 | Issue: | Asia-Pacific I 2010 |
| Article no.: | 6 | |
| Topic: | Saving the world from global warming with mCommerce? | |
| Author: | Justin Ho | |
| Title: | CEO | |
| Organisation: | Utiba Mobility | |
| PDF size: | 188KB |
About author
Justin Ho is the Co – CEO of Singapore based Utiba Pte Ltd, a pioneer in the field of mobile based transaction systems. Mr Ho has more than two decades of experience in the technology and finance sectors. Before founding Utiba, Mr Ho worked with NCR and Compaq Computers in a variety of various senior positions in the security and electronic commerce sectors. Mr Ho also founded Emerge Asia wand was its Managing Director. Justin Ho has an Engineering degree from the University of Melbourne.
Article abstract
The growth of mobile telephony in the developing world is largely due to pre-paid airtime. Pre-paid service originally required printed ‘scratch’ cards that cost users a minimum of US $5 and, throughout the world, required 15 million barrels of oil per year to distribute. The online transfer of credits to a user’s handset – eliminated the card’s high production and distribution costs, make top-ups of as little as 20 cents possible and can save vast amounts of fuel and carbon emissions.
Full Article
Mobile payments and global warming Completely, I doubt it. But it can make a contribution, maybe a significant one. The world is in a battle of politics versus science at the moment. Politicians are doing what they do – saving their jobs and the jobs of their constituents. They think, ‘If we impose restrictions and carbon caps industry will suffer and jobs will be lost. Gosh I may even lose my job as a result and that ain’t worth it for saving the planet. Anyway, is this global warming thing for real?’ Scientists everywhere pretty much agree global warming is happening and the death of life as we know it on this planet is inevitable, unless we change our ways. I have always trusted science more than politics. Sadly, the politicians have the upper hand. Just two days ago, despite opposition party senators crossing the floor to vote in favour of significant environmental legislation, the Australian senate rejected the Carbon Pollution Reduction Scheme. This was supposed to give Australia – currently one of the world’s worst carbon emitters per capita – something useful to bring to the negotiating table at the Copenhagen summit this month. It’s starting to look like Copenhagen will be another summit where leaders end up having discussions about ensuing discussions where decisions might eventually be made. Meanwhile, Western economies are refusing to cut their own emissions, but are asking rapidly developing countries like China and India, who are beginning to add to the carbon explosion, to cut theirs. Developing economies argue that they should be able to output the same carbon per person that western countries do, but everyone faces the same far-reaching dilemma – if they don’t create jobs they will have social unrest and increasing poverty. Jobs and economic growth naturally imply more industry, more electricity, more cars and therefore quite a lot more carbon. Whose issues are larger – jobs and poverty if the West changes its driving and industrial habits, or a developing world that cannot develop? You can’t stop progress, but you can change habits in countries where basic needs are already met. The West has to take responsibility and alter lifestyles, but can the developing countries do anything but copy the West and introduce more cars and more industry? Is there a way to shift this paradigm? Enter the humble mobile phone. The mobile phone has revolutionized emerging markets. Ten years ago getting a fixed line in your house required bribery and patience. The needed copper-wire infrastructure was not in place and rolling it out meant digging more ditches and smelting more copper. It was slow and resource hungry. Mobile networks do away with the need to dig up streets or erect poles for copper wiring and gets phones to consumers faster and more affordably. In developing countries mobile phones provided access, but not necessarily popular uptake, because of the tariffs set at old landline rates or higher. Then too, few people in the lower economic classes had access to credit or a credit rating sufficient obtain a post-paid phone subscription. Consumers with no credit could not qualify for post-paid plans. Pre-paid began to solve this problem, but pre-paid requires an easily accessible way for people to buy airtime; scratch cards provided the first widely usable solution. Nevertheless, scratch cards are expensive to make, expensive to distribute and are subject to theft and fraud. For a normal consumer in Bangladesh, India, Philippines or Africa, they were just plain expensive. Minimum values for a recharge coupon initially were about US$5 – unthinkable for someone earning US$2 per day. Phones, although a prized necessity, were still out of reach. In 2003 a new concept reached the market in the Philippines when Globe launched software that gave retailers the ability to sell airtime electronically using a virtual stock of airtime ‘deposited in a wallet’ in their mobile phones’ memories. This was a hit and within a year a new business for micro entrepreneurs had sprung up. Globe went from 30 thousand retailers to 600 thousand retailers in less than a year. Vans were no longer required to deliver the card inventory. Virtual airtime minutes were sent, instead, via SMS. Because the production and distribution costs of the cards were eliminated, the minimum top-up value could be dropped from US$5 down to 20 cents. In some countries top-ups of as little as one cent are possible, offering instant affordability. This top-up method is now available in all developing economies throughout the world with similar challenges and is now the preferred way of distributing airtime stock. Scratch cards are fading fast. What was the carbon impact? Today, we estimate that there are close to 50 billion top-ups of this sort annually around the world. If paper cards were used for this purpose, half a million trees would be consumed annually. Cards made of plastic also impact carbon emissions in a number of ways, in addition to using one of the world’s most precious and fast disappearing resources, oil, as raw material to manufacture the plastic. The savings, in both dollars and carbon emissions, realised by eliminating the need to physically distribute cards are impressive. In India, one large operator alone sells its airtime though 1.5 million retailers serving 120 million subscribers. Fifty thousand sales people serve these retailers. Each sales person visits ten customers per day consuming, on average, two litres of petrol. That’s 100,000 litres per day or about 36 Million litres in a year just to distribute scratch cards. One barrel of oil is equivalent to 42 US gallons of oil or 75 litres of petrol (Wiki Answers). Eliminating these sales visits to distribute pre-paid cards saves 0.48 million barrels of oil per annum. Extrapolate these savings for all 3.0 Billion pre-paid subscribers in emerging markets around the world and we can save 15 million barrels of oil each year. That amounts to 0.05 per cent of the 31 Billion barrels of oil the world consumes yearly. Let’s look at another huge emerging market consumer of resources – the distribution of fast moving consumer goods (FMCG). In Africa, Asia and Latin America, vast webs of distributors, middle men and retailers serve this market. Take, for example, Raffy; he owns a distribution business in a small province of the Philippines. He sells soft drinks and chips and other fast moving consumer goods to some 200 small outlets known as Sari Sari stores. He employs drivers to deliver the goods, which he sells to the stores on credit. Since he cannot trust his delivery people to collect the cash due every 14 days from each of his customers, he drives two days of each week to collect the money and consumes 40 or more litres of fuel. There are 650 thousand Sari Sari stores and many such micro distributors supplying each Sari Sari with everything from canned soup to cashew nuts. The fuel cost of collecting money from all of these stores is nearly impossible to estimate, but based on the number of distributors and Sari Sari stores, we estimate around 32 million litres of fuel (400 thousand barrels of oil) are consumed each year just to collect this cash. The Philippines consumes (The Philippines Oil & Gas Report, 2009) 115 Million barrels of oil per year, so nearly 0.3 per cent of the total is used just to collect cash from these stores and, perhaps, as much as 0.5 per cent when you add consumer payments. Could emerging economies save 0.5 per cent just by eliminating these trips? Let’s investigate the next wave of innovation in mobile payments – the ability to pay for things using a mobile phone. Once again, this revolution caught fire with Globe and G-Cash in the Philippines in 2004. Today, one can pay utility bills, send money to relatives in the provinces and handle banking transactions using a mobile phone. Mobile payments can, in principle, eliminate cash much like we eliminated scratch cards in the previous example. Mobile payments can replace physical payments in a wide variety of mobile – and physical – commerce transactions. Mobile payments work in much the same way as debit card payments are deducted from a bank account, but with mobile payments, the amount due can be deducted from the mobile airtime credits stored in the phone. The universe of money transfers of all sorts and cash payments is vastly larger than that of the isolated examples of scratch cards and cash collections from small merchants mentioned above – and so are the potential energy savings and carbon footprint reductions that mobile payments can bring. Can mobile payments save the planet? Partially, yes; small, but significant savings can be had just by using technology that is safe and secure – and readily available today. The developing world can show the West – the original creators of the carbon blanket – that innovation can lead to a reduction in wasted travel and time, increased profits, reduced fuel consumption, and less cutting of the trees we need to replenish our air. Bibliography Sari-sari store. (2009, September 8). Retrieved December 2, 2009, from Wikipedia: http://en.wikipedia.org/wiki/Sari-sari_store The Philippines Oil & Gas Report. (2009). Wiki Answers. (n.d.). Retrieved December 2, 2009, from http://wiki.answers.com/Q/How_much_gasoline_can_be_made_from_one_barrel_of_crude_oil
