Mobile payment solutions

Today, Smart is the mobile communications market leader in the Philippines. Much of this success is due to its ability to innovate―and in particular to innovate and be first to market with new and easier ways for their customers to make payments using their cellphones.

In a society where around 90% of all transactions are made in cash, mobile operators―including Smart―have traditionally offered their customers prepaid scratch cards. Because of their high cash value, larger quantities of scratch-cards had to be transported around the country in armored vehicles, just like currency.

Smart’s revolutionary idea was to introduce the ability for its customers to use their cellphones to make payments, not just for their cellphone time, but also for any payment where a credit card could be used.

In late 1999, Smart and Wirecard began to exchange ideas on a mobile payment solution. Wirecard’s industry experience meant it was able to integrate the new product with Smart’s existing systems. It also designed the applications needed to interface with Smart’s prepaid network and SMS system. The product was extended in partnership with other companies where outside expertise was required.

Reliability was one of the most important requirements for Smart. The high availability of the solution and the stability of the system were plus points for Wirecard.

The resulting mobile Mastercard Electronic product which included a micro top-up function, SMART Money went live on 15 December 2000. From SMART Money, the SMART Load service offering was born. Using the Airtime top-up function previously developed from SMART Money coupled with the ability to do wallet to wallet transfer and merchant management, SMART Load was introduced to the market in 2003. SMART Load transactions are authenticated and encrypted to the industry standards for electronic transactions.

Today the mobile payment solutions are so embedded in Smart’s business model that SMART Money, SMART Load and the more recent SMART Padala (for remittances via mobile phones) are considered “traditional” products. These products and services are used by more than 80% of Smart’s 16.5 million subscribers. Revenue has increased from around US$500 million to US$1 billion―and 99% of this business continues to be prepaid.

Wirecard’s industry expertise helped Smart become the local market leader. Before the introduction of SMART Load, Smart and its closest competitor, Globe, were neck and neck in the Philippine telecommunications market. Now that Smart customers are able to buy airtime in denominations of as little as five minutes at a time, Smart has moved into pole position.

Smart won twice in the GSM Association’s prestigious awards: in 2001 the Award for Most Innovative GSM Wireless Service for Customers for its SMART Money and in 2004 the Award for Best Mobile Application or Service – Consumer Market for its SMART Load product, and the judges’ comments are telling: “This prepaid microbusiness is very, very impressive. Not only is Smart Communications increasing its customer base and reducing churn, it is creating employment, creating new businesses and multiplying its retail channels.”