Mobile devices have changed drastically all spheres of our life, including the one which is so dear to us: money. Though any financial novelty is looked upon apprehensively, progress cannot be stopped: mobile payments are rapidly winning the market.

It is already evident that mobile payments will make an important stage in the development of payment systems. The highly fragmented mobile payment market offers quite a number of various solutions each of them having the right to exist. Some are developing successfully, others are somewhat disappointing, and the outlook of the rest is so far cloudy.

Mobile payments include a range of diverse solutions using mobile devices intended for transmitting and receiving information and for financial transactions. In other words, they embrace all means that make it possible to pay for goods and services and to transfer funds.

Today we will discuss Azerpay, the newly launched universal payment system enabling users to make contactless payments and money transfers, to submit loan requests, to use POS machines and bank cards, to make distant payments for goods and services – and all this works even without access to the Internet. The total number of payment services will reach 160, they will be launched gradually, as they are integrated into the infrastructural environment. Users will also be able to register their tax ID number in order to accept payments. This service, called Mobile POS, is designed for self-employed individuals and small and medium business to enable them to accept commercial payments, to do accounting records and financial planning, and to pay taxes.

The security of the payment system is provided by several protection levels guaranteeing safety of the users’ funds. The protection means will not allow a stranger to access the account even if the mobile phone is lost. Besides, the Azerpay users will be able to use the payment system via the azerpay.com website.

What is Azerpay? 

The mobile payment market started about 10 years ago with popular, understandable and simple sms-interfaces. As the mobile communication technologies developed, new hardware facilities, soft applications and other payment tools came into being. For today’s mobile payment system, developers offer a wide range of solutions enabling customers to use several communication interfaces, combination of different applications reading barcodes, QR codes, etc.

The creators of Azerpay carefully studied foreign experience and evolution of similar solutions abroad. The task was to offer the general public a service free from any signs of technological discrimination. Everything was to be so transparent that even unsophisticated users could easily get registered in the system and realize how easy it was to use.

For a good reason, USSD was chosen as the system’s basic communication interface as, compared to SMS, it is more reliable and easier to use. USSD is an operations interface of GSM networks that performs consistently providing a stable dialog with the user even with the low level of the mobile network signal.

The task of the second stage was to integrate the USSD interface with all kinds of current technology expanding the service scope of the system. There was a need for a solid payment platform allowing to interact with nonconventional interfaces that had not been used in the USSD banking before. The developers’ team succeeded in designing and implementing their own version of contactless payment services on the basis of the RFID technology which surpasses its NFC counterparts from the point of view of both technology and safety, and does not require major investments.

The issue with NFC is that this product is intended for groups of investors, which always involves achieving agreement, relatively high expenses, problems of compatibility and final implementation of the service. RFID does not involve collective investments and when we invite a payment service provider to accept payments we imply that the users already employ means of contactless identification able to interact with various facilities for accepting payments: from a mobile POS terminal at a supermarket to a ticket validator at a movie theater.

The current Azerbijani legislature so far prevents from implementing all the technical solutions supported by Azerpay. Today we can configurate payment processing that would operate the data allowing both the user and the payment recipient, who have delegated the responsibility to an intermediate agent, to settle the accounts by means of electronic cash equivalent. The law ‘On Electronic Commerce’ defines the function of the such an agent as mediation.

It would be wrong to say that the technology used by Azerpay is unparalleled among world’s payment tools; however, it comprises a set of unique technological and business solutions, which makes it possible to rate it as the best-of-breed.

The principal achievement of its developers is that inexperienced users will not have to struggle through the instructions because to use Azerpay’s payment instruments is as easy as to make phone calls.

Using Azerpay 

First, you have to get registered with the system dialing *365#yes. Azerpay’s USSD dialog menu has only five items. For the reasons of safety and protection from abusive activities, the duration of payment sessions is limited to 120 seconds. For users’ convenience, the developers advise, during the brief registration procedure, to provide a secure means to restore the PIN: the user should just enter another telephone number to which a text message with a temporary PIN will be sent in case of emergency.

After the registration, the user opens his electronic Azerpay account to which funds can be added in different ways: via payment terminals, at post offices or bank branches, or using bank cards.

Basically, Azerpay is not an e-purse so well known to our public, as it does not directly operate users’ funds: they are kept at the system’s operating bank licensed to provide financial services.

At bank branches and post offices users will be able to add funds to their accounts or to withdraw cash. Azerpay has a round-the-clock support service really caring for the users’ convenience: support operators contact the customers themselves in reply to the request ticket sent directly from the USSD menu. The system works with two categories of users: identified and non-identified.

Non-identified users can add to their account 50 manats in one installment, while the annual turnover shall not exceed 1000 manats. But this limitation, imposed in accordance with the current Central Bank requirements, can be changed by means of an easy identification procedure that a user can complete at any post office or bank branch producing his ID.

For identified users, the annual operations limit is 10,000 manats, and they can refill their Azerpay account with any amount within this margin.

Contactless payments using Azerpay stickers


These small round stickers can be fixed to the mobile phone surface or kept in a purse. Now Azerpay is negotiating the practical use of this innovation with transport and parking companies. Stickers will be available at authorized bank branches and post offices. After purchase, the sticker’s ID will be applied to the user’s mobile phone number registered with Azerpay.

If the sticker is used only to pay public transport fares its user will be able to choose automatic fare balance refill thus getting rid of the need of any additional moves, and the added amount will be deducted from the main Azerpay account according to the trips made the day before. In future it will be possible to fix the daily balance independently via the USSD menu.

Azerpay’s partners accepting contactless payments will gain a lot from the cooperation: their cash collection expenses will be reduced, as well as the lines at the terminals, while the service speed and, respectively, passenger traffic will increase. Azerpay stickers will also be used to pay for parking, with no additional commission charged. This option will first be introduced at commercial parking areas near malls.

Paying for goods and services using POS terminals 

Contactless payment services are very popular with retailers as they drastically enhance the customer care and reduce expenses. The procedure of contactless payments is simple and convenient. After the cashier types in the sum to be paid the user just has to bring his mobile phone carrying a sticker or the wallet with the sticker inside close to the POS terminal. Then the user gets a text message notification of the bill and dials his PIN. The whole payment process takes several seconds. When the bill is paid the POS terminal prints out a check and the operation is over.

In the near future Azerpay users will be able to connect their Azerpay accounts to bank cards. This service will be available after the completion of safety certification procedures, which will enable customers to make transactions with their plastic money and bank accounts.

Contactless payment service provides an opportunity to pay without getting your card out of your pocket and giving it to the cashier: you just have to place your purse/mobile phone/ watch/keychain against the reader. In the tough competition for customers, banks will soon make every effort to familiarize Azerbaijani users with these high-end services and make them more relevant. Those banks who will pioneer in introduction of contactless technologies upgrading their hardware and software will be the first ones to introduce mobile payments. Such technologies require investments so at first we will expect moves from the major players on the market.

The expansion of contactless payment services as the we know them today is a preliminary stage before the introduction of mobile payments which are likely to substitute for plastic money in the next few years.

Huseyn Veliev

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