Iran’s financial system is gradually undergoing a technological evolution in micropayments by the introduction of NFC (Near-Field Communication) services tailored for handling small payments.
An e-wallet dubbed “Kipaad” was unveiled last October, a joint product of Pasargad Bank, mobile operator MTN-Irancell and Fanap—the electronic payments solutions company affiliated with Bank Pasargad—to manage minor payments under 500,000 rials ($11).
The system first went into execution in the eastern shrine city of Mashhad and the northwestern city of Qazvin and will soon be launched in Tehran.
The offline e-wallet is designed to use SIM cards provided by Iran’s second largest mobile operator MTN-Irancell to safely and quickly conduct micro transactions for Android users.
NFC is a short-range wireless connectivity standard that uses magnetic field induction to enable communications between devices when they are touched together, or brought within a few centimeters of each other.
The method has proven successful as 7,500 daily transactions are made employing NFC services only in the public transportation sector of Mashhad.
The idea was first explored when banks suffered financially from micropayments made nationwide.
Payments under 50,000 rials take up major volumes of the network’s traffic and include 80% of Shaparak’s (the entity in charge of Iran’s payment network) transactions.
Banks on the receiving end of a transaction must spend 500 rials (1 cent) for each transfer; therefore, absorbing the commission for minor payments is considered a loss-making business. By utilizing NFC, banks can cut considerable costs in the long term.
The system was unveiled by Bank Pasargad during the third Iran Transaction Exhibition held last October.
Last week ICT Minister Mohammad Javad Azari-Jahromi attended Irancell’s bash held on the occasion of the World Information Society Day to showcase the company’s status and latest achievements and visited the Kipaad project’s stand.
Statistics announced during the event show that the project is one of the incoming measures to make the country’s cities smart.
Spurring Economic Growth
Head of the Communication Regulatory Authority Hossein Fallah made a speech regarding e-wallets as they will soon debut in the capital and said, “Mobile operators are collaborating with electronic payment solutions companies to employ technology and offer new services to customers.”
According to him, such business ventures can cut expenses and help stimulate economic growth.
Fallah regarded micropayments as one of the challenges the country’s financial structure is facing and extolled the cooperation between mobile operators and tech companies to offer innovative services.
The CRA chief pointed to the move toward electronic banking and said, “We must pay special attention to e-banking as the mainstay of speed and comfort in banking transactions.”
Fallah says the government of President Hassan Rouhani has plans for the country’s banking system to mostly draw on technology.
How It Works
Android users can download the application from kipaad.ir. The app is supported by most smartphones in the market.
In order to use Kipaad, users have to first install and register with Irancell’s payment application called Dorj.
The e-wallet can hold two million rials ($47) worth of credit and can transfer the maximum amount of 500,000 rials ($11) in each transaction.
NFC contactless payment requires hardware equipment as well. Mashhad’s subway and bus stations, and Qazvin’s bus fleet are currently equipped with the necessary hardware and 2,500 POS (point of sale) systems have been installed in the said locations which support NFC transactions.
In the second phase of the scheme, the service will be established in Tehran to relieve the population from always looking for change to pay for the use of public transport.
Taxi Authority in Capital Introduces E-Payment
Tehran Taxi Organization has declared that it is on course to implement an e-payment scheme for taxi fares in the capital by the end of the current fiscal, which ends in March 2019.
Announcing the satisfactory results of a pilot phase in Vanak Square north of Tehran, TTO Director Alireza Qanadan stated that the organization intends to expand the scheme so as to provide citizens with various payment options.
Smartphone application “PhonePay”, developed by a knowledge-based firm, grants citizens the e-payment alternative simply by getting installed on their phones.
PhonePay makes use of QR-codes. Users need to install PhonePay’s app on their handsets, sign up by entering their phone number, and then simply pay the fare upon scanning the QR-code embedded on the back of the taxi’s front seats or in case of the passenger riding shotgun, the visor.
So far, about 10,000 taxis out of the total 80,000 active in the ever-sprawling capital have been equipped with the required hardware, as reported by Qanadan.
He mentioned that this program failed in some cities, due to the lack of necessary infrastructures.
Qanadan is of the opinion that both cabbies and passengers will benefit from the implementation of the scheme.
Taxi drivers can dispense with the shortage of change, and as fares will be calculated by an electronic taxi-meter, passengers need not worry about being overcharged.
