What Is Holding Mobile Payment Systems?

Mobile payments can simplify commerce, stop fraud, and provide better services to consumers and businesses.

So why can’t the developed world figure out a simple, universal standard for mobile payments?

I have written previously about the advantages for cities in moving to a cashless environment. There are many reasons for cash transactions to cease, and we have the technology and the means to make that happen.

In developing nations, mobile payment systems have caught on. One of these, called M-Pesa, a system created by African mobile operator Safaricom, has changed the way millions of people handle money. Originally created to allow people to share and transfer cellular network time, M-Pesa now offers mobile banking in Kenya, Tanzania, Afghanistan, India, and South Africa. The service is so popular that other cellular providers and financial institutions want to introduce M-Pesa in many new markets.

M-Pesa was started to fill a gap in Kenya’s economy. Most people in that country, except those living in large cities, do not have access to traditional banking services. The system works with any mobile phone through secure SMS gateways. M-Pesa "branches" are the traditional storefront shops of Safaricom and other mobile operators, which charge a very small fee to deposit and withdraw money. Deposits are usually guaranteed by a large bank in each country.

Typical M-Pesa users deal with only small deposits in their M-Pesa accounts, which they use for daily purchases, such as buying groceries or receiving payments for small services. To avoid traveling with cash, some people use an M-Pesa storefront branch as they would a bank, depositing funds there to withdraw again a few hours later in another town.

You can find out more about M-Pesa in this video:


In Africa, people living in cities with access to traditional banks also use M-Pesa every day. It lets them pay for goods and services in many shops that don’t accept credit cards; they also can send money instantly to friends and relatives anywhere in the country, even internationally.

Why don’t we have a service similar to M-Pesa in the industrialized world? Basically because of greed! Since the introduction of 2G networks with SMS services, everyone has been trying to control the business of sending and receiving payments with cellular phones. With a smartphone in the pocket of 60 percent of the population of Europe and the US, all the players are fighting for a piece of the action. As a result, there is no agreement among the players in the mobile, banking, and Internet ecosystems to establish a secure, easy-to-use, mobile money system.

What the product and service providers don’t realize is the amount of money being lost every single day because of the lack an open, compatible, and secure standard.

Some companies have decided to take action on their own: Google has been providing its Google Wallet service in the US to anyone with an Android NFC phone and a credit card. Orange, the French telecom company, recently announced the Orange Cash service, effectively converting any NFC mobile phone into an electronic cash wallet. Canadian carrier Rogers plans to make an open NFC mobile wallet available to its customers soon; and the credit card giants are rolling out their own services, such as Visa’s V Pay and MasterCard’s PayPass.

All those services are headed in the right direction, but they are not able to interact with each other. Each one is only available through one mobile operator or bank and costs money to businesses, institutions, and customers.

M-Pesa is an inspiring example of a simple system that is making a difference for millions of people who can’t afford a smartphone or bank account. It works, and it can be replicated in the First World if the players get together and find a solution.

Maybe the solution will come from government regulation, such as the GSM standard established in Europe 25 years ago. I hope we don’t need to wait for that to happen.

Article first published as Why Your City Doesn't Have Mobile Payments on UBM Future Cities

Rio de Janeiro Improves Transit With BRT, Wins Smart City Award

The “smart cities” movement is consolidating everywhere in the world, and countries previously considered developing are joining the club.

This was evident during the recent Smart City Expo World Congress in Barcelona, which garnered a record attendance both to the exhibition and congress -- and with some cities awarded for leadership in innovation and smart solutions to their unique problems.

The Smart City Expo World Congress Awards judges decided to give the Best Smart City prize to Rio de Janeiro, recognizing the city’s efforts to improve services, transit, security, and quality of living for its citizens.

In presenting the award, Pedro Paulo Carvalho Teixeira, the Chefe da Casa Civil de Rio de Janeiro, said [translation provided by the congress organization]:

It is a huge honor for us to win the World Smart City Award 2013, especially here in Barcelona, a city that sets an example in this area. Rio is an amazing city, but full of daily challenges. It is really significant that we have won competing against developed cities such as Berlin and Copenhagen. This means that Latin American cities have good experiences to share with the world.

I had the opportunity to interview Pedro Paulo Carvalho Teixeira before the awards, and he shared with me some of the initiatives that he thinks make Rio a worthy recipient of the award. He insisted on people’s participation as the key to realize the smart cities concept:

People want to participate and be informed; they want their opinions heard. We [Rio’s government] are not thinking about asking people about every decision, they elected us to make decisions, but we want them to feel involved, and that the city is sharing with total transparency what we do.
To encourage civic involvement, Rio uses Google hangouts to broadcast live discussions between the city’s mayor with a panel of experts on policy and events.

The Rio official also explained the city’s plans to revolutionize public transport with BRT (Bus Rapid Transit). The city is taking down the biggest overpass in the city center in dramatic fashion to recover the space for people to use:

There is a change in cities’ priorities. Previously, cars and roads were the main focus of investments within cities. Now, people, and living, are more important, we want people to be able to walk and enjoy the city without their cars.
We decided to blow up the overpass to send a message. We could have just dismantled it by pieces, but we wanted people to understand the change, that the city belongs to the people... In 40 years, Rio built 40 km of Metro, in six years, we’ll make 155 km of BRT. BRT is important for cities where speed is important [and where] we can’t build Metro lines due to budget and time constraints.


Rio’s BRT system is expected to increase the proportion of city’s population using public transport from the current 16% to 60% by 2016, the year of Rio’s Olympic Games. As noted in the comment above, the BRT, which is already running on the “TransOeste” corridor, will command 155 kilometers of dedicated lanes for articulated buses. Some of those lanes will occupy the center of the road, separated from the rest. Elevated platforms will serve as dedicated stops for loading and unloading passengers.

The city of Rio currently has over 300 km of bike lanes, which city officials expect to grow to 480 km by 2016. The current bike-sharing program, “Bike Rio,” will eventually be expanded to cover the entire city.

Rio also wants to use the latest technology for other initiatives such as regulated parking, air quality, rubbish disposal, and flooding warning.

Retaining its status among the world’s top smart cities may be tough. Just a few months ago, the city was criticized for a series of setbacks that seemed to put its civic preparations for the Olympics in disarray. Still, city officials are determined to press on in the direction for which they've been recognized. At very least, their efforts look promising.

Article first published as Rio Recognized for Technology & Transit on UBM Future Cities

Your Electric Car Can Power Your House

Last October I had the opportunity to visit the Electric Vehicle Expo and Congress (EVS27) in Barcelona. While the percentage of 100% electric cars is still small, the industry has been busy rolling out new models, improving range, reducing costs, and now they claim there is no reason not to consider an electric vehicle instead of a conventional one.

By Electric_car_charging_Amsterdam.jpg: Ludovic Hirlimannderivative work: Mariordo (Mario Roberto Durán Ortiz) [CC-BY-SA-2.0 (http://creativecommons.org/licenses/by-sa/2.0)], via Wikimedia Commons

But there is another powerful reason to choose an electric car, especially if you live in an suburban area and your average driving distance is less than 80 mi/day: It can actually power your home!

Many US towns are losing power every year because of storms, hurricanes and other fierce weather phenomena. And many houses stay without electricity for several days.

Two years ago while living in the outskirts of Boston I experienced the force of Hurricane Irene. High winds, toppled trees and heavy rain caused loss of power in many areas of Massachusetts, and I remember one of our neighbors was without electricity for several days due to a fallen tree on his power line. Repair crews took more than two weeks to restore electricity to all customers in the area. Now just imagine your electric car powering your house from its huge batteries and keeping everything running until mains are restored.

Many countries are increasing their electricity production from renewable sources such as solar and wind power. But most people don’t know that “intelligent” wind turbines need to be slowed down or stopped for several hours, especially during the night, because no one is using that electricity. Building massive accumulators to store that production surplus is not a viable option right now, so that potential clean energy is lost.


Electric cars can help to alleviate that problem, and provide the necessary storage. Those cars have big batteries to store the power needed for their daily operation. A typical medium-size electric car — such as the Nissan Leaf — contains a 25 kWh lithium ion battery, enough to power the car for about 100 miles, or power your home!

The average house in the UK consumes 3,300 kWh per year, or 9 kWh/day. A fully charged battery of a Nissan Leaf could power your house for nearly three days (or more if you cut the use of unnecessary appliances). Moreover, if you don’t plan to use your car the next day you could charge its battery during the night (using a cheaper rate) and let the car power your house during the day.

Many electric car manufacturers are already looking into this solution. I had the opportunity to see the Nissan Leaf-To-Home system, which can be configured to balance power between the grid and the house, and switch instantly to the car batteries in the case of power loss. The Leaf-to-Home device also acts as a power filter to protect your house and car from dangerous spikes that could damage your electric and electronic devices.

Other solutions for small communities allow electric cars to connect to the town grid, thus saving money and balancing the power consumption. In countries such as Norway (with the highest penetration of electric vehicles in the world) and Denmark, those solutions are beginning to evolve from small pilots to larger scale implementation.

We need more incentives for people to consider electric cars as a real alternative. Some cities offer free parking, lower tolls (or none at all), lower taxes and other perks.

I believe electric cars are excellent as city vehicles and for short commutes. But for people driving more than 100 miles/day an electric car is still limiting, even though technology and range are getting better all the time.