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Millions of mobile phone users in Pakistan now have the facility of online banking from their sets. (FAROOQ NAEEM/AFP/Getty Images)
Millions of mobile phone users in Pakistan now have the facility of online banking from their sets. (FAROOQ NAEEM/AFP/Getty Images)


One day, our cellphones will be hand-held banks too Add to ...

Most three-year-old Canadian companies make the bulk of their sales at home, and the holy grail is the much larger U.S. market just across the border. But Ottawa-based Telepin found its early customers in more far-off places: Africa, the Middle East, the South Pacific and South America.

Mobile phone customers in those countries use Telepin's software to transfer money and pay for goods and services with their phones. Earlier this year Telepin signed its first Canadian customer, the startup mobile carrier Wind Mobile.

But while mobile payments could have a bright future in North America, the real action today is in emerging economies, where people seldom have bank accounts or credit cards.

Telepin came to this potentially huge market indirectly. A small group of technologists - one of whom still works at Telepin - started the company in 2006 with software designed to make it easier for customers to buy prepaid airtime.

Originally, prepaid mobile plans required customers to buy plastic cards from retailers. Scratching a patch on the card would reveal a number that, when entered on the phone keypad, would add the value of the card to the customer's airtime account. This is both inconvenient for customers and costly for the carriers, who must produce and distribute the cards, says Vincent Kadar, Telepin's president. Counterfeiting is also a problem.

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These days operators are depending less on cards as better options appear, and Telepin's was among the early alternatives. Recharging prepaid accounts is a huge market, says Mr. Kadar - 70 per cent of all mobile subscribers have prepaid plans, and in emerging economies the number usually tops 90 per cent.

Mr. Kadar, who joined Telepin as president in 2008, previously had co-founded Ottawa-based Taral Networks, which bought a European firm in 2004 and became Airwide Solutions. Mr. Kadar was Airwide's chief technology officer until 2008.

On arriving at Telepin, Mr. Kadar decided that concentrating on recharging mobile-phone accounts "seemed like a rather isolated play." The money-transfer technology Telepin was putting into carrriers' networks could do many other things as well. So Mr. Kadar started introducing bill payment and subscriber-to-subscriber money transfers.

"We actually start to transform that [mobile phone]operator into more than just a communications network but a communications and financial network," he says.

In Pakistan, there are one million bank accounts - and 90 million mobile phones, notes Iain Grant, president of telecommunications consultancy SeaBoard Group in Montreal.

In Africa, mobile carrier Safaricom launched the continent's first mobile payments service, M-Pesa, in co-operation with Vodafone in Kenya in 2007, and "millions of people signed up for that essentially instantaneously," Mr. Grant says. "It's been a huge success story." M-Pesa has since been extended to Tanzania, South Africa and, under the name M-Paisa, to Afghanistan.

What initially lures many subscribers to mobile payments is remittances - the ability to transfer money from one subscriber's account to another, Mr. Grant says. This is particularly attractive for people working abroad who want to send money home to their families.

Once people set up mobile wallets on their phones to do this, it makes sense for merchants to accept payments the same way. And that is happening. In the Philippines, Mr. Kadar says, it's now possible to pay a taxi fare using a mobile phone.

In Canada, Telepin's software is making Wind the first mobile carrier to allow subscribers to transfer prepaid airtime balances to other subscribers, says Scott Campbell, Wind's chief marketing officer. "We selected Telepin because it did some unique things for us," he says. Down the road, Mr. Campbell sees potential for Canadians to pay for other goods and services with their phones.

Today, Telepin has more than 30 customers, mostly in Africa and the Middle East, Mr. Kadar says. The company has a satellite office in Cairo. Development, marketing and sales are based in Ottawa.

And Telepin has come this far without turning to outside financing. Mr. Kadar - who has previously run startups backed by venture capitalists - says either way has its pros and cons, but being self-financed affords more flexibility.

"We could probably experiment a little bit more, and we could take more risks than if we had to produce a detailed plan on a particular angle that we're going down," he says.

Of course Telepin isn't the only supplier of mobile payments software. The 70-employee Canadian startup is up against players from around the globe, such as Comviva Technologies Ltd. of New Delhi, HomeSend, operated by Belgacom subsidiary BICS SA of Brussels, and Vodafone with the M-Pesa technology. Nonetheless, Mr. Grant says, "a rising tide will lift many ships."

Promising startups can stumble, but at present Telepin seems well placed. "I think Telepin has a strong potential future, ahead," Mr. Grant says.

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