> Posted by Juan Blanco, Associate, Financial Inclusion 2020, CFI

Mobile money services have spread like wildfire, making people less cash-reliant and able to easily carry out transactions like bill payments and money transfers. GSMA’s Mobile Money for the Unbanked program identified 14 mobile money sprinters – leaders of some of the fastest growing mobile deployments in the world. Among these, three case studies from mobile money services in Pakistan, Somaliland, and Zimbabwe have been published. The case studies highlight the reasons why these particular schemes have achieved significant customer bases and transactions volumes since their deployments.

Easypaisa (Pakistan). After only 11 months, Easypaisa registered 5 million transactions and by the end of 2012 it had 100 million transactions with a volume of $US 1.4 billion. Easypaisa was created in late 2009 by the MNO Telenor Pakistan and Tameer Bank, after Telenor acquired a 51 percent stake in Tameer. Telenor acknowledged that launching a mobile wallet product wouldn’t be the ideal way to set up Easypaisa since they only had a 22 percent market share and so the product wouldn’t encompass 40 million non-Telenor customers. Furthermore, regulations in the country called for very comprehensive Know-Your-Customer (KYC) procedures, creating the additional obstacles of increased registration cost and time.

Taking this into account, Easypaisa was set up as an over-the-counter (OTC) service, offering money transfers and bill pay. All of the transactions were assisted by an agent and registration wasn’t required. Customers could go to an Easypaisa agent, present their national ID card and the money to be transferred, and the agent took care of the rest. No mobile phone account was necessary. This model proved to be successful as 70 percent of customers using the services were not Telenor Pakistan clients. Easypaisa’s big-picture vision was to create a mobile wallet product, since the OTC service had the downside of a limited product offering, and then slowly migrate users to the wallet system. This mobile wallet service now has products other than money transfers and bill payments such as savings and insurance through Easypaisa Khushaal.

Telesom ZAAD (Somaliland). Telesom ZAAD has been considered a great success; 70 percent of their subscribers actively used the service after one year and users were performing an average of 30 transactions per month. This journey started when a team of senior level officers from Telesom, a mobile network operator in Somaliland with 85 percent market share, traveled to Kenya and Tanzania to learn about the M-Pesa platform. Telesom’s vision was to start a similar service, however from the beginning they had in mind the idea of building an ecosystem that included salary payers and merchants.

Even before launching the service (in June 2009), 170 merchants had agreed to accept payments via mobile money and were encouraged to buy Telesom products using the same service. Likewise, Telesom led by example and started paying all of their employees the entirety of their salaries through Telesom ZAAD. This sent a powerful message to other companies such as Kaah Electric Company and Amoud University, which also started paying their employees using the same method. As of April 2013, ZAAD reported 368,000 customers of whom 59 percent held an average balance of $37 on their accounts, and 8,600 merchants of which 83 percent reported an average balance of $352. In other words, Telesom ZAAD has been effective as a cash replacement tool.

Ecocash (Zimbabwe). Econet Wireless, an MNO with 70 percent market share in Zimbabwe, set out to develop a mobile money platform in 2011. Eighteen months after Ecocash was launched it already had 2.3 million registered users, over one million active accounts, and an estimated monthly transactions volume of $200 million. Although Ecocash was launched initially as a person-to-person payments platform, Econet’s vision was to move beyond payments and become the “primary way people pay for goods and services,” explaining the unusually large investment in this mobile money service.

Ecocash identified the most important pain points in the financial system (payment needs of the informal economy, replacing cash, and bridging the gap between formal and informal economies) and has ambitiously set out to address them. Ecocash started simple by offering P2P transfers. Now, it is building two vital structures, a network of merchants that accept mobile money payments and full interoperability with other banks in the country.

These three mobile money services are considered successful and yet they are so different. Easypaisa started as an OTC system, ZAAD for salary and merchants pay, and Ecocash as a P2P system. Why have they all been so successful? They have done well in gaining a deep and detailed understanding of the particular market conditions in their respective countries. Easypaisa acknowledged their market position and the costs of first creating a mobile wallet. Telesom could have transposed the M-Pesa model to Somaliland, but they recognized that this could have failed given the market conditions, including unfamiliarity with mobile money, low income levels, and a lack of formal banking infrastructure. Econet realized that people had lost trust in Zimbabwe’s banking institutions due to the hyperinflation crisis and recognized that there was a role for a prominent MNO to play in the mobile money market.

Though these systems all face their challenges and shortcomings, valuable lessons from their experiences should be shared on how they solved the problems encountered in each market and the obstacles that still remain.

What mobile money deployments do you know of that hold insights for the industry?

Image credit: carol mitchell

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