Killing the cheque­book

Pocit hopes to change the way we pay

Finweek English Edition - - Communication & Technology - BENE­DICT KELLY benk@fin­

THE CHEQUE­BOOK could be a thing of the past if Pocit, a new mo­bile start-up, can get the pub­lic to buy into its vi­sion of us­ing their cell­phones as a means of send­ing and re­ceiv­ing money. Mo­bile pay­ment and bank­ing sys­tems are no­to­ri­ously dif­fi­cult to han­dle. Just build­ing a sys­tem that can op­er­ate on the ma­jor­ity of hand­sets and which doesn’t put un­nec­es­sary bur­dens on users is a task many com­pa­nies have failed to achieve.

The un­der­whelm­ing per­for­mance of MTN bank­ing is just the most re­cent ex­am­ple of how that is by no means guar­an­teed – even with hun­dreds of mil­lions of rand to spend on de­vel­op­ing and mar­ket­ing a prod­uct’s suc­cess.

So what’s dif­fer­ent about Pocit? For starters, Pocit uses your cell­phone as a base from which to send and re­ceive money. What sets it apart from other ser­vices is that it’s merely act­ing as an in­ter­face be­tween ex­ist­ing bank ac­counts and credit cards rather than looking for clients to open new ac­counts with them.

Pocit MD David Reyn­ders says what it’s try­ing to do is re­move the bar­ri­ers that make send­ing and re­ceiv­ing money elec­tron­i­cally dif­fi­cult. “How Pocit works is that the users in­stall a small pro­gram on their cell­phones. They link that pro­gram to their credit cards and bank ac­counts and then, when they want to send money to an­other user, sim­ply send it to them us­ing their cell num­bers as the unique iden­ti­fier. Users can also re­quest pay­ment from other users.”

Reyn­ders says no fi­nan­cial in­for­ma­tion is stored on the cell­phone. In­stead, it’s stored se­curely in­side the Pocit sys­tem. “When you want to send money to some­one else you sim­ply log on to the sys­tem and en­ter the rel­e­vant phone num­ber and amount. If that per­son is us­ing Pocit then the money will be de­posited into his bank ac­count. But if such per­son isn’t reg­is­tered, then he’ll be sent an SMS re­quest­ing him to reg­is­ter.” Once reg­is­tered the money is paid into his ac­count.

He says apart from in­ter­per­sonal trans­ac­tions, the ser­vice’s real po­ten­tial is in pay­ing re­tail­ers. It’s in that sec­tor Pocit is looking to make its money. For ser­vice providers that have tra­di­tion­ally re­lied on pay­ment by cheque (or hop­ing the client will trans­fer the money via In­ter­net bank­ing) this may pro­vide an easy way to re­ceive pay­ment for ser­vices ren­dered. It would ef­fec­tively re­place the need for a credit card ma­chine in many mo­bile busi­ness sit­u­a­tions.

Reyn­ders says the rates Pocit will charge ser­vice providers for even small vol­umes of trans­ac­tions will make it cheaper to use than con­ven­tional credit card pro­cess­ing sys­tems.

Its big­gest chal­lenge is go­ing to be con­vinc­ing po­ten­tial cus­tomers that stor­ing their credit card and bank ac­count de­tails on the ser­vice is safe. He says even though Pocit is a reg­is­tered pay­ment ser­vices provider, it doesn’t take any money di­rectly from bank ac­counts. That’s be­cause it can’t be done fast enough to make the sys­tem work. Cus­tomers need ei­ther a credit card or cheque card to make pay­ments on the sys­tem. In ad­di­tion, each card is tied to the phone num­ber of the hand­set it’s reg­is­tered on.

To trans­act, a cus­tomer would have to be in pos­ses­sion of the hand­set that they reg­is­tered for the ser­vice on, know the se­cret pin num­ber that un­locks the ac­count (which can be be­tween five and 24 dig­its) and have the three digit CVC num­ber from the card be­ing used for the trans­ac­tion.

Pocit is a divi­sion of Trade­bridge. Reyn­ders says cap­i­tal for the ven­ture is com­ing from its par­ent com­pany for the time be­ing. “At the mo­ment we’re test­ing the wa­ters and try­ing to as­cer­tain what the cap­i­tal re­quire­ments will be to take the ser­vice from the stage where we’re re­ly­ing on the vi­ral na­ture of mo­bile ser­vices and some low level mar­ket­ing to a mass mar­ket prod­uct,” Reyn­ders says. “That may re­quire more money than the com­pany can fund in­ter­nally. Right now that’s un­clear.”

Trade­bridge also op­er­ates Healthbridge, one of the com­pa­nies re­spon­si­ble for link­ing doc­tors, hos­pi­tals, phar­ma­cies and med­i­cal aids and en­sur­ing that the right in­for­ma­tion gets to the right or­gan­i­sa­tions as quickly as pos­si­ble.

Ini­tially, Pocit is tar­get­ing the higher end of the con­sumer mar­ket, as those are the peo­ple who have both credit cards and bank ac­counts. But Reyn­ders says it’s ex­plor­ing ways in the fu­ture to push into the lower ends of the mar­ket.

Its big­gest chal­lenge is go­ing to be con­vinc­ing po­ten­tial cus­tomers that stor­ing their credit card and bank ac­count de­tails on the

ser­vice is safe.

Chart­ing the fu­ture. David Reyn­ders

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