Behind the scenes of creating MDS for

the transformation of prepaid markets (www.movotek.com)

The global prepaid airtime and digital economy continues to grow fuelled by the

estimated 3.5 billion unbanked people in the world who do not have a bank

account. 2.7 billion people live in a cash-based economy, yet they all have a phone.

Less than 25% of people in Africa have bank accounts, and even fewer have credit

cards. 1 Informal retail and cash purchases are the norm in the region, but they

bring associated risk and cost. Retailers in emerging markets, whether formal or

informal, require tools that aid quick, safe and reliable transactions. Despite its

size, the vibrant and underserved informal sector tends to be an afterthought in

the development of new payment devices and solutions.

Movotek E-Voucher System, the turn-key solution for prepaid airtime topup

This context presented a unique opportunity to create new technologies to serve

the specific needs of informal trade in emerging markets. The predominant

method for distributing prepaid airtime is through scratch cards transported

physically by road or foot to retailers for onward sale to customers. With the

proliferation of prepaid airtime service providers and increasing demand for

small denominations of airtime (meaning more scratch cards need to be sold to

generate the same amount of revenue), the management of an ever-growing

inventory of stock was becoming increasingly problematic and profit margins of

scratch cards were decreasing for retailers as a result.

There is a US$60 billion prepaid airtime market, and that’s just prepaid airtime

in Africa alone. By some estimates, by 2015 there is going to be $85 billion of

prepaid airtime floating about.

We all thought that PINS (called Vouchers by many) were for calling cards or

topping up prepaid mobile phones. And with the slow death of calling cards, and

other ways to airtime top up prepaid mobiles, surely this would lead to the

decline of the Prepaid PIN.

Yet, the reality is no - we are seeing huge demand from financial services

institutions who realise that the digital world lacks a very basic capability – how

do you enable a consumer who has real cash use this cash to access digital

services? For instance, pay real cash into a digital wallet or to pay an online

merchant for goods and services.

So, simple Use Case. A consumer in Canada wants to buy goods from a web

merchant. The consumer goes to a Canada Post outlet, buys a Ukash voucher

(which has a 19 digit PIN) via the Ezipin Canada service and then redeems the

voucher at the payment page of the merchant. During the redemption process,

the merchant’s website will communicate with Ukash, confirm that the voucher

has not been previously redeemed and then give good value to the consumer. So,

cash at the retailer becomes electronic currency via a prepaid airtime PIN.

So, where is Movotek playing in this? We have recently enabled a number of new

service providers to generate PINS, manage warehouses of PINS, redeem PINS

and distribute PINS via electronic distributors.