A promising new model is emerging for cross-border remittances with mobile money as both the sending and the receiving channel.
This paper from GSMA draws commercial insights from two early examples in the West African Economic Monetary Union (WAEMU), where member states are socio-economically integrated and adoption of mobile money has been rapid in recent years. These factors make the region a natural starting point for this model. [Read more…]
According to a recent report by the Boston Consulting Group, introducing mobile financial services to the “unbanked” could have a positive effect on more than 2 billion people.
The study named “Socio-economic impact of mobile financial services” also shows that economic inequality in Malaysia could be reduced by five percent and become roughly equivalent to that of Canada today. In the developing world, more than 2.5 billion adults – or approximately 72 percent of the population – are unbanked, meaning they have no access to traditional financial services like banks. At the same time, nearly 2.5 billion people in these same emerging economies have mobile phones. This means that there could be up to 2 billion mobile phone users who are currently unbanked that could be served through mobile financial services. Overall in the five countries covered in the study, mobile financial services has the potential to reduce financial exclusion by five to 20 percent through 2020 and increase GDP by up to five percent. [Read more…]
Visa Inc. today announced that it is acquiring Fundamo, a leading platform provider of mobile financial services for mobile network operators and financial institutions in developing economies. It also announced a new, long-term commercial agreement with Monitise plc (LSE: MONI.L), a leading provider of mobile money solutions for financial institutions in more developed geographies. [Read more…]
World Economic Forum, prepared in collaboration with The Boston Consulting Group.
Despite the broad awareness that mobile financial services can serve as a means for “banking the unbanked” on a global basis, widespread adoption has yet to be achieved, according to the Mobile Financial Services Development Report 2011, a new report released by the World Economic Forum and The Boston Consulting Group. According to the report, to meet the financial needs of underserved populations, most countries—even those that have achieved scale with mobile money transfer—should focus on the flexibility of regulatory provisions for nonbank players, the competitiveness of market structures, and the strengthening of financial literacy skills of individuals.
The report provides a comprehensive analysis of more than 100 variables across 20 countries in Africa, Asia, and Latin America. It measures the critical factors necessary to achieve meaningful scale of mobile financial services and meet the needs of billions excluded from the formal economy, and notes that the adoption of mobile financial services is currently confined to a few countries where, historically, access to financial services has been constrained and the scope of services limited to mobile money transfer. The findings suggest that financial services such as savings, credit, and microinsurance are only now becoming available and that regulatory environments, market competitiveness, and financial literacy of end users all need to be collaboratively addressed before meaningful scale can be achieved.
Countries such as Kenya and the Philippines are among the few covered by the report that have achieved adoption levels of more than 10 percent of the total adult population. A defining characteristic of these countries is a dense network of agents—retail access points where it is possible to register account holders and handle cash transactions. However, as these countries look to achieve scale in mobile financial services other than payments, it will be critical for them to focus on factors such as government disbursements through the mobile platform, the competitiveness of their financial and telecom sectors, and better data collection and monitoring to facilitate “test and learn” approaches.
“Including millions in the formal economy by providing them with tools to transact and save can have strong positive economic and social benefits,” said Marc Vos, a partner in The Boston Consulting Group’s Technology, Media & Telecommunications practice. “But public and private stakeholders must first get the basics right: solid and efficient distribution networks close to the consumer, and regulations that combine openness to innovation with protection of consumers and broader financial stability.”
In terms of the array of enabling factors covered in the report, several countries, such as Brazil and India, demonstrate areas of relative strength when compared with countries that have already achieved scale in mobile payments. The ability to leverage existing agent networks and consumer protection in Brazil may facilitate the development of more complex financial services through the mobile platform. The widespread availability of mobile phones within India, the degree of competition within its telecom sector, and recent regulatory changes may drive dramatic improvements in adoption levels.
Estimates of the levels of adoption of mobile financial services in the 20 countries surveyed were compiled through an analysis of deployments done in collaboration with the GSMA Development Fund. A survey of regulators, conducted jointly with the Alliance for Financial Inclusion, provided data on regulations specific to mobile financial services. Data from a number of secondary sources such as the Consultative Group to Assist the Poor were also integrated into the analysis. The report contains a profile for each country featured in the study, including a summary of the relative advantages and disadvantages within its mobile financial-services ecosystem, as well as an extensive listing of data tables showing results for each variable used in the country profiles. The data set is available for download and can also be analyzed online with other World Economic Forum data sets for deeper and customized analysis.
Some report highlights:
More information: Mobile Financial Services Development Report 2011
Source: Boston Consulting Group (BCG)
Money Transfer Industry Urged to Inter-connect at IAMTN Conference: Luup and Dhasatra Advocate an Open Mobile Money Transfer Ecosystem.
Luup, a mobile financial solutions provider with offices in UAE, Norway and the UK, outlined key success factors for building a seamless remittances ecosystem that includes challenging geographies such as Indonesia. The information was presented at the MTD conference held in Dubai by the IAMTN, the international trade association for the money transfer industry.
According to Saqib Iqbal, Regional Director Asia Pacific for Luup, “Users want cost-effective interconnected money transfer services that they can access from any provider, anytime, anywhere.” He added: “Mobile technology enables such efficient services, yet they depend on co-operation and the building of payments gateways, seamless remittance interconnections and cash-out facilities.”
Indonesia is a particularly challenging geography due to a largely unbanked population spread over hundreds of islands. The proliferation of mobile phones though makes it highly conducive to mobile enabling services. Seizing this opportunity to bring cost effective, real time remittance solutions to its customers, Dhasatra Indonesian Remittance, has joined Luup’s expanding, open mobile money transfer ecosystem.
Luup will mobile enable the inbound remittance corridor to Indonesia for Dhasatra and the subsequent distribution into Dhasatra’s extensive network in the country. Both banked and unbanked will be able to remit into bank accounts of 120 banks or cash out from bank and post office branches as well as telecom franchisees.
In 2010 alone inbound remittances to Indonesia amounted to around US$ 11Bn. The fast growing numbers of Indonesian migrants in the Middle East in particular are set to benefit from this increased convenience. The UAE, for example, ranks fourth globally with its sending volume to Indonesia and Luup already has an established payments gateway serving users in the Middle East. Luup’s regional presence provides Dhasatra with access to more sending institutions and other key partners in the Luup ecosystem.
Nicolas R. Dharmawan, President Director of Dhasatra, joined Luup at the MDT conference in advocating seamless mobile money transfers and gave examples of business benefits his company is gaining: “Partnering with Luup brings more remittances volume and traffic to Dhasatra and ultimately increases revenue. We are also excited about opportunities we will be able to pursue in Indonesia for m-commerce and domestic mobile money transfers as the partnership evolves further.”
The Money Transfer Dubai conference was held on the 29th March in Dubai and Luup demonstrated its solutions on its stand as well as speaking on the conference stream ‘Business opportunities and Challenges’.
More information: IAMTN
Source: PR Newswire
In Kenya, with banks often few and far between, 65% of population uses M-PESA. 81 percent of M-PESA users said they used M-PESA for saving.
As the developed world begins its recovery from the global economic meltdown, the financial architecture in parts of the developing world is being rapidly transformed by a mobile payment system that enables people to deposit, send, and withdraw money with a push of a few buttons.
Established in 2007, the sms-based service, known as M-PESA, has enabled Kenyans to both save money and better withstand serious blows to their personal finances, according to new research by Tavneet Suri, a professor at MIT’s Sloan School of Management.
Suri and her colleague William Jack, a professor at Georgetown University, conducted two surveys of 3,000 households in Kenya: the first was in 2008, the second in 2009. They found that nearly 60 percent of Kenyan households now use M-PESA for person-to-person transfers, as well as to pay for everything from school fees to mobile phone credit to electricity bills.
“Kenyans find using M-PESA faster, more reliable, and more convenient than a traditional bank,” says Suri. “There are nearly 25,000 M-PESA agents in the country compared with 850 bank branches. In Kenya, if you want to transfer money from your bank, you need to travel long distances, stand in line with a fistful of cash, and fill out a bunch of paperwork. M-PESA agents, on the other hand, are often found at gas stations and grocery stores, and some are open 24-hours a day.
Although M-PESA balances do not earn interest, the service has some of the functions of a bank account but is much easier to access, and much easier to manage.”
According to their survey, the vast majority of Kenyans – over 80 percent – stash some of their money “under the mattress,” but M-PESA is fast becoming an important savings tool.
In 2008, about 75 percent of users said they used M-PESA for saving, and by 2009 this increased to 81 percent. By that year, half of all households said M-PESA was one of their two most important savings instruments.
“People are able to amass savings on their M-PESA accounts over time,” says Suri. “By providing a safe storage mechanism, the service could increase net household savings over the entire population.”
Most important, the expanded ability to make interpersonal transfers deepens the person-to-person credit market, which helps Kenyans withstand shocks to their household finances through risk-sharing networks.
In the developing world, a poor harvest or an illness can quickly portend financial ruin. Because mechanisms like unemployment insurance and health insurance are limited, people in Kenya have created informal risk-sharing systems whereby wide networks of friends and extended family give money to those in need with the implicit understanding that when they one day find themselves in grim circumstances, the favor will be returned.
This arrangement in the past has been fraught with risk. Poor roads, an inadequate transport system, and expensive money transfer services, like Western Union, mean that people wait a long time for their money, and often, conditions worsen.
“In the US, if you lose your job you may well be eligible to receive unemployment insurance, in which case you would continue to be able to eat three meals a day,” says Suri. “But in developing countries, when you lose your job, there are often no formal safety nets. People don’t have a lot of savings or other ways to smooth these shocks so their food consumption drops.”
But this is not as true for users of M-PESA. According to Jack and Suri’s research, the consumption of M-PESA users falls about 6 percent less during a crisis because they are able to receive money from a network of family and friends.
“It appears that M‐PESA facilitates efficient risk sharing and enables support networks to keep negative shocks manageable,” says Suri. “For example, a household head with access to M‐PESA who suffers a mild health shock might quickly receive a small amount of money via M‐PESA that allows him to keep his children in school. If this money was delayed, the children might have quit school, the effects of which are hard to reverse.
“The way M-PESA improves the ability of households to manage risk is dramatic and has important implications for the welfare of virtually all Kenyans,” she adds. “M-PESA has helped households overcome some of the most impenetrable barriers to financial services, and has provided real value to Kenyans, especially during a time of need.”
*The Risk Sharing Benefits of Mobile Money By Tavneet Suri, MIT Sloan School of Management and William Jack, Georgetown University; January 2011
Source: PR Web
The Mobile World Congress in Barcelona hosted a Working Group for its “Mobile Money for the Unbanked” program. The group has now release a new report the outlines strategies for building the customer base of mobile money users.
The report, entitled “Driving Customer Usage of Mobile Money for the Unbanked” differentiates the marketing methods for airtime versus mobile money. From the MMU Blog, Neil Davidson writes:
“The report considers the many nuances of marketing mobile money. A key theme of the article is that marketing mobile money is very different from marketing airtime. Indeed, the customer journey for mobile money from unawareness to regular use is long and requires a number of inputs: customers need to not only be informed that the service exists, but also convinced that it could solve a problem in their lives and educated about how it works. We discuss tactics that marketers can employ when customers get stuck along this journey, such as when they have registered but fail to transact, and we have included a diagnostic as a supplement to the article to help operators diagnose and rectify such issues among their potential customer base. The article includes 27 mini-case studies about effective—and some less effective—mobile money marketing tactics, and we are grateful to the many mobile operators and other mobile money providers who agreed to share their experiences with the broader industry.”
The 33-page report (PDF) is available for download.
See full report (PDF): Driving Customer Usage of Mobile Money for the Unbanked
Source: MMU Blog
With a penetration rate over 102%, Brazil has one of the largest rates of cell phones in Latin America. Despite of that, the mobile payment market in the country is still small, with few transaction made through cell phone.
Nevertheless, due to the enormous potential of the mobile payment market in Brazil, all stakeholders involved in the means of payment landscape are currently focused on developing new mobile payment platforms and creating products utilizing cell phones as a means of payment.
The total number of mobile payment transactions in Brazil reached a total of 3.9 million in 2010. This number is negligible in comparison to the total number of transactions effectuated by credit and debit cards that reached a total of 5.8 billion transactions in 2010. With growth rates over 30 percent in the short term, the number of transaction is likely to reach 5.1 million by the end of 2011.
“There are drivers with high impact in the short and medium terms that are likely to leverage the usage of this payment model in the country. A considerable unbanked population in Brazil, increase on mobile payment solutions and bundling advantages to other services are the main ones”, explains Marcelo Kawanami, Industry Manager for Frost & Sullivan. The company has produced a report on Brazil’s mobile payment market, and expects the industry to take off starting in 2012.
Source: NewswireToday
Safaricom’s M-PESA has won the Mobile Money for the Unbanked Award at this year’s Global Mobile Awards 2011 which is being held in Barcelona, Spain between February 14th and 17th.
The M-PESA service was launched in March 2007. As of the end of 2010, the service had over 13.5 million customers countrywide. More than 400 organizations acceppt Bill Payment via M-PESA. The service does not require users to have a bank account; an important aspect in Kenya, where millions of people do not have a bank account. With M-PESA, account holders can buy electronic funds at an M-PESA agent and send the electronic value to any other mobile phone user in the country, who can then redeem it for conventional cash at any M-PESA agent. The awards are part of the annual Mobile World Congress which brings together players in the global telecoms market and is organized by the GSMA (Global System for Mobile Communications Association).
The “Mobile Money for the Unbanked” award category recognizes innovative, sustainable, pioneering mobile money services around the world that bring low-cost financial services, through mobile, within the reach of low income groups. The award recognizes the mobile money service that has had the most significant impact on unbanked customers in developing markets over the last year.
The win extends a five times winning streak by Safaricom M-PESA at the GSMA conference in over a three year period, and is a fitting recognition of its leadership in Mobile Money services.
Safaricom CEO Bob Collymore exalted in the win and said it was a validation of ongoing work to expand the M-PESA service in line with meeting the needs of the Kenyan customer.
“I am delighted and congratulate the M-PESA team. This shows that we are leading the evolution of mobile money from simple transfer to a total mobile commerce solution,” he said.
The judges said in their citation: “The success story continues. This solution is enhanced further with the addition of new features and territories. It is winning ground in a way seldom seen in the mobile industry and is a true and sustained success story.”
This years entry, put together jointly with Vodafone, covered M-PESA in Kenya, Tanzania, South Africa, M-Paisa in Afghanistan, India and Fiji, and Vodafone Money Transfer in Qatar, bringing together the strengths and benefits of the service to the firm’s customers across the group.,
The GSMA, which organizes the awards, represents the interests of the worldwide mobile communications industry. Spanning 219 countries, the GSMA unites nearly 800 of the world’s mobile operators, as well as more than 200 companies in the broader mobile ecosystem, including handset makers, software companies, equipment providers, Internet companies, and media and entertainment organizations.
Since the launch of M-PESA in just over 3 years, M-PESA has bagged a total of 12 international awards in its contribution to offering financial inclusion to the un-banked in Kenya.
Source: Safaricom
Paybox, a provider of mobile payment enterprise solutions, announced the paybox Mobiliser products, which allow mobile operators and financial service providers worldwide successful market entry into mobile payment and mobile commerce.
In developed markets, paybox — beyond mobile person-to-person payments — enables the creation of open, national standards for any kind of mobile payment. With paybox Mobiliser products, banks and operators in emerging markets can create low cost, financial services for the unbanked.
Eckhard Ortwein, co-founder and CEO states: “The paybox Mobiliser products coupled with our expertise enable customers to rapidly deploy, easily launch, successfully market and efficiently operate m-payment and m-commerce solutions”.
The Austrian operators A1 Vodafone and One have become leading players in m-commerce by creating a national standard based on paybox.
Paybox offers its customers following solutions:
The paybox Mobiliser products are built on the patented paybox Mobiliser platform which has been developed since 1999 covering services required for transaction and payment processing in a mobilised world, namely: Authentication, authorization and reporting.
Source: PRNewswire
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