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57510
Public Disclosure Authorized
Public Disclosure Authorized
Public Disclosure Authorized
MOBILE MONEY SUMMIT 2010
Unleashing the Power of Convergence to
Advance Mobile Money Ecosystems
Piya Baptista and Soren Heitmann
Public Disclosure Authorized
Written by Piya Baptista and Soren Heitmann Designed by Alison Beanland © 2010 IFC and the Harvard Kennedy School ACKNOWLEDGEMENTS This report draws heavily on the experience of speakers and participants in the third annual GSMA Mobile Money Summit, co-organized by IFC, CGAP, and the UK Department for International Development, held May 24-27, 2010 in Rio de Janeiro, Brazil. In particular the authors would like to thank various speakers and industry experts for generously sharing their time and insights through in-depth interviews during and after the summit. The authors would like to thank Andi Dervishi, Arata Onoguchi, and Ian Larsen for their strategic guidance and input into this report. The authors would also like to thank the Harvard Kennedy School’s Beth Jenkins for her careful review, substantive input and editing of various drafts as well as her ongoing dedication to this project. This report would not have been possible without the institutional and financial support of IFC and the Government of Netherlands. All quotes and content for this report are drawn from conference sessions, working groups, speaker interviews and presentations during the Mobile Money Summit 2010. Material from other sources is referenced in the endnotes. RIGHTS AND PERMISSIONS The material in this publication is copyrighted. Quoting, copying, and/or reproducing portions or all of this work is permissible using the following citation: Baptista, Piya and Soren Heitmann. 2010. “Unleashing the Power of Convergence to Advance Mobile Money Ecosystems.” Washington, DC: IFC and the Harvard Kennedy School Photographs © GSM Association; Digicel; Zain Zap; MTN; Roshan; YellowPepper, O2
MOBILE MONEY SUMMIT 2010 Unleashing the Power of Convergence to Advance Mobile Money Ecosystems Piya Baptista and Soren Heitmann
Defintions and Acronyms Used in this Report
Acronyms
AML: Anti Money Laundering G2P: Government to Person MFI: Microfinance Institution
B2B: Business-to-Business KYC: Know Your Customer m-wallet: Mobile Wallet
CFT: Combating Financing of Terrorism MNO: Mobile Network Operator NFC: Near Field Communication
e-money: Electronic Money m-money: Mobile Money P2P: Person-to-Person
Definitions1
Agent: A person or business that is value is typically stored in a microprocessor regulators, international financial institutions
contracted to facilitate transactions for users. chip embedded in a plastic card or and donors, and even civil society
The most important of these are cash-in and “smartcard.” On the other hand, network organizations.
cash-out (i.e. loading value into the mobile based products use specialized software
money system, and then converting it back installed on a standard personal computer for Mobile Payment: A movement of value that
out again); in many instances, agents register storing the “value.” The loading of value is made from a mobile wallet, accrues to a
new customers too. Agents usually earn onto the device is akin to the withdrawal of mobile wallet, and/or is initiated using a
commissions for performing these services. cash from an ATM, and the product is used mobile phone. Sometimes, the term “mobile
They also often provide front-line customer for purchases through a transfer of value to payment” is used to describe only transfers to
service—such as teaching new users how to the merchant’s electronic device. pay for goods or services, either at the point
initiate transactions on their phone. Typically, of sale (retail) or remotely (bill payments).
agents will conduct other kinds of business Float: The balance of e-money, physical cash,
in addition to mobile money. The kinds of or money in a bank account that an agent Mobile Money Provider:4 Any institution
individuals or businesses that can serve as can immediately access to meet customer that plays the lead role in a mobile money
agents will sometimes be limited by regulation, demands to purchase (cash in) or sell (cash deployment. In this report, “mobile money
but small-scale traders, microfinance out) electronic money. provider” refers to MNOs, banks or third
institutions, chain stores, and bank branches parties that provide mobile money services.
serve as agents in some markets. Some Know Your Customer (KYC): Rules related
industry participants prefer the terms to AML/CFT which require providers to carry Mobile Money Transfer: A movement of
“merchant” or “retailer” to describe this out procedures to identify a customer. value that is made from a mobile wallet,
person or business to avoid certain legal accrues to a mobile wallet, and/or is initiated
connotations of the term “agent” as it Liquidity: The ability of an agent to meet using a mobile phone.
is used in other industries. customers’ demands to purchase (cash in) or
sell (cash out) e-money. The key metric used Mobile Wallet (m-wallet):5 An account that
Anti Money Laundering/Combating to measure the liquidity of an agent is the is accessed using a mobile phone. A mobile
Financing of Terrorism (AML/CFT): A set sum of their e-money and cash balances (also money provider can offer a wide range of
of rules, typically issued by central banks, that known as their float balance). services to facilitate financial transactions via a
attempt to prevent and detect the use of mobile wallet. These services could include
financial services for money laundering or to Interoperability: The ability of users of remittances, person-to-person money
finance terrorism. The global standard-setter different mobile money services to transact transfers, bill payments, proximity payments,
for AML/CFT rules is in the Financial Action directly with each other. Given the technical, airtime top up, loan repayments, etc
Task Force (FATF). strategic, and regulatory complexities that
enabling such transactions would entail, no Unbanked: Customers, usually poor, who do
Cash in: The process by which a customer mobile money platforms to date are fully not have bank accounts or transaction accounts
credits his account with cash. This is usually interoperable with each other. However, at formal financial institutions.
via an agent who takes the cash and credits many mobile money services allow users to
the customer’s mobile money account. send money to non-users (who receive the Under-banked: Customers who may
transfer in the form of cash at an agent). have access to basic transaction accounts
Cash out: The process by which a customer offered by formal financial institutions, but still
deducts cash from his mobile money account. Mobile Banking: When customers access a have financial needs that are unmet or not
This is usually via an agent who gives the bank account via a mobile phone; sometimes, appropriately met. For example, they may not
customer cash in exchange for a transfer from they are able to initiate transactions. be able to send money safely or affordably.
the customer’s mobile money account.
Mobile Money (m-money): A service in
Electronic Money (e-money):2 Electronic which the mobile phone is used to access
money is defined as a stored value or prepaid financial services.
product in which a record of the funds
or value available to the consumer for Mobile Money Ecosystem:3 Networks of
multipurpose use is stored on an electronic organizations and individuals that must be in
device in the consumer’s possession. place for mobile money services to take root,
This definition includes both prepaid cards proliferate and scale up. They are
(sometimes called electronic purses) and characterized by interdependence and
prepaid software products that use computer coordination among any number of
networks (sometimes called digital cash). In actors—such as MNOs, banks, airtime sales
the case of card-based products, the prepaid agents, retailers, utility companies, employers,
Table of Contents
IFC FOREWORD 4
PREFACE: THE OCCASION FOR THIS REPORT 5
SECTION 1: STRATEGY 7
SECTION 2: MARKETING 13
SECTION 3: OPERATIONS 17
SECTION 4: GROWTH 23
LOOKING FORWARD 27
APPENDIX 1: MOBILE MONEY SUMMIT 2010 AGENDA 29
APPENDIX 2: MOBILE MONEY TRACKER 32
APPENDIX 3: ENDNOTES 34
APPENDIX 4: USEFUL REFERENCES 35
APPENDIX 5: LIST OF INTERVIEWEES 36
MOBILE MONEY SUMMIT 2010 3
e 2010 Mobile Money Summit marked an important moment in the evolution
of the mobile financial services ecosystem. No longer is mobile money an enticing
possibility or an unproven concept. In the two years since the first summit, mobile
money has provided millions of people around the world with access to finance,
and demand continues to increase.
Kent E. Lupberger
Over the next two years, the number of people with access to a mobile phone but
Senior Manager,
Telecom and Information not to traditional financial services is expected to grow from one billion to 1.7
Technology, billion, and Mobile Network Operators (MNOs) are poised to earn $7.8 billion in
Global Infrastructure & Natural direct and indirect revenues from more than 350 million clients.
Resources Department,
International Finance Whether it is for paying salaries, reimbursing suppliers, or sending remittances home
Corporation from abroad, mobile money is allowing people to conduct transactions at lower cost
and with greater efficiency than physical transactions. With mobile money, users
are moving out of cash-based informal systems and are fully participating in the
formal economy, making it a key way to improve livelihoods.
Clearly, mobile money is proving its potential.
But scaling up the industry to meet demand requires a deep understanding of
money, individual market nuances, stakeholders, strategies, and roadblocks to
success.
e Mobile Money Summit 2010 was convened to help the industry better
understand how the ecosystem has grown and how each of these factors affects
mobile money’s role in developing a larger e-money economy: one in which cash
wallets are replaced with mobile wallets and other electronic payment instruments.
To continue its growth and begin to fulfill the promise of an e-money economy,
industry stakeholders must work together to unleash convergence, drive customer
acquisition, and refine enabling technology. Mobile money must have a clear appeal
to consumers, the public sector, and the private sector.
e Mobile Money Summit 2010 identified a number of key lessons for all of the
industry’s stakeholders. Primary among these was that mobile money’s development
value rests in its ability to facilitate financial sector inclusion. To do so will require
financial institutions and MNOs to work together with regulators on a
country-by-country basis. Providers will need to introduce basic mobile money
services where they do not already exist and foster the consumer’s appetite for more
sophisticated services. Effective distribution networks must be developed in order
to reach critical mass in the industry.
IFC has produced Unleashing the Power of Convergence to Advance Mobile Money
Ecosystems to capture these and other key lessons learned during the Mobile Money
Summit 2010. e report serves as a valuable resource to anyone who seeks to
understand the state of the mobile money industry – or to anyone working to grow
the industry further, a goal shared by IFC and the entire World Bank Group.
4 MOBILE MONEY SUMMIT 2010
The Occasion for this Report
T
his report is written on the occasion convincing is needed of the mobile money
of the third Mobile Money opportunity. e Rio Summit brought
Summit, held May 24-27, 2010 in together 58 speakers and 643 participants
“Mobile money
Rio de Janeiro, Brazil. e discussions at from 63 countries. Approximately 51%
sustainability can be
this year’s summit reflect the evolution in of attendees were senior management.
the mobile money industry since the first As in previous summits, the participants achieved through the
summit was held two years ago. As represented every sector of the mobile development of the
GSMA Mobile Money Director Gavin money industry—including financial full ecosystem but
Krugel stated, “We have evolved from service institutions, mobile network must be done jointly:
hype in 2008 to regulatory and other operators (MNOs), development organ- banks, governments,
challenges in 2009 to a deeper level of izations, technology vendors, regulators MNOs, merchants,
conversation based on real experience in and academics. regulators.”
2010.” is experience is based on an e Mobile Money Summit 2010 Report George Held, Group Marketing
increase in the number of mobile money aims to provide readers with a high level Director, Zain
deployments worldwide from 60 in 2008 summary of the key discussion points and
to 120 in 2009 to 160 as of August 2010. takeaways from this year’s conference. It is
Of these 160 deployments, 73 are live and based on the main conference proceedings
87 are expected to go live in 2010 (see on May 25 and 26, interviews with 23
Mobile Money Tracker on pages 32-33). speakers and other experts during and
is increase in the number of mobile after the conference, and on pre- and post
money deployments, as well as the conference events, namely the Mobile
continued diversity of speakers and Money for the Unbanked Working
participants at the Mobile Money Group on May 24 and the Leadership
Summit, indicate that no further Forum on May 27. e report explores
MOBILE MONEY SUMMIT 2010 5
E-money: Setting the Electronic Money Context in this Report
Mobile money services are financial individuals to engage the formal an electronic transaction. As retailers
services accessed via a mobile phone. financial system through electronic and individuals use and accept e-money,
The mobile phone is the newest of many transactions. it will become more common and more
vehicles used to access financial services. However, the mobile phone is useful in the marketplace and decrease
Credit cards are a well-established what makes mobile money services the need to cash-in or cash-out.
mechanism for electronic payments, revolutionary. Mobile money describes this broad
and it has been possible to send money Mobile phones provide individuals a collection of financial services that are
orders since the telegraph. Current convenient access point to financial accessed by mobile phones, enabling
mobile money deployments provide services, permitting the user to initiate individuals to spend, accept, store and
person-to-business electronic transactions from anywhere transfer electronic money. Mobile money
payments, like and send them anywhere, including services will soon serve the breadth of
purchasing air time other mobile phones. More significantly, today’s daily financial transactions,
top-up, or international the money used through mobile money potentially making mobile phones the
person-to-person services is fungible so that someone primary access point for daily economic
remittance services, for can loan a friend lunch money, for transactions and electronic money
example. These services initiate an example, in a way that credit cards the primary means of settling those
electronic transaction that is functionally cannot possibly do. Because the store transactions.
similar to the act of swiping a credit of value is maintained and potentially
card in a store or sending money with spent or re-sent anywhere, this describes
Western Union. All these services enable electronic money (e-money), not simply
select themes, practices and challenges to divided into four sections: strategy,
unleash the full potential of mobile marketing, operations and growth. Each
money for the benefit of consumers section presents one to two questions
worldwide—the banked, the unbanked, and insights drawn from the discussions
and the under-banked. e report is at the Rio summit. ese include:
SECTION KEY QUESTIONS
Strategy • How do we unleash the power of convergence?
• What is the recipe for launching and sequencing services?
Marketing • How do you drive customer acquisition and usage?
Operations • How do you develop and implement an optimal agent network strategy?
• How does technology enable a successful mobile money deployment?
Growth • How can we accelerate the acceptance of mobile money services?
Previous Mobile Money Summit Reports new mobile money industry marks a
focused on ‘developing’ and ‘accelerating’ critical, powerful point of convergence
mobile money ecosystem development. between banks and MNOs. In his
is report focuses on ‘deepening and opening remarks, Krugel asked
broadening’ mobile money ecosystems. participants to “unleash the power of
Cross-sector partnerships among MNOs, convergence.” In other words, to think
banks and others are leading to the about what we can do together to jointly
emergence of deeper, more inter- target new market segments. “It’s not you
connected networks and new entrants are or us,” he says, “it is us together that will
broadening these networks. Partnerships create a market for mobile money.” By
between MNOs and banks in particular joining forces, the telecommunications
facilitate the development of the mobile and banking industries have the power to
money industry as a whole, in a way that change the way people across the globe
these individual industries may not easily transact, and especially to address the
accomplish. Cooperatively growing this financial needs of the poor.
6 MOBILE MONEY SUMMIT 2010
1 STRATEGY
Strategic Partnerships: The key to unleashing the power of convergence is
strategic partnership between banks and MNOs. Together, these partners have
the infrastructure capability and institutional know-how to meet regulatory
challenges and successfully launch a mobile money service. But clear roles and
dedicated leadership are required for a mutually beneficial relationship.
Product Sequencing: Each market has its own demands and constraints,
implying there’s no single recipe for launching a mobile money service, or even a
clear answer for what that service should be. A successful service will meet
customer needs and demand, but requires a deep knowledge of the market.
“MNOs have the customer base and understand mass consumer behavior. Banks want
to go down-market and tap this wider opportunity utilizing more cost-effective
methods of service delivery. With the aligned objectives of increasing access to financial
services at lower cost, MNO-bank partnerships will be an underlying theme for the
next five years.”
RIZZA MANIEGO-EALA, PRESIDENT, G-XCHANGE INC.
MOBILE MONEY SUMMIT 2010 7
1 STRATEGY
How do we unleash the power of convergence?
❚ Partner for Power
“Mobile money has the potential to impact scale. “e role of the financial institution
billions of people globally,” observes George gives the regulator comfort,” explains Held,
Held, Group Marketing Director, Zain. making them more likely to come to the
is potential lies at the intersection table when approached by an MNO-bank
of modern telecommunications and partnership than an MNO alone.
traditional banking. is is the power of Partnership with financial institutions can
convergence: through union between these also help expand services and reach new
industries, mobile money can reach customer segments. In the Philippines, for
emerging and developed markets alike with example, Globe Telecom’s mobile money
tremendous opportunities in the form of platform provided by its wholly-owned
new services for greater financial inclusion. subsidiary, G-Xchange Inc., has enabled
“What’s the best way It is no coincidence that all successful millions of Filipinos living abroad to send
to get a mobile money mobile money deployments in the world money home to GCASH customers
today involve an MNO and a financial though partnerships with PayPal, BICS,
service off the ground?
institution. ese strategic partnerships Western Union, Xoom and numerous
Making sure you have have emerged as best practice for other large remittance companies. Rizza
the right ecosystem unleashing the power of convergence. Maniego-Eala, President of G-Xchange
partners behind you.” Partnerships combine know-how when Inc., describes such partnerships as huge
engaging the regulator and capacity to scale assets for the growth and success of mobile
Amit Mattatia,
service offerings. Zain’s Zap service boasts money. ese partnerships create the
President & CEO, Trivnet
over 12 million customers6 in Africa and essential components of the foundation
the Middle East and partnerships with that will allow more financial services to be
CitiBank and Standard Chartered were key offered to mobile subscribers.
factors enabling this level of international
❚ Challenges for Partnerships
ere are two fundamental components regulator’s help and support must be
of a successful mobile money sought early on to identify problems and
deployment: infrastructure and regu- find solutions, or else it will be impossible
latory approval. “If your mobile money to get the mobile money deployment
strategy wants to cover a mobile area and off the ground. MNO-bank partnerships
your network doesn’t, that’s a conflict,” are a perfect match to address mobile
says Koji Ono, Chief Strategy Officer for money needs, but both must be fully
Robi. e same type of conflict can arise committed to the project’s success. e
when trying to launch a service that challenges will push partners into
doesn’t meet compliance standards. Being unfamiliar territory and the mobile
compliant is seldom trivial, in part money service itself will likely represent a
because mobile money is so new that divergence from their respective core
regulators have yet to fully codify how business models. Dedication from top
these services need to work. e management is a key factor for success.
8 MOBILE MONEY SUMMIT 2010G-Xchange Inc.’s partnerships
enable G-Cash customers in
the Philippines to receive
money from relatives abroad.
Roles and responsibilities are also may fear competition and back away.
critical success factors. ese need to e required commitment to cooperation
be clearly defined, not only to meet and shared benefit increases as services
regulatory challenges, but also to ensure expand and partnerships grow. For
that the partnership is based on shared MTN Ghana, there are nine partner
risk and shared benefit. Coenraad banks. “It was a challenge to get
Jonker, Director of Community everyone to understand why they
Banking, Standard Bank of South Africa needed to share,” says Bruno Akpaka,
acknowledges that banks may be wary General Manager, MobileMoney, MTN
when approached by an MNO seeking Ghana, “but now everyone understands
to enter the financial services space. If their role” — and this has spelled success
the MNO seeks to provide mobile for the partnership, which expects over
money as a value-added service to 2 million mobile money customers
increase its margin or customer base, the within the first year of deployment. In
bank is ready to help the partnership this example, MTN Ghana led the
succeed. But if the MNO seeks to go partnership due to its initiative, strong
deeply into financial services, the bank brand and customer base among a
A Strong Partnership Solves Regulatory Challenges
The Méditel-BMCE Bank partnership included requiring that only bank AML concerns, but also to improve the
identified a strong opportunity for mobile employees register new users and that service offer.
banking services in Morocco, with 31% of cash-in transactions happen only at bank Thanks to strong commitment and
the population banked and 76% using branches. Banks needed to have cooperation from both Méditel and BMCE
mobile phones as of 2008. A careful study governance control over IT infrastructure, top management, the parties managed to
of the market found demand for money imposing requirements on the overcome these regulatory challenges by
transfer, bill payment and airtime top-up partnership’s business model. Finally, signing an “Intermediary in Banking
services. banks were responsible for payments Operations” mandate. This mandate
However, initial regulatory requirements accounting, but SIM cards and phones allows Méditel to commercialize mobile
posed a significant hurdle: money transfer were inadequate identifiers. money using its own agent network to
services needed to be executed in Early on, Méditel and BMCE shared the collect money from customers on behalf
dedicated premises that included guards project with the central bank to ensure of BMCE.
and security cameras. With Méditel’s agent regulation was addressed in the scope of
network consisting of small grocers, these the project. Many working sessions
prohibitive requirements meant no allowed the partners not only to comfort
widespread deployment. Other hurdles the central bank about security, KYC and
MOBILE MONEY SUMMIT 2010 91 STRATEGY
largely unbanked population. Strong MNO, a third party may be best
leadership is critical, and this role must equipped to lead, such as in Ecuador
also be decided. But who leads is highly where YellowPepper brings a host of
dependent on the market and the assets mobile money ecosystem stakeholders
each partner brings to the table. While and customer segments together under
an MNO might lead in a market like the tri-branded MONY service.
Ghana, a bank might lead in a country Regardless of who fills the role, uniting
where the ATM network vastly outstrips under strong and dedicated leadership
an MNO’s agent network. In settings is necessary for stable, beneficial
without a clearly dominant bank or partnership.
What’s the recipe for launching and
sequencing services and products?
❚ The Killer Application
ere is no recipe for launching or target unbanked populations or those
sequencing mobile money services. with low financial literacy, as these
However, the ingredients are well segments are less likely to demand
known: success is predicated on a formal financial tools or be familiar with
thorough understanding of the market their use. Herein lies the challenge
and target customer, a positive of identifying the so-called killer
regulatory environment, and the right application. But Richard Mwami, Head
partnerships. Knowing each country’s of MobileMoney for MTN Uganda,
needs and regulatory nuances is critical offers three basic principles for guidance:
to identifying the right opportunities, think big, start small, and scale fast. e
says Hesham Shawki, Chief Innovation right sequencing will present itself once
and Partnership Officer for Orascom initial services take off, says Aletha Ling,
Telecom Holdings, but the use case is Executive Director and Global Head of
what ultimately drives and defines Business Development for Fundamo:
success. e problem with the use case “Your customers will surprise you, not
is that the customer doesn’t always know just on volume, but on demand for more
what they need or what they want to do services.”
when it comes to mobile money services.
is can particularly trouble services that
10 MOBILE MONEY SUMMIT 2010MTN agents interact
face-to-face with customers
to explain the product and
service offering.
❚ Think Big
Mobile money services are generally offer numerous different services, but
categorized in terms of the transaction there’s no correct sequence or starting
stakeholders: person-to-person (P2P) is point; the only requirement is that the
perhaps the most basic and currently the service meet the customer’s needs. Know
most common. But many possible the customer, know how they spend
applications and permutations exist their money, and how they want to
among governments, businesses, spend their money. is can also mean
customers and all stakeholders within the knowing how a customer wants to
ecosystem, both horizontally and receive or send money. For Zain this
vertically. Opportunities for mobile meant approaching Coca-Cola in
money exist throughout the customer Tanzania—whose big, red trucks
spectrum, from the base of the pyramid advertised a driver carrying cash along
on up, says Roberto Rittes, Director for insecure, rural routes—and asking, “Do
Oi Paggo, with products ranging from you have a cash collection problem?”
traditional remittance services to With drivers receiving payments using
microinsurance or government benefits mobile money, Coca-Cola’s problem
payments. found a solution and Zap stimulated the
An expanding deployment will likely broader ecosystem. Knowing how
Introducing Mobile Money Services in Diverse Markets
In Kenya, Safaricom piloted M-Pesa as a a critical customer mass, Safaricom is necessary for creating a rich mobile
service for microfinance borrowers to now addressing the demand for savings commerce experience. Going beyond
repay loans, but discovered that users products frequently seen in unbanked “2D” services is the sort of innovation that
wanted remittances. M-Pesa refocused markets. Ramsden believes is necessary to really
to meet this stronger demand and quickly Developed markets need a different excite customers and stimulate demand in
gained over 9 million customers. Safaricom value proposition. O2, for example, developed markets, where people are
is now expanding its offering by partnering targeted London to pilot its O2 Wallet, highly banked and already use numerous
with Equity Bank to launch M-Kesho, an which combined three industries by placing financial services. Micro-savings accounts
interest-bearing micro-savings account held an Oyster NFC transport card and a aren’t going to excite customers in London,
by Equity Bank and offered to M-Pesa Barclay’s credit card into a NFC enabled and mobile wallets currently lack demand
clients. M-Kesho will be a powerful draw mobile phone. This created the “3D” in Kenya. The right mobile money service is
for customers looking for alternatives to experience that Andy Ramsden, Head of the one that fits the market and is
“saving under the mattress.” First reaching Payment Products at O2, describes as introduced at the right time.
MOBILE MONEY SUMMIT 2010 111 STRATEGY
Coca-Cola wanted their drivers to everywhere, and Olga Morawczynski,
receive money made it an easy entry, says Financial Literacy Project Manager at
George Held, Group Marketing the Grameen Foundation’s AppLab,
Director, Zain, who advises: remember reminds us that the poor are active
corporate customers too, not just money managers too, who show
end-users, when looking for market particular demand for savings products.
opportunities. But opportunities are
❚ Start Small
e first service should be one that Officer at Orascom Telecom Holdings,
enhances the provider’s image or bottom and “once you have gained your
line. It does not necessarily need to be consumers’ confidence, and they are
complex or game-changing. MTN hooked to a simple but useful product,
Uganda introduced a straight P2P they will demand more from your
money transfer service to bring people technology.” Prompted by this demand,
onto the platform, says Richard Mwami, the evolution of a company’s mobile
Head of MTN MobileMoney in financial services roadmap for the
Uganda. For now, they’re staying small, unbanked could evolve as follows:
waiting for a critical mass of subscribers sophisticated payments; money storage
and double-digit penetration rates or accumulators; interest-bearing savings
REGULATORY TAKEAWAYS
• Who’s accountable for
regulatory compliance: before offering more services. Rapidly products; access to credit; and finally
the bank or the MNO? introducing new products can over- insurance. However, a mobile money
Different environments whelm customers or risk diluting the strategy targeting a financially
have different mandates.
In Mexico, banks are
service quality as managerial capacity sophisticated customer segment or
held accountable; in the may be forced to address competing developed markets may target
Philippines, the MNO must demands across multiple new market convenience services and develop in a
see that agents follow segments. “Do a few things, but do totally different direction. In Shawki’s
protocol. The regulator
must clearly articulate
them exceptionally well, as many opinion, real success will happen at the
which party is ultimately customers don’t tolerate complexity and crossroads of both segments. Again,
responsible in order for lack of focus,” says Hesham Shawki, there is no one recipe for product
partners to define clear Chief Innovation and Partnership sequencing.
roles and responsibilities.
❚ Scale Fast
“Achieving critical mass is difficult—but government-to-person (G2P) strategy
it’s the way to achieve success,” says offers access to a large customer base. A
Rittes, who recommends establishing critical mass is just the start. “You may
partnerships with large merchants first, get customer uptake with a given
thereby providing customers with more product; but you may not get the
opportunities to use the product at the volume you really need without going
earliest stages. Indeed, focusing on beyond basic product offerings,” says
merchant buy-in is one way to scale a Mark Pickens, Microfinance Specialist
mobile money operation quickly for CGAP. Spanning customer segments
because if the merchants are convinced, and stakeholders is a crucial next step.
consumers will use and adopt e-money. True scale is marked by integrating the
Or in the case of Roshan, focusing on a entire mobile money ecosystem.
12 MOBILE MONEY SUMMIT 20102 MARKETING
Key Message: Know the customer to craft a message that expresses the
value-add of a service in a way the customer values. Then drive acquisition
and usage with a strong marketing campaign.
“Consumers today demand cash because it’s what they are used to. We have to help
them understand that cash is not always the only option and perhaps not always the
best option. It is our role to educate consumers that mobile money is safer, more secure
and more convenient.”
ZAHIR KHOJA, EXECUTIVE DIRECTOR OF MOBILE COMMERCE, ROSHAN
MOBILE MONEY SUMMIT 2010 132 MARKETING
How do you drive customer acquisition
and usage?
❚ Know the Consumer: Sending the Right Message
Understanding the market is critical where people already do mobile airtime
for identifying strategic product transfers, so they are accustomed to
opportunities, but to drive uptake and sending something of value via a mobile
usage within the market, you must know phone. is provides a lever for
the customer. is is a necessity for marketing P2P-type services. Under-
successful marketing and strategy, standing the customer goes beyond
echoed repeatedly at the Rio Summit. providing the right service; it means
As a speaker put it, “You have to know knowing how to successfully
your customers. If you do not know communicate with the customer by
“The final polish that them, you cannot do business with offering that service in a way that
them.” resonates with what the customer already
converts a diamond
Knowing what potential customers in the understands, and ultimately, what he
from a rough stone market already do can reveal strong levers wants to accomplish.
to a precious gem in for driving adoption of mobile money Use-based marketing messages have
the eyes of consumers services. In Kenya and Uganda, for proven successful for many mobile
lies in direct and example, Bruno Akpaka, General money services precisely because they
Manager of MobileMoney for MTN appeal to what a customer already wants
effective marketing,
Ghana, explains that sending money back to do. Simple ideas, like MTN Uganda’s
once fundamental home is already a deep cultural “now you can send money to your
elements such as characteristic. Remittance services are parents,” offer a ready solution for a
organization of the immediately understood, and relatively customer seeking remittance services
company, distribution little effort needs to be spent educating without dwelling on the service itself.
the customer about something they However, in many circumstances
points and a certain
already do, already know and already potential customers may be unaware of
regulatory framework value. By comparison, in many West what they can do, making lifestyle
are in place.” African countries, he says, money may be messaging a better approach. Yellow
remitted, but without the same cultural Pepper’s ad campaign offers customers
Rizza Maniego-Eala, President,
G-Xchange Inc. expectations: “It’s a help, but money “more time for yourself,” through services
transfer will not be the main driver in that provide greater convenience by
these markets. Each market needs to limiting the time spent waiting in line at
identify what will be the main driver.” the bank or making trips to the utility
Knowing these types of cultural norms is company to pay bills. e advantages
instrumental in effecting customer uptake of these conveniences are readily
and demand for mobile money services. understood. It’s a message that resonates
For example, Haridas Nair, Area Vice with customers, and for many, “more
President of mCommerce at Sybase 365, time for yourself ” means more time to
Inc., points to Latin American markets, earn money. For Roshan’s M-Paisa in
14 MOBILE MONEY SUMMIT 2010Afghanistan, although the service also make a purchase or another possibly
offers time savings benefits—and even time-consuming transaction, you have
safety benefits by enabling customers to more time to stay at home. Lifestyle
potentially avoid difficult or dangerous benefits resonated strongly with M-Paisa’s
transit—initial marketing campaigns that customers: by staying home and spending
focused explicitly on ideas of convenience time with his family, a father is seen as
fell short. “Marketing convenience is being a better father, explains Khoja.
difficult in Afghanistan,” says Zahir e successful marketing campaign
Khoja, Executive Director of Mobile communicates the service in terms of
Commerce and Product Marketing for what the customer already values, and is
Roshan. “e population has never characterized as providing something the
experienced it. ey do not know what it customer already desires.
tastes like.” But if you’re not going out to
❚ Marketing, Marketing, Marketing
e right message will grab the and usage is critically driven by
customer’s ear, but this is only a piece of traditional marketing, and lots of it.
the puzzle: whether broadcasting that Branding is one of the first issues to
message (above-the-line marketing) or address in developing a strong marketing
reaching out to individuals (below-the- campaign: the customer must trust the
line marketing), customer acquisition message and the product. e strongest
Differentiating Your Product From the Competition
A Zain TV advertisement shows a proposition with a message that resonates out to his mother, who is working in the
payments evolution from shiny shells to with the customer. That message should garden back home. Clearly cash doesn’t
plastic cards, stating, “throughout history, also help distinguish the product from the fly: M-Pesa is better. Different services
money has changed hands and forms.” competition. Although multiple operators and markets will have different value
The next change comes in the form of may offer mobile money services, today, propositions, but articulating why mobile
Zap, bringing a “revolution in commerce.” the real competition is cash. M-Pesa’s Send money is better than cash is both a
The message articulates that Zap is just Money Home campaign differentiates compelling message and one that
another form of money, but better itself from cash with a TV spot showing a promotes the broader adoption of
money. A marketing campaign needs to young man in an office sending money e-money.
communicate the product’s value home: cash bills fly from his cell phone
MOBILE MONEY SUMMIT 2010 152 MARKETING
brand in a partnership should lead in the Uganda 1,000 existing agents bolster its
target market, although when multiple overall sales force.
partners are strong in the market, a Promoting ongoing service use is as
co-branded mobile money service may critical as customer acquisition.
provide a better vehicle. And while a YellowPepper encourages customer
brand name may help bring a customer buy-in up front by charging a
to the table, the technology device or registration fee that preloads an
REGULATORY TAKEAWAYS
• Customer acquisition may platform itself is the ultimate custodian equivalent amount of airtime. By
be accelerated with of the marketing campaign: it is the first putting something at stake, the customer
proportional KYC experience a customer has upon is incentivized to try the service at least
regulation. Unbanked and
registration. For many customers in the to get her money’s worth. Loyalty
under-banked customers
may face financial exclusion mobile money space, a complex user schemes and airtime bonuses also
because they lack ID cards interface can immediately undermine promote ongoing usage, as do ancillary
or the ability to verify IDs customer uptake and belief in the incentives, like micro-health and burial
due to absence of faxes,
product. insurance coverage that YellowPepper
photocopiers or even
electricity. This segment Nontraditional marketing channels customers receive with their initial
engages in low-risk can often be very effective ways to reach registration fee. However, incentivizing
transactions, often below new mobile money customers, where the players in the ecosystem can have
$20. Regulators need to
target market is more receptive to significant knock-on effects for
consider alternative KYC
requirements for these below-the-line marketing. For customers stimulating customer uptake and usage.
groups, allowing further who may be illiterate, who lack any For example, if wholesale suppliers offer
customer uptake while experience with formal financial tools, or shopkeepers discounts or inventory
keeping risks low.
who simply live in rural areas difficult to bonuses when making purchases using
• For providers, incentivizing
reach with broadcast marketing, direct mobile money, these small shops will
an agent network as a
marketing and sales force is sales engagement is the most successful encourage mobile money uptake among
also a KYC issue. It must be channel. MTN Uganda, for example, their customers simply by providing the
done properly, to minimize credits its direct sales model with its ability to transact using mobile money
perverse incentives: agents
soaring growth. Over 2400 trained sales services. is is the ultimate marketing
eager to earn a new
customer commission may agents travel significant distances into tool: providing customers more
disregard KYC requirements, rural areas to promote mobile money opportunities to buy, spend and send
presenting a risk far greater and educate communities. By focusing using e-money. “We’re introducing a
than merely signing up
on below-the-line methods, MTN new form of money into society:
frivolous accounts.
Uganda achieved just short of one electronic money,” says Andi Dervishi,
million customers in its first year. MTN Practice Lead, Electronic Payments and
Ghana employs other below-the-line Marketplaces, IFC, “and every time such
tools, such as viral marketing and an endeavor has been attempted, success
demonstration effects, by promoting depended on whether sellers or
service use and word-of-mouth merchants accept the new money as
advertising among employees, their payment. Marketing that will drive
families and existing customers. acceptance by one seller can trigger
However, one of the strongest adoption by a much larger number of
opportunities for personal engagement buyers. Merchants influence consumer
is leveraging existing agent networks to behavior and are the ‘queen bees’ of a
both sell and aggressively promote transacting community.”
mobile money services: for MTN
16 MOBILE MONEY SUMMIT 20103 OPERATIONS
Agent Network Development: Agents are the face of the mobile money service to
the customer, playing the vital roles of customer education, sign-up and transaction
support. A customer’s interaction with an agent creates the trust that is critical to
adoption and use. Building a trustworthy, ubiquitous, liquid and profitable agent
network is key to a successful deployment.
Enabling Technology: The technology platform is what enables mobile money
operations to succeed: processing transactions, mediating regulatory requirements and
binding partners and customers together. Technology will also help spur NFC-integrated
phones and broader e-money ecosystems.
“We don’t use the term ‘agents,’ but ‘merchants.’ The reason we believe the merchant
is very important is the sustainability of the business model. If a person sells orange
juice or magazines, and at the same time he is using mobile payments as a means of
payment, it makes a sustainable business versus if his job is just to perform cash-in and
cash-out.”
GEORGE HELD, GROUP MARKETING DIRECTOR, ZAIN
MOBILE MONEY SUMMIT 2010 173 OPERATIONS
How do you develop and implement an
optimal agent network strategy?
❚ Build a Trustworthy, Ubiquitous Network to Achieve Uptake
If customers, especially the poor, are to goods companies. In others, mobile
adopt mobile money services, they must money providers need to build
trust that their money is safe. Selecting relationships from scratch with
trustworthy agents who can educate independent “mom and pop” shops or
customers about the value of shifting from select agents within existing mobile phone
cash to e-money is key. is process airtime distribution networks. GSMA’s
begins when agents sign up customers research indicates that successful operators
and continues when they facilitate grow agent networks in phases.7 In the
transactions. Easy access to agents for first phase, an adequate number of agents
these services helps customers to need to be recruited throughout the
experience the principal benefit of mobile market to support launch. In the second
money: convenience. Types of agents, phase, resources need to be redirected
however, vary by country. In some from agent recruitment to customer
countries, it is easy to leverage the large acquisition. In the third and final phase,
retail footprints of supermarkets, numbers of agents and customers need to
pharmacies and fast-moving consumer grow in parallel.
“If a person wants to ❚ Agent Liquidity and Profitability are Key to Customer Trust
cash out his salary and Mobile money providers should pay electronic money for daily transactions.
the agent does not strong attention to how their agents is reality makes it important for agents
have the money, the manage liquidity to ensure sufficient to have sufficient cash on hand.
reserves of e-money are available for Ultimately, as Serge Elkiner, President of
SMS message on his
cash-in transactions, such as sending YellowPepper, notes, “enabling customers
phone has no value. remittances, and physical cash for to use the system not only to cash-out, but
Agent liquidity is cash-out transactions, such as receiving also to make payments and purchases, is a
paramount to the remittances. An agent’s inability to way to address the liquidity challenge.”
success of mobile perform these transactions could Agent liquidity and profitability are also
negatively impact customer trust. Richard closely related since maintaining fixed
money.”
Mwami, Head of MTN MobileMoney amounts of cash and e-money reserves, or
Zahir Khoja, Executive in Uganda, notes, “if your customer walks float requirements, comes at a cost. An
Director, Mobile Commerce into the agent, he expects to find agent can face increased operating costs as
and Product Marketing, electronic money and cash. If he cannot a result of frequent trips to the nearest
Roshan find the money, he won’t come back.” bank or other lender to withdraw cash;
Currently, customers in most mobile high interest rates on working capital
money deployments are performing more loans needed to main float; or theft of
cash-out than cash-in transactions since physical cash by employees at an agent’s
there are not many places where they can store. All these factors can eat into an
use their mobile phones to pay with agent’s profit margin. Recognizing that
18 MOBILE MONEY SUMMIT 2010M-Paisa agents in
Afghanistan leverage
Roshan’s partnership
with Azizi Bank to ease
liquidity challenges.
agents in rural areas face bigger challenges and other services to ensure a profitable
in managing liquidity, some mobile agent model require judicious structuring.
money providers are offering higher In general, an agent is likely to stop
commissions for cash-out transactions to offering mobile money services if it’s
compensate these agents for the extra unprofitable. is in turn may lead a
time, effort and money needed to customer to lose trust in mobile money’s
maintain the float. Commissions for reliability.
customer registration, cash-in, cash-out
❚ Agent Training and Management Ensure a Positive and Consistent
Customer Experience
“One must build in the cost of agent an independent company, Top Vision, to
training and management to ensure that train its M-Paisa mobile money agents on
agents continue to adhere to established KYC/AML requirements to ensure
procedures, that the system remains intact, regulatory compliance; branding and
and that customers build and maintain marketing to increase the visibility of the
trust,” says Elkiner. While some providers M-Paisa service and customer foot traffic;
use in-house staff for agent training and and liquidity management to ensure agents
management, others outsource this have sufficient float to maintain a positive
function to third parties. Mobile network and consistent customer experience.
operator Roshan, in Afghanistan, has hired
Approaches to Managing Agent Liquidity Challenges
“There’s limited trust in the banking its preferred agents about the amount of branch, so agents don’t have to travel far
system in Afghanistan today, due to money to be transferred and the locations to convert e-money into cash during high
historical losses. We have one chance to where agents will need to have cash on demand periods. In addition, if an M-Paisa
prove the value to the customer. We need hand. These preferred agents, in turn, agent runs out cash, M-Paisa customers
to build this trust,” says Khoja. Roshan contact other agents in their areas may visit the Azizi Bank branch to convert
relies on a preferred agent approach on regarding expected cash needs. Roshan has their e-money into cash, which is especially
salary disbursement day to ensure that also partnered with Azizi Bank, one of the important on salary disbursement days. In
members of the Afghan National Police country’s largest banks, which has areas where there are no rural bank
and employees of other entities availing of extensive nationwide reach, to ease the branches, Roshan ensures that a strong
M-Paisa’s salary transfer service are able to liquidity burden. About 70% of M-Paisa emphasis is placed on liquidity
cash out. In this approach, Roshan informs agents are within reach of an Azizi Bank management during agent training.
MOBILE MONEY SUMMIT 2010 193 OPERATIONS
• Regulators seeking financial with mechanisms to ensure its own. This approval for a
REGULATORY TAKEAWAYS
inclusion should resist regulating customer integrity, protection network-based license allows
m-money agents in the same way and security. The Philippines G-Xchange Inc. to expand its outlet
as traditional banks, since the exemplifies what can be achieved network faster while taking full
former are often micro and small by progressive regulation. In early responsibility for the KYC/AML
businesses who cannot bear the 2010, the Central Bank of the requirements of its network,
high overhead costs that can stem Philippines allowed G-Xchange continuing to fully comply with
from compliance with complex Inc., Globe Telecom’s m-commerce regulations that will ensure
regulations. Progressive regulatory subsidiary, to extend its remittance financial integrity and the
frameworks balance the ground license to its accredited agents protection of consumers.
realities of branchless banking instead of each agent applying for
How does technology enable a successful
mobile money operation?
❚ The Technology Glue
“Technology is what makes these projects careful consideration, both because it
possible,” says Aletha Ling, Executive shapes the customer experience and
Director, Fundamo. But mobile money because there is relatively little industry
providers are not selling technology; in precedent to guide developers. Mobile
fact, the platform should remain largely money operations need to consider the
transparent to the user. e service applications layer from the outset or risk
platform sits behind the scenes, yet acts alienating customers or limiting future
as the glue that binds the mobile money service offerings. “Many deployments
ecosystem together. Well-established today fall short and do not engage
technology already connects the broader application developers to the extent that
financial system and underpins global they should,” according to David Sharpe,
telecommunications, but two additional Head of Products, Digicel Haiti. “Banks
layers are needed for mobile money and MNOs need to do this, but the level
solutions: first, one to connect finance of thought required for applications that
and telecommunications, and second, an sit on top of mobile money hasn’t gone
applications layer that connects the in.”
customer. is applications layer bears Although attention must be given to
“An MNO as a carrier is an enabler. Google and Apple
provide the platform, but put out to the development
community for applications software. If Apple didn’t have
thousands of applications, it wouldn’t succeed. The MNO
needs to provide applications on top of its platform, too.”
David Sharpe, Head of Products, Digicel Haiti
20 MOBILE MONEY SUMMIT 2010Agents play a key role in
educating customers
about the value of
shifting from cash to
e-money.
the applications layer, the first connective call may fail,” said a speaker, “but a
layer is perhaps more critical: the financial transaction cannot go down.”
technical platform that turns money And this means flawlessly handling
mobile. Here, both regulatory and potentially millions of transactions an
business requirements are major hour, and handling them with absolute
considerations for the platform’s security. “Security is the backbone
technical specifications. Mobile money of mobile money services,” says
solutions are beholden to the same Jean-Pierre Gressin, Head of Alliances
security and reliability mandates as & Partnerships, Oberthur Technologies,
traditional financial services. “A phone and lack of security carries enormous
Integrating NFC into Phones and into the Market
NFC technology started with contactless to integrate the broader e-money ecosystem.
cards and is now moving to fully-integrated Pilots such as Tap and Pay help
mobile phones that will enable the full demonstrate that electronic wallets
range of mobile and financial services that implemented through NFC-integrated
comprise the electronic wallet. ViVOtech, phones have the potential to redefine the
for example, is working to establish these merchant-customer relationship to be more
electronic wallets in the marketplace by convenient, more targeted and more
developing mobile payments, loyalty, personalized. Consumers will benefit by
merchandising and marketing applications having everything in one place, be able to
software for existing and NFC-enabled enjoy an enhanced shopping experience,
mobile devices. By also deploying over making quick payments and seeing lower
750,000 contactless and NFC payment risks associated with loss, theft or fraud.
terminals across 35 countries, ViVOtech Customers may also take advantage of
is providing both the software and personalized in-store offers by tapping their
infrastructure necessary to bring mobile NFC phones to smart posters, which similarly
payments into the retail world. This will benefits merchants, who can engage in
offer consumers numerous payment one-to-one marketing, offer instant,
conveniences and give merchants new individualized offers, and better track
payment and marketing channels. customer loyalty. With networks and mobile
ViVOtech’s wallet software technology money services intermediating these
drove Citi’s Tap and Pay pilot, for example, benefits, operators will see additional
and this is helping to push payment systems revenue sources as NFC-integrated phones
to include and go beyond m-money services and related services take hold in the market.
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