Thus Spaketh Idd Salim

Increase your SMS revenue to 155%.

Recently, the revenue share model for SMS services running on short-codes was revised and, as always, it anti-enterprenural.

As hot girls might tell you, I don’t like beating around their bushes and I always dive right to the meat of the moment and this being a weekend post, i will make it straight to the point, like me.

So, I will share model 1 of 3 and hopefully, it will be of use to someone.

The Locus Standi

The current revenue share model for Kenya is like this:

SMS Service on Safaricon

Government – 26% (16% vat + 10% excise),

SAF 50% (of what remains after tax) – if your traffic is less that 1M smses or 40% if it is more.

PRSP 20% (of your 100%, which is 50% of the after-tax value.)

You – A hefty 80%, from which you must the government another 5% with-holding tax.

So for an SMS service charging the client 10 bob per response, The share will be:

Govt : 2.6, Saf : 3.7, PRSP : 0.74, You: 2.96 (less 5% W/h tax : 2.812)

Same applies to other operators, give or take 5% from their share. or yours.

So, for you to make something sensible, e.g. 5 Bob per SMS, you must charge at least 20 bob.

The Solution

When I designed the Easy Hisa System for Standard Investment Bank (SIB) as an adaptation of our Mobile Stock Trading and tracking suite, we decided to try a different revenue model. Today, I will share with you the revenue model, so that you can use it to maximize on SMS revenues.

This model is simple and is applicable to banks, insurance companies, stock brokerage houses, bars and clubs etc. Think outside an in-existent box, and the possibilities are unlimited.

Success Story: How SIB is doing it

SIB Opted for a model that is simplistic and traffic independent. The profits are always HIGH and fixed. Client gets charged normal SMS rates to access the system, e.g. 1 bob for YU and 2 bob for Zain.

At SIB, I have setup a MODEM pool with SIM cards for all operators. All lines are the same e.g. 0711/0751/0734 (900009) and clients just need to SAVE their network number to their SIM as SIB.. or Broker.

Anytime a client needs to check the status of their shares order, balance etc, they just send a normal-rated SMS to SIB on their address book and we receive the SMS, process it and respond. Mara iyoiyo… Cost on their Airtime, 2 bob. Needless to say, SMSes come to the client using out TumaSMS gateway and are masked as the broker sees fit.

Now comes the big question. How does the broker make money?

The clients have been educated to see this as a convenience service and looking at the kawaida cost of going to your broker of KSHS 100+ coz of transport etc and the time wasted because of Jam etc not forgeting akina morio, they gladly pay the 10 bob SIB charges as a service fee for this service.

EasyHisa passes a journal to the internal brokerage system and charges the client’s trading account 10 bob, a revenue stream from which SIB keeps 100% profits. 10 outta 10.

So here, the client pays 12 bob to get information that would have cost them 100 bob. In 5 seconds when it would cost them 1hour+. SIB keeps 100% profit as opposed to 28.2%. Simple, Easy, Neat!

Jidosishe mzee, dont dosisha wadosi.

Back to code.

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Tick… tock… Tick… tock… Goes my HackOmeter. “Have they been hit yet?”, I ask myself. I switch on the TV to see if a Kenyan Bank has yet been hit. “Not yet”, I conclude. “I see voluptuous women flaunting naked in the streets an on bill boards. Soon the rapists are coming.”, I tell my friends. And Ohh, what a sad day it will be.

The Topic for today is SMS Banking.

What it is MEANT to do:

SMS banking is a remote banking service via mobile phones. Upon each money withdrawal operation with a card account (purchase using a card, cash withdrawal in an ATM), the client connected to the SMS Bank system receives an SMS message with information on the transaction. Such SMS message usually includes the charged amount, part of the credit card number, date, time, and place of the transaction (shop or ATM location). Full stop! That is what SMS Banking was meant to be, should Be and Must remain as.

What is has been ABUSED to be:

But hang on, there. What about these services all over the news that allow a user to check balances, transfer money, stop checks etc, all from SMS (or USSD as the case of Equity and Barclays) ? Isn’t that what SMS banking really is?

Well, this is classic example Security Through Obscurity.  Like walking at Tom Mboya at 2am waving a KSHS 1000 Note and reaching home safe. You won’t do that for long.

Shamelessly stolen from The RSA Website, :

We have all read about the iPhone and Blackberry SMS attacks and vulnerabilities. There is current commercially available (let alone black market) software that allows eaves dropping and spoofing of SMS. The lack of SMS confidentiality has been established by congressional members, city mayors, and international government officials in dozens of cases where their text messages were intercepted and made public. Like landline communication, cell phone communications including SMS should be considered to have no confidentiality.

An SMS can be:

• Intercepted on its way from your phone to Zain/Safaricon/Safaricom.
• Changed and edited [The content, the destination Numbers, The Source Number etc].
• Delayed.
• Deflected and even deleted before it ever gets there.

This can be done with equipment that cost less than USD 10, 000 and also with techniques that anyone who knows the difference between Hellon and Arunga can master in a week.

How Can this be done?

There are 3 Knows ways to Intercept communication between 2 sources that are sent via SMS:

• Phone cloning – The best. Totally bamboozles the MSP Cell Towers [Saf/Zain]. They see two phones with same phone number, MIN and ESN. Very effective on CDMA networks but not as effective on GSM – More Info -
• SIM Copying – VERY Illegal because it is 100% efficient. Clones the SIM and yours becomes active whereas the clone is dormant but receives copies of all your SMS and calls.
• Patched Firmware  – A very easy and common method is for a hacker to upload a super-firmware to their phone. This upgrade turns their phone into a super-phone radio transmitter and they can receive SMSes that are addressed to THEM and people AROUND them. You can really have fun with this at a club, a mall or a bus-stop.

Ever been robbed or attacked then the assailants returned your phone / SIM? Chances are you got cloned and All your phone-calls [as long as you are on the same Cell Area] and ALL your SMSES [irrespective], get delivered to YOU real phone and its clone.

Where is the problem?

Ok. Enough phone hacking lessons. For those dumb enough not to grasp where the problem is, so far, please, allow me to reiterate:

• Your SMSes are neither CONFIDENTIAL nor PERSONAL. Get over it! In a recent article about how guys from SafCon sell data call and SMS records shows the first level of breach. Your data can be bought!
• Your SMSes can be intercepted by hackers. SafCon can fire all those name-spoilers they hire, but your information is only secure from humans. It is NOT digitally secure. SMS and USSD traffic is rarely encrypted, if ever.

What is MY problem?

Just your money, my reader. You dont want all your hard-eraned cash to end up in Nigeria, do you?

Why doesnt Safcon [Not to be confused with Safaricom] etc do something?

Honestly, not their problem. You send SMSes, they make money. And it is not their mandate to SECURE these systems. they offer the ROAD. If you get an accident on it, hard luck!

Is All Lost in the Mobile Banking Sector?

Not by a long shot. But that is a topic for another day, or you can skype/gmail/yahoo me @iddsalim so tell you HOW Symbiotic is Countering this menace. Power through serious code..

Adios!

Back to code!

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Alot of times, I have been stopped on the streets [on my way to Laico for lunch] by many a coders with the same question. ‘Salim, I want to make money using SMS shortcodes and tun my own campaign ya kulipua mabilioni kama ile ya Safaricon. Nidosike kama Sebi na ninunue Kompressor sita za pink.’

So, being the big brother I am to a few, I always cancel my lunch and take the person to Savanna Loita, and explain it all.

• How it works
• How much money once can make
• What different types of billings are available
• What are the best people to partner with to get value
• How to promote your service

Now, After the Arsenal Loss, I woke up refreshed and sober. I can share this with the public. So here we go.

Premium rate SMS services are a value-add SMS revenue model for Mobile Service Providers (MSP) customers, that is run by Premium Rate Service Providers (PRSP) and Content Providers (CP) to drive revenue via SMS and SMS-related services.

By Law, MSPs (Safaricon, Zain, YU, ME, Orange and PineApple) are not allowed to run ANY shortcode business directly or indirectly, as this would kill the small players (But we all know SafCom does it anyway, huh?)

To become a PRSP, you will need to pay KSHS 210, 000 to CCK for a license, and renew it anually for KSHS 100, 000. This allows you to book Shortcodes with the MSPs. If you dont have 210, 000, you can become a content provider and book a shortcode from a PRSP.

There are two types of shortcodes in Kenya.

• Golden Shortcodes : (e.g.) 5050, 8008, 4441. Easy to remember, cute on the eye and cost KSHS 200, 000 application and a monthly of KSHS 10, 000 per month, per Network + VAT.
• Normal Shortcodes : (e.g.) 4034, 2346, 4659 etc. Kawaida shortcodes for KSHS 10, 000 per month, per Network + VAT.

So if you want to run a normal shortcode on 2 networks (e.g. SafariCon and Zain), you need KSHS 20, 000 + VAT per month and you FULLY own the shortcode and can run your own services on it and rake in cash, as long as you can advertise them and make them popular.

So, Where is the money?

When you book a short-code, you need to decide the following:

• What Billing band should it be? – Bands start from KSHS 3.5 per SMS where you make 0 (Read Zero) Shillings to one that the client gets charged around 100 bob per SMS. Most people settle for KSHS 10 to KSHS 60.
• Should it be MO-billed, MT-billed or MO-MT billed? MO-Billed means user MUST have the money e.g. the 10 bob, on their phone before engaging you. MT means user gets billed once SMS lands on their phones. MO-MT is obvious. Means user gets billed half on send and half on receive.
• How much money you want to make. Obvious huh?

So, How much money Do I Keep?

Well, I was hoping we dont fika here. This is the saddest part of the entire business. Normally, based on whether you are a PRSP or a CP, the moneymatics are as follows:

• Unless you have received 1, 000, 000 SMSes on your shortcode, the MSP takes 50% revenue, PRSP takes between 10-30% of the remaining 50%. So, if you are charging 20 bob per SMS, you take home between 7-9 bob per SMS, PRSP takes between 1 to 3 bob and Safaricon takes 10 bob; bila adabu.
• Zain have a better deal at 30% if your volumes are high.

Errrr, yeah. I will answer the rest personally.

Back to code.

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