly in consumer markets that are largely “unbanked”, has spurred renewed interest on the part of Mobile Network Operators (MNOs) to investigate the introduction of such services, and has also opened the door to a wide spectrum of suppliers who believe their technology can service the requirements of the industry.  While opinions vary on where we are at in the product lifecycle of mobile financial services to both unbanked and banked demographics, what seems abundantly clear on the supplier side of the industry is that this opportunity is quite possibly the biggest land grab going in the payments space in recent past.  The buzz and interest with this opportunity is reminiscent of the ERP glory days of the late ‘90s when the fear of the Y2K bug was omnipresent, and corporations of all sizes were upgrading their management information systems.     

With the number of technology participants that filled the exhibit hall, each offering the same types of solutions on the surface, I can’t help but think how any MNO embarking upon a solution evaluation process might be challenged with the solution providers to even include in their list of ones to look at.  As most MNOs will realize early on, there is a significant difference between those providers that simply offer a slick mobile application, to those who provide a robust underlying financial services technology platform, to those who bring with them the operational expertise to guide and support the operator in such a capacity once the service is “live”.  The list of viable technology partners out there becomes even more narrow in cases where the financial services model requires sophisticated transaction settlement either between financial service partners (such as partner banks), or other 3^rd party settlement networks. 

These types of solution differentiators also became glaringly apparent in a recent meeting with a large regional MNO.  After spending the best part of a day in a detailed collaborative session on payments with the project team, at the end of it they came to the collective realization that what they are about to embark on has more to do with financial services than it had to do with “mobile specifically”.  As a technology provider that has been delivering payment solutions and infrastructure in the Financial Services industry for as long as hyperWALLET has, it really highlighted the importance and value this background brings to customers who are going down this path for the very first time.

• Direct link: http://www.slideshare.net/secret/ugaxIPUInr07Na
• Download PPT: http://www.slideshare.net/secret/ugaxIPUInr07Na/download

While we are there, I’m looking forward to meeting the operators of next-generation services like M-Pesa and Zap in Kenya,  Wing in Cambodia, and PayMate in India.   These initiatives represent great correspondent partners for hyperWALLET  as we march toward our goal of commerce-enabling humanity.   The banking industry has employed a correspondent-clearer relationship model for decades – its time for electronic and mobile payment services operators to develop similar strategies, which will yield service benefits to their customers and commercial benefit to themselves.

But I’m keen to also meet with technology platform and service competitors as we vie for the attention of the largest multinational mobile operators.  My motivation doesn’t arise from the usual “keep your enemies close” mentality, either.  Its because after 9 years in the payments industry, I’ve come to appreciate that today’s cut-throat competitor is next-week’s RFP collaborator, or could very well be one’s processing saviour when a policy change at a clearing bank leaves one in a lurch.