Friday, July 11, 2014

Mobile Money Revolution: Pakistan Surges Ahead of India

Pakistan government is handing out Rs. 40,000 per family to nearly a million internally displaced persons (IDPs) through mobile service operator Zong's mobile SIMs. The government is attempting to ease the discomforts of displacement for such a large number of people displaced after the start of Pakistan Army's Operation ZarbeAzb  to root out terrorists from North Waziristan tribal agency. Zong is one of several mobile service operators offering Easypaisa m-money service. It was pioneered by Telenor Pakistan.

Easypaisa moved $3.5 billion in fiscal 2012-13. Bangladesh's bKash did $4 billion over the same period. These figures were well ahead of the $3.2 billion moved in comparable period by India's M-Pesa mobile money network, according to New York Times.  Over the last 12 months, the m-money market volume in Pakistan has reached 153 million annual transactions worth US$ 6.2 billion, according to Asian Development Bank.

Easypaisa M-money Growth in Pakistan (Source: ADB) 

Pakistan’s m-money infrastructure has grown rapidly since the launch of the first domestic initiative in October 2009. This expansion has been enabled by a liberal financial and telecommunications regulatory framework, and active private sector participation. Four out of five cellular mobile companies currently operating in Pakistan have launched m-money systems in partnership with financial institutions. The m-money market volume has reached 153 million annual transactions worth US$ 6.2 billion.



There are two ways through which m-money services are offered in Pakistan. Over 95% of m-money transactions are done through mobile banking (m-banking) agents, and the rest are processed directly through customers’ mobile-wallet (m-wallet) accounts, using mobile phones. M-banking agents (retail points) provide the basic infrastructure for Pakistan’s m-money services, whereas customers’ m-wallet accounts currently have a limited role in the m-money services market.

It is believed that the reason why India lags behind Bangladesh and Pakistan in mobile money is because its regulators require mobile operators to work with banks to provide the services. Mobile networks would prefer to have their own agents who can cash out the digital money into hard currency. Much of the infrastructure is already in place, because there are so many locations where customers can top up on airtime. But the mobile operators are not allowed to use those sales outlets as financial agents in India.

Related Links:

Haq's Musings

Branchless Mobile Banking Takes Off in Pakistan

Pakistan Ranks High in Microfinance

Pakistan Deploying Mobile Apps to Improve Governance

Pakistan Mobile Broadband Faster Than India's

Pakistan's Media and Telecom Revolution

16 comments:

Monis said...

It's happening folks! Mobile money is maturing in Pakistan.

MCBLite to accelerate this!

Cankaya said...

Mobile Banking In India–$350 Billion Worth Of Transaction Expected By 2015 : NextBigWhat

http://www.nextbigwhat.com/mobile-banking-in-india-report-297/

Riaz Haq said...

Chankaya: "Mobile Banking In India–$350 Billion Worth Of Transaction Expected By 2015 : NextBigWhat"

This is a highly optimistic forecast for India made in 2011 which has so far been proved wrong....it's likely many other highly optimistic forecasts for India that have not materialized as its economy has slowed considerably.

BTW, here's what I forecasted for India back in 2011:

http://www.riazhaq.com/2011/09/indian-economy-slowing-to-hindu-rate-of.html

Riaz Haq said...

The use of mobile money in Pakistan appears to be gaining ground, based on supply-side data. The most recent quarterly statistics gathered by the State Bank of Pakistan [1] showed a 4 percent increase by volume and a 5 percent rise in the value of transactions from the previous quarter, continuing a fairly steady upward trend.

However, from a demand-side perspective, uptake remains modest. InterMedia’s Financial Inclusion Insights team conducted a nationally representative survey of 6,000 Pakistanis in late fall 2013 to assess access to and use of mobile money and other financial services. The survey showed only 7 percent of Pakistanis had used mobile money at least once. The survey also confirmed the predominance of over-the-counter (OTC) transactions which are conducted by a mobile money agent on behalf of a customer. Ninety four percent of mobile money users only use OTC mobile money services, while 6 percent have a registered account and can use either the account or transact through an agent.

Why is mobile money uptake low?

Awareness of mobile money is one potential hurdle. When asked in the FII survey to name at least one mobile money company, around half (49 percent) of nonusers were able to do so unprompted. An additional 13 percent were able to do so after being shown logos of Pakistani mobile money companies, for a combined awareness total of 62 percent. [2]

Thus, 38 percent were not aware of mobile money products at all. This group had some demographic particularities. Forty-three percent of female respondents fell into this category, compared with only 28 percent of male respondents. Geographically, Punjab fared better than other provinces in terms of awareness about mobile money companies; only 25 percent of the respondents from Punjab could not name any mobile money company. This is logical, given that Punjab is a relatively developed part of the country and mobile phone use is high there. Punjab’s 25 percent stands in contrast to the 65 percent of respondents from Balochistan, 55 percent from Sindh and 35 percent Khyber Pakhtunkhwa, who were unaware of mobile money companies.

Television ownership also tends to increase awareness about mobile money companies. Among respondents without a TV in their home, 57 percent could not name a single mobile money company, compared with 31 percent of respondents whose households included a TV set.

From awareness to knowledge

Even among nonusers who are aware of mobile money, nearly half (49 percent) said they do not have a mobile money account because they don’t need one, which is, of course, a legitimate reason.

However, the FII survey also indicated that 39 percent of non-users who are aware of mobile money were not able to identify a single mobile money function. It raises the question of whether some Pakistanis currently believe they don’t need mobile money simply because they don’t know what they might be able to do with it. We can’t answer this question directly from the survey data, but it does provide some clues about knowledge gaps that may act as barriers to usage.

Even among those non-users who could name at least one mobile money function, the table below shows that the bulk of this knowledge focuses on person-to-person money transfers and, to a lesser extent, paying bills and buying airtime pop-ups. Other potential functions get little recognition.

http://finclusion.org/fii-blog/pakistan-mobile-money-uptake-awareness-and-trust/

CanadianBoy said...

'Super Power' India ranked 143 among 162 countries on peace index,Indigenous Maoist movement observed to be the biggest threat to her security. 'Failed State' Pakistan ranked 154. Buddhist-majority Bhutan the safest south-Asian country.

http://articles.economictimes.indiatimes.com/2014-06-18/news/50679163_1_global-peace-index-peaceful-country-22-indicators

Naveed Siraj said...

Dear Riaz sb

This link may be helpful for a future update. Wishing you the best & regards Naveed Siraj

http://propakistani.pk/2014/10/27/easypaisa-holds-53-market-share-mobile-financial-services/

Riaz Haq said...

ISLAMABAD: Pakistan has potential to lead to transform into a cashless economy by shifting from conventional mode of cash payments to electronic ones, which now have becoming preferable for being cost saving, transparent, speedy and secure, Managing Director Better Than Cash Alliance, Dr. Ruth Goodwin-Groen said. Dr. Ruth, while talking to a selected group of journalists here said that the United Nations-backed alliance would ask Pakistan to join the group, which already has over 30 members, while the registration of several other countries is in process.

She said that Pakistan has tremendous potential to exploit as just 10 percent of its population were utilising banking services and 90 percent were still away from these services.

The Better Than Cash Alliance is UN-housed alliance of governments, the development community and companies, committed to empower people by shifting from cash to electronic payments.

The alliance works closely with World Bank, the Consultative Group to Assist the poor, the World Economic Forum and is an implementing partner of the G20 Global partnership for financial inclusions.

Talking about the benefits of the alliance, Dr. Ruth said that the biggest generators of payments globally, estimated offer US$40 trillion in 2009, with millions of people in developing countries receiving salaries benefits and pensions through government-to-people payments.

She said that the financial services are often difficult and expensive to provide to poor people at scale.

As a result, most of these households are forced to subsist almost entirely in an informal, cash-only economy, making it difficult to save for the future, build assets and move out of poverty.

She said, when governments shift payments from cash to electronic distribution-for example on mobile phones or by prepaid cards-there are lasting benefits for people, communities and economies.

She said that the electronic payments decrease costs and increase efficiencies, citing example of Mexico, where the government trimmed its spending on wages, pensions and social welfare by 3.3. percent annually, or nearly $1.3 billion, by centralising and digitising its payments.

She said that electronic payments are more transparent, increasing accountability and tracking and reducing corruption and theft while these are typically safe and have faster delivery.

She was of the view that electronic payments can also accelerate access to and use of financial services and can also open doors for new business models for previously excluded people and create additional benefits.

http://www.dailytimes.com.pk/business/04-Dec-2014/pakistan-has-potential-to-lead-in-cashless-economy

Riaz Haq said...

HBL signed agreements with MasterCard and Monet for the rollout of the first Mobile Point-of-Sale (mPOS) service in the country.

The signing ceremony was held at HBL’s head office in Karachi between Mr. Faiq Sadiq (Head – Payment Services, HBL), Mr. Aurangzaib Khan (Country Manager – Pakistan & Afghanistan, MasterCard) and Mr. Abbas Sikander (Chief Executive Officer, Monet).

The mPOS solution that HBL is launching will enable micro and small merchants to accept credit, debit and prepaid cards as payment, and can also integrate with the complex back end systems of larger retailers to provide a robust mobile POS solution.

The mPOS technology “Swipe2Pay”, powered by Monet, is a low-cost solution which will help facilitate fast and secure card payments and drive card acceptance across the country.

Speaking at the occasion, Mr. Faiq Sadiq said, “HBL is proud to be the first bank in Pakistan to rollout the mPOS technology which will cater both to the consumer and merchant’s need for a faster, more convenient and cost effective way to pay and be paid. It will also enable payment automation in merchant segments which are not effectively covered by conventional POS today.”

http://propakistani.pk/2015/01/21/hbl-signs-deal-mastercard-monet-launch-first-mpos-service-pakistan/

Riaz Haq said...

At the start of the year, a collaboration between Habib Bank and Monet resulted in the launch of the first mobile point-of-sale (mPOS) system in the country. It allows retailers of all sizes to take payments using a mobile phone and can run on a slow GPRS connections. While it doesn’t sound ground-breaking – and it’s something commonplace in other countries, using gizmos made by companies like Square – it’s a breakthrough moment for Pakistan. Simply, it’s a card-swiping gadget that plugs into smartphones; it looks like this:

Cash is king in Pakistan. But digital alternatives are finally emerging

This could finally disrupt the cash-only culture and local payments industry. It could even chart a course that emerging and future startups can take.

Ahson Saeed, head of marketing and business development at Monet, says the aim is to change the way both consumers and retailers focus on cash payments in Pakistan. “Complete digitization is our end goal,” Saeed says. This can give retailers “a data-centric system that is absolutely free from error,” he adds.

Useful for startup services
Saeed points to the ride-sharing app Savaree and the recently-launched contractual worker startup Labourforce.pk as examples of services that would benefit from the mPOS system that his firm has launched. “It is imperative for early-stage startups to have streamlined cash flows, and by employing mPOS the threat of pilferage as well as higher insurance costs are both removed.”

For startups to scale up in Pakistan, it is imperative for a larger proportion of the population to be comfortable in using their services. This means that smaller grocery stores, tobacconists, tea stalls, vegetable retailers, and even transport and communication services all need to be brought on board with digital payments. To do this, Monet is venturing into areas which private sector banks have traditionally ignored.

The first web company to deploy this new mPOS system is Daraz, the Amazon-esque ecommerce startup run by Rocket Internet that has been operating in Pakistan since July 2012. Amyn Ghazali, head of alternative payments at Daraz, is similarly optimistic about the impact that this will have on the business. “Over 90 percent of our existing orders are done on a cash-on-delivery basis,” he reveals to Tech in Asia. “This model is inefficient and restrictive, as insurance costs burgeon for big ticket items such as electronic goods, mobile phones, and home appliances, thereby impacting our bottom line [This]. mPOS is a workaround which benefits both the end consumer and Daraz.”

It is still difficult to ascertain how quickly this would reach mass-acceptance. The positive indications are that this kind of smartphone-connected POS is low-cost technology to implement. The Monet gadget itself comes with the backing of one of Pakistan’s largest private-sector banks, and the founders are working aggressively to market it to segments that are not effectively covered by conventional POS systems. In time, this kind of phone-mounted payment system will certainly redefine how small and big businesses work and how consumers pay for things.

https://www.techinasia.com/pakistan-mpos-systems-replace-cash/

Riaz Haq said...

Financial Inclusion Challenge Finalist: Telenor #Pakistan Mobile Banking #EasyPaisa

http://on.wsj.com/1MTSnCw

Telenor Pakistan is one of the country’s first mobile banking programs making financial services available to millions of Pakistanis. Photo: Telenor Pakistan

Riaz Haq said...

#Pakistan Plans to Bring Millions More Citizens into the Economy by Digitizing Payments http://prnw.cbe.thejakartapost.com/news/2015/pakistan-plans-to-bring-millions-more-citizens-into-the-economy-by-digitizing-payments.html …

The Government of Pakistan announced it will continue to move toward a more digital financial economy by joining the United Nations-based Better Than Cash Alliance. This is paving the way to greater financial inclusion for millions of its citizens and inclusive growth for its economy.

Photo – http://photos.prnewswire.com/prnh/20150922/269306

Pakistan’s announcement comes just as new Sustainable Development Goals will be launched by world leaders at the United Nations in next week, drawing a spotlight on the role of digital financial services in achieving broad economic growth and individual financial empowerment.

Pakistan is fully aware that digital financial services, driven by digital payments, can help poor people save for the future, provide for their family’s health and children’s education, or invest in a business. In 2015, formal financial access in Pakistan is 23% and adult banked population has increased to 16%. By joining the Better Than Cash Alliance, the government of Pakistan is taking clear positive action to further leverage new technologies to expand financial inclusion.

“Digital payments are a critical and practical step that help advance and achieve our financial inclusion goals for our citizens,” said Federal Finance Minister Senator Ishaq Dar, “Our vision for sustainable economic growth is to ensure all citizens have access to fair and dignified financial services. This will create more opportunities of doing business and economically empower everyone in Pakistan.” In May 2015, Minister Dar launched Pakistan’s first ever national financial inclusion strategy (NFIS) in partnership with the State Bank of Pakistan (SBP) and the Securities and Exchange Commission of Pakistan (SECP) offering a national vision for universal financial inclusion in Pakistan.

Better digital payments systems will also help the government overcome some of its hurdles of making payments and distributing social benefits in a cash-dominant economy. Cash payments incur significant costs associated with manual record keeping, security, and transportation. In other parts of the world, digitizing government payments has brought many benefits and cost savings. For example, when the Government of Mexico digitized and centralized payments, the cost to distribute wages, pensions, and social welfare dropped by nearly US$1.27 billion.

Riaz Haq said...

#Pakistan Plans to Bring Millions More Citizens into the Economy by Digitizing Payments http://prnw.cbe.thejakartapost.com/news/2015/pakistan-plans-to-bring-millions-more-citizens-into-the-economy-by-digitizing-payments.html …

The Government of Pakistan announced it will continue to move toward a more digital financial economy by joining the United Nations-based Better Than Cash Alliance. This is paving the way to greater financial inclusion for millions of its citizens and inclusive growth for its economy.

Photo – http://photos.prnewswire.com/prnh/20150922/269306

Pakistan’s announcement comes just as new Sustainable Development Goals will be launched by world leaders at the United Nations in next week, drawing a spotlight on the role of digital financial services in achieving broad economic growth and individual financial empowerment.

Pakistan is fully aware that digital financial services, driven by digital payments, can help poor people save for the future, provide for their family’s health and children’s education, or invest in a business. In 2015, formal financial access in Pakistan is 23% and adult banked population has increased to 16%. By joining the Better Than Cash Alliance, the government of Pakistan is taking clear positive action to further leverage new technologies to expand financial inclusion.

“Digital payments are a critical and practical step that help advance and achieve our financial inclusion goals for our citizens,” said Federal Finance Minister Senator Ishaq Dar, “Our vision for sustainable economic growth is to ensure all citizens have access to fair and dignified financial services. This will create more opportunities of doing business and economically empower everyone in Pakistan.” In May 2015, Minister Dar launched Pakistan’s first ever national financial inclusion strategy (NFIS) in partnership with the State Bank of Pakistan (SBP) and the Securities and Exchange Commission of Pakistan (SECP) offering a national vision for universal financial inclusion in Pakistan.

Better digital payments systems will also help the government overcome some of its hurdles of making payments and distributing social benefits in a cash-dominant economy. Cash payments incur significant costs associated with manual record keeping, security, and transportation. In other parts of the world, digitizing government payments has brought many benefits and cost savings. For example, when the Government of Mexico digitized and centralized payments, the cost to distribute wages, pensions, and social welfare dropped by nearly US$1.27 billion.

Riaz Haq said...

#Pakistan ranks 7th among 21 countries for #mobilemoney accounts and growing fast. #EasyPaisa http://brook.gs/1SdQ4wo

Pakistan ranked 7th in terms of the percentage of adults with mobile money accounts among the 21 countries, achieving the highest percentage of all of the Asian FDIP countries. Yet there is significant room for growth — as of 2014, only about 6 percent of adults had a mobile money account.

The State Bank of Pakistan (SBP) has clearly expressed its commitment to advancing financial inclusion, which earned the country a commitment score of 100 percent. The SBP developed Branchless Banking regulations in 2008, with revisions in 2011. These regulations were explicitly intended to promote financial inclusion. More recently, the country’s National Financial Inclusion Strategy was launched in May 2015. In terms of quantitative assessments of financial inclusion, the SBP tracks supply-side information on branchless banking in its quarterly newsletters.

Recent public and private sector initiatives may help advance mobile money adoption. For example, a re-verification initiative for SIM cards was mandated by the government and initiated earlier in 2015. Mobile network operators have been promoting registration of mobile money accounts since the biometric re-verification process is more intensive than the identification requirements needed to register a mobile money account.

Earlier, in September 2014, the EasyPaisa mobile money service decided to eliminate fees related to money transfers between Easypaisa account customers and cash-out transactions for a set period. As of April 2015, the number of person-to-person money transfers had increased by about 2500 percent.

Still, barriers to financial inclusion remain. A 2014 InterMedia survey noted that while distance was less of a barrier to registration than previously, distance did affect the frequency with which users engaged with mobile money services. Therefore, expanding access points could further facilitate use of mobile money. Increasing the number of registered accounts could also provide individuals with more opportunities to engage with financial services beyond basic transfers — the InterMedia survey found that as of 2014, about 8 percent of adults were over-the-counter mobile money users, while 0.3 percent were registered users.

http://www.brookings.edu/blogs/techtank/posts/2015/09/16-fdip-results-asia

Riaz Haq said...

#Pakistan (9% male, 2% female) Leads South Asia in #MobileMoney. #India (3% m, 1% f), #Bangladesh (3% m, 2% f) http://blogs.worldbank.org/opendata/chart-pakistan-leads-south-asia-mobile-money …


In 2014, an average of 3% of people in South Asia used a mobile phone to send or receive money. While there are still gaps between how often men and women use these services, Pakistan leads the region with 9% of men and 2% of women moving money on their mobiles. You can find more data on financial inclusion in the Global Findex Database

Riaz Haq said...

#EasyPaisa: Incentivizing #Mobile Wallet Usage in #Pakistan. #financialinclusion http://www.cgap.org/blog/easypaisa-incentivizing-mobile-wallet-usage-pakistan#.V0us-6KRENY.twitter …


Despite a robust mobile money market, six years after the launch of the first branchless banking product, the number of active, registered mobile money accounts in Pakistan stands at only 0.4% of the population, according to the Financial Inclusion Insights study. The percentage of users of mobile money products, however, is 7%, which means that the majority of the customers prefer to transact over-the-counter via an agent. However, true financial inclusion only results when customers open their own mobile money accounts. It is only then that customers can avail of more advanced financial products such as insurance, savings, and credit. Hence, mobile money accounts are an important indicator for financial inclusion.

One of the principal barriers to mobile money accounts was the stringent Know-Your-Customer (KYC) requirements as set forth by the Central Bank in its branchless banking regulations. However, the recent government-mandated SIM biometric verification drive has resulted in very powerful KYC data: every mobile phone owner has now met the requirements for a mobile money account. If the regulators allow this data to be re-used, it could result in a boon for mobile money account registration drives.


What has Easypaisa done about this?
A tension already exists between the lucrative over-the-counter (OTC) model and the growing realization that future revenue opportunities lie in mobile wallets. Acting on this realization, in September 2014, Easypaisa launched an experimental P2P campaign that eliminated all fees related to money transfers (P2P) between Easypaisa account customers and cash-out transactions. Aside from the daily transaction cap or 50,000 rupees ($500) for Easypaisa accounts with minimal KYC requirements, this campaign enables customers to make unlimited and free P2P transfers. Free cash-ins and cash-outs, however, are limited to 15 and five transactions per month, respectively.

What has been the progress so far?
Attributing the results in the market to any one initiative is never an easy task but this is especially true in the fast-moving world of wireless telecom services where multiple promotions with diverse goals can run at the same time. Additionally, the SIM biometric verification drive has provided a separate boost to mobile money account registration.

Nevertheless, Easypaisa tracks three key indicators they believe indicate the impact of the free P2P campaign on account usage. These are: number of active accounts, number of transactions, and the ratio of active to total accounts.

---

While the free P2P campaign was truly unique in the Pakistani market and demonstrates how Easypaisa is thinking ahead, growing mobile money accounts in an environment as cut throat as Pakistan’s branchless banking market was always going to be a tough slog. As a leader in the market, they have perhaps a little more latitude in such experiments even though the pressure to show positive results is always present. And competing marketing efforts can distort how much can be attributed directly to this campaign to grow wallets. Encouraging customers to replace OTC transactions with account to account transactions by ensuring that it is almost completely free is only one of the ways in which Pakistan can move towards universal financial inclusion. Other promising initiatives such as reduced National Database and Registration Authority (NADRA) verification fee and the government’s willingness to digitize it’s incoming (P2G) and outgoing (G2P) payment flows will also go far towards reaching this goal.

Riaz Haq said...

#Pakistan’s #Easypaisa offers thumbprint recognition to raise #mobile money transfer amount to Rs 50,000 - #fintech http://mwl.me/2agq485

Telenor-owned Easypaisa deployed biometric technology so it can increase the maximum amount that customers can send through its retailers.

Before the launch of thumbprint recognition, users could send or receive an upper limit of PKR15,000 ($150) per month though Easypaisa retailers. Now, secured by biometrics, Easypaisa raised that limit significantly to PKR50,000 per month.

Easypaisa said the addition of a thumbprint means retailers can ensure that a customer’s Computerised National Identity Card (CNIC) is neither expired nor blocked by Pakistan’s government.

More than 20,000 out of 75,000 Easypaisa retailers are equipped and trained for biometric verification to transfer and receive funds, with more retailers being added.

“Easypaisa’s higher money transfer limits will address a growing segment of the market who want to send higher amounts, hence increase customers’ reach and trust, thus helping in tapping the true potential of branchless banking industry in Pakistan,” said Muhammad Yahya Khan, head of Easypaisa.