Retail Payment Systems

In the OIC Member Countries

3.10 Three Exemplary Retail Payment Systems

Octopus - NFC in Hong Kong

Payment systems for public transport were the pioneer applications of mass digital payment

and were initiated with applications such as Mondex in England for Croydon busses and trams

in the 1980s and a few other money storage cards elsewhere. By the late 1990s, however,

numerous applications, many using near field communications [NFC] technologies were being

introduced. In Turkey electronic payments were used for Bosporus Bridge tolls and the “Kent

Kart” systems introduced first in Izmir in 1999 and spreading to 18 smaller cities within a

dozen years. The payment system is also used in nine foreign cities, including Amman, Doha,

Prizren (Kosovo), Skopje (Macedonia) and Lahore. The largest such systems are the Oyster

card in London and the Octopus card in Hong Kong, each of which have over 10 million daily

users. While both started as transport cards using radio frequency [RFID] or NFC technologies,

the Octopus card quickly became a multi-purpose electronic payment card. Recently, the

Oyster system has been integrated into commercial banking cards with compatible NFC

technologies and so combine multi-purpose payment practices with transport tickets.

The Octopus system, in contrast, was conceived from the outset to perform a variety of retail

payment systems functions and so is a prototype of other advanced, integrated, general use

payment systems. The advantage it gained from its origins in the transport system is a

reminder of what is necessary for rapid mass acceptance of such a scheme. In this case the

entirety of the Hong Kong population was more or less obliged to engage with the Octopus

scheme.

What is distinct about the scheme is the manner in which the various stakeholders came

together to ensure that financial services providers, retailers, regulators and other bodies,

along with the transport authority, all cooperated.

M-Pesa - Mobile Payment in Kenya

M-Pesa is an electronic payment and store of value systems that was developed by mobile

operator Vodafone and commercially launched by Safaricom, its Kenyan affiliate, in March

2007. Since its inception, M-Pesa has seen extraordinary growth and already been adopted by

15 million users (2014) that are conducting more than 2 million daily transactions.

Recently regulators have licensed three other MNOs (Finserve Africa, Mobile Pay and Zioncell Kenya) to challenge the

quasi-monopoly of Safaricom.