Mobile Money Revolution in Pakistan

[Riaz Haq]

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.

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[Riaz Haq]

At the start of the year, a collaboration between Habib Bank and Monet resulted in thelaunch 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:

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]

https://vimeo.com/121175832

Easypaisa - Best Mobile Money Service in Emerging Markets (Pakistan) from Omar Moeen Malik on Vimeo.

Easypaisa is a joint venture between Telenor Pakistan, and Tameer Micro Finance Bank, the first bank to get a MFS license in Pakistan.
Of Pakistan's 180 million people, only 15 million have bank accounts and associated access to financial services. The domestic remittance market is estimated at nearly USD 7 billion through formal sources and a similar amount flowing through undocumented, informal channels like Hundi and Hawala.
At Easypaisa, we set out to empower every Pakistani through our broad portfolio of financial services. From sending and receiving money through paying bills to insurance and savings options, Easypaisa allows the customer to choose whichever service best suits him.
In Pakistan transferring funds through conventional formal channels required both the sender and receiver to have bank accounts which was possible for only 15% of the population. Low bank branch penetration and a focus on urban areas and the privileged left the masses without any feasible option for their financial needs.
Easypaisa offered its services as the first of their kind to allow funds transfer in a matter of seconds, requiring only basic KYC. Starting with money transfer, additional products like bill payments, salary disbursal, international remittance, loans, and more have been added over the years.
In 2014 Easypaisa continued its trend of innovation by launching a host of new services. The Inter-bank Funds Transfer facility links Easypaisa with the banking network via a local switch, allowing M-wallets to move funds to and from any account at any of the 35 1-link enabled banks in Pakistan, also allowing OTC customers to send funds to any bank account, enabling transactions between banked and unbanked customers. ATM cards were added to the portfolio to give customers easier access to funds via ATMs. ‘Sehat Sahara’ was launched as Pakistan’s first micro health insurance product, offering health insurance at very affordable rates to a segment that has never before seen such a service. E-payments enables payments through M-wallets via NFC and through OTC as well, specifically targeted towards enabling smaller merchants and micropayments. Handset financing has also been launched and provides customers easier access to handsets with credit scoring based on GSM usage.
The Money Transfer product was initially picked up by customers who did not have access to financial services and belonged to the bottom of the pyramid in rural areas. A study carried out by CGAP and Coffey International in 2011 discovered that the majority of these customers (69%) live on less than $3.75/day, while around two-fifths (41%) of these users live on less than $2.50/day. The majority of this segment was not targeted by banks either because they were not considered economically feasible or because the banks did not have a presence in these areas. Money Transfer was aimed at providing a safe, secure and instant service with minimal KYC requirements that could document and formalize all this money flowing within the country and has since proven itself by moving approximately 1% of the country’s GDP in 2013.
Inter-bank Funds Transfer was launched to bridge the gap between banked and unbanked, enabling payments from unbanked to banked which constitute a large part of the remittance market. The health insurance product is the first of its kind for the target market, and seeks to bridge the gap in healthcare. The e-payments domain suffered from limited uptake so we implemented new technology ( NFC) to bridge the usability concerns around payments. Finally handset financing offers customers without a credit history the ability purchase better phones with a new credit scoring model based on GSM activity.
Easypaisa was the first branchless banking initiative in Pakistan to launch the Money Transfer OTC service that has served nearly 28 million unique subscribers since inception who have carried out nearly 167 million transactions as of October 2014. On a monthly basis there are approximately over 6 million people who use the Money Transfer OTC service across Pakistan and since 2009 the transactions per month have grown from 0.5 million to touch 6 million transactions in September 2014.
Easypaisa also has over 1.3 million beneficiaries across government sponsored disbursement programs. More than 50,000 subscribers have opted for Khushaal Beema life insurance. Over 100,000 ATM cards have been issued in the past year. More than 11,000 customers are on board for Salary Disbursement. All these people using financial services helped Easypaisa move 1% of Pakistan’s GDP in 2013.

[Riaz Haq]

#Pakistan Plans to Bring Millions More Citizens into the Economy by Digitizing Payments http://prnw.cbe.thejakartapost.com/news/2015/pakistan-plans-to-brin... …

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]

#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-resul... 

[Riaz Haq]

#Pakistan to have 100 million bank accounts by 2025. #financialinclusion #banking 

http://tribune.com.pk/story/999299/one-minute-bank-account-pakistan... …


“Thanks to the concept of the one-minute bank account, the industry is opening close to a million accounts a month,” he said.

There were a total of 41.7 million bank accounts in Pakistan at the end of last fiscal year, according to the State Bank of Pakistan (SBP). More than 31.3 million accounts, or 75% of all bank accounts, belonged to the personal accounts category.

The SBP has recently modified the regulatory framework to quicken the bank account-opening process with the help of the national database authority.

“NADRA is the real-time online depository of the biometric impressions of close to 100 million people,” Hussain said, adding that utilising its database had so far resulted in eight million one-minute accounts.


The industry expects 50 million accounts by 2020 and 100 million accounts by 2025. Assuming the average balance of Rs1,000 in these accounts, Hussain said these accounts will bring as much as Rs100 billion back into the banking system.

It will also make access to credit possible for people and small businesses that are currently unable to borrow from commercial banks, he noted. “A bank account is the centre of gravity for financial inclusion,” he said.

Speaking on the occasion, Lucky Cement CEO Muhammad Ali Tabba said his group had plans to invest $1.8 billion in the next four years. “The economy and the security situation are on an improving trajectory. The feel-good factor is prevailing,” he said.

Urging people to “believe in Pakistan,” Tabba said the China-Pakistan Economic Corridor (CPEC) will be a game-changer for the economy. “I think $46 billion investment will materialise and transform Pakistan into a major economic hub.”

Addressing the audience, Planning and Development Minister Ahsan Iqbal said Pakistan has undergone a huge change since 2013. “The world now considers Pakistan an important player in the region, as Chinese investments would integrate Pakistan with Central Asian countries.”

The CPEC will bring development and prosperity in the country with investment of up to $5 billion in infrastructure and networks of roads and bridges, he said.

[Riaz Haq]

#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... …


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]

#EasyPaisa: Incentivizing #Mobile Wallet Usage in #Pakistan. #financialinclusion http://www.cgap.org/blog/easypaisa-incentivizing-mobile-wallet-usag... …


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.

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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]

#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. 

[Riaz Haq]

Finca launches #Pakistan’s first ever digital wallet. #mobilepayments

https://en.dailypakistan.com.pk/technology/finca-launches-pakistans...

KARACHI – FINCA Microfinance Bank, one of the fastest growing microfinance banks in Pakistan, has announced a movement to make digital commerce and payments free in the country.


SimSim, a mobile payment platform, was introduced in partnership with Finja – an internationally funded FinTech startup – at a launch event Thursday night at Mohatta Palace, Karachi. The event was attended by major industry stakeholders, government officials, artists, tech enthusiasts and media figures.

Finja, the Fintech partner, developed the technology to enable anyone with a valid CNIC to open a remote zero account in less than one minute through their smartphones. As a consequence, Finca will broaden its outreach to multiple consumer segments including the financially excluded and underserved customer segments.


SimSim will give people access to frictionless payment options directed towards a diverse pool of merchants. It intends to act as a catalyst for financial inclusion and shall spur digital payments by making even the smallest ‘payment event’ free i.e. as low as one rupee.This open API platform allows any online business to integrate and become a part of the SimSim ecosystem. Moreover, in the near future, individuals will also be able to seek credit and buy insurance through the SimSim platform.

SimSim is also connected to other banks in Pakistan through 1-Link for instant money transfers. It is available for both Android and iOS smartphones.

While praising the initiative, Executive Director BPRG, State Bank of Pakistan, Syed Irfan Ali said, “The efforts of the SimSim team should be commended for creating a platform which offers ease of access to financial services. In particular, it has minimised the need for transaction free policy which will encourage increased usage of digital financial services at the consumer end.”

“It is also important for all digital service providers to pay special attention to customer protection rights and customer data protection when deploying new products and services in the evolving space of digital financial service,” he added.

“SimSim will enable FINCA Pakistan to broaden its reach to multiple consumer segments including financially un-served and underserved customer segments in a sustainable manner by enabling smartphone users to instantly open a mobile wallet with FINCA and transact digitally”, said Andrée Simon, Chief Executive Officer of Finca Impact Finance.

“SimSim, we believe, will transform and improve the lives of people by giving them financial identity and the power to change their lives,” said M Mudassar Aqil, CEO of Finca Microfinance Bank Limited.

While talking about SimSim, Finja Chief Executive Officer Qasif Shahid said that “SimSim is not just an app but is a free payment movement to transform Pakistan. Come join this movement and break free!”