Mobile Phone Enabled
Payments – an example of
“Beyond Scaling”?



Simon Batchelor
Impact and Learning Team
Seconded from ...
Mobile Phone enabled payments

       How are new technologies such as ICTs, new diagnostic technologies and other
       ...
Mobile Phone enabled payments

    What is the basic story?
    Did we achieve anything - where are we now?
    What were ...
Storyline - the backdrop

    Western world had tried mobile phone enabled payments, with mild
    success (unashamedly us...
Storyline – backdrop failure

    European m-payments scheme SimPay collapses
     – The SimPay brand was launched by T-Mo...
Storyline – informed by research

    Africa studies show behaviour of the poor
     – In 4 countries, researchers observe...
Storyline – active communication of research
    Research practitioners share findings with private sector in
    Mozambiq...
Some people say it was
                   9,000,000 Users
                                                     a stabilisi...
Global picture
    Game changing rule change on banking regulation
     – Championed by UK Financial Services Authority
  ...
Drivers?

     Built on existing behaviours
      – Very contextual, multispatial households, airtime transfers,
         ...
Drivers?

     Donor harmonisation
     Kenyan government (Central Bank) - Willingness to risk
     Completely different m...
Barriers?

     New behaviours didnt always take - Afghanistan
     Political mandates hampered by
      – vested interest...
Takeaway lessons?

     Per poor research? (per-poor innovations (by the poor and for
     the poor)
     Step by step cha...
Beyond Scaling up?

     Was not more “bank branches” - uses new pathways to engage
     local actors (Mpesa 12000 cash in...
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Beyond Scaling Up: Mobile banking in Africa

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This presentation was given at the 'Beyond Scaling Up: Pathways to Universal Access' workshop which was held at the Institute of Development Studies, Brighton on the 24-25 May, 2010. This event was co-sponsored by the Future Health Systems Research Programme Consortium and the STEPS Centre. Batchelor presented on mobile banking in Africa.

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Beyond Scaling Up: Mobile banking in Africa

  1. 1. Mobile Phone Enabled Payments – an example of “Beyond Scaling”? Simon Batchelor Impact and Learning Team Seconded from Gamos For Date:25/5/10
  2. 2. Mobile Phone enabled payments How are new technologies such as ICTs, new diagnostic technologies and other major information systems-related developments affecting the structure of health systems, the capacity for rapid change and our understanding of concepts of scaling up? This is a story of a fairly significant change in the structure of the financial sector To what extent do they (ICT) facilitate greater agency by local actors? New local actors have been able to enter the financial sector. What are the implications of the rapid increase in the number of actors producing and disseminating health-related information? 2
  3. 3. Mobile Phone enabled payments What is the basic story? Did we achieve anything - where are we now? What were the drivers? What were the barriers? Any principles/lessons to take away? 3
  4. 4. Storyline - the backdrop Western world had tried mobile phone enabled payments, with mild success (unashamedly using wikipedia at this point) • “Mobile commerce was born in 1997 when the first two mobile phone enabled Coca Cola vending machines were installed in the Helsinki area in Finland. They used SMS text messages to send the payment to the vending machines. In 1997 also the first mobile phone based banking service was launched by Merita bank of Finland also using SMS.” • In 1999, two major national commercial platforms for m- commerce were launched with the introduction of a national m-payments system by Smart as Smart Money in the Philippines and the launch of the first mobile internet platform by NTT DoCoMo in Japan, called i-Mode. 4
  5. 5. Storyline – backdrop failure European m-payments scheme SimPay collapses – The SimPay brand was launched by T-Mobile, Orange, Telefónica Móviles and Vodafone in June 2003 with the overall objective of creating an open and interoperable framework for mobile payments in Europe. 5
  6. 6. Storyline – informed by research Africa studies show behaviour of the poor – In 4 countries, researchers observe behaviour - using airtime as a means of transferring money over distances (2002). Desk research reveals the importance of Remittances – At that time approximately $100 Billion was being remitted to the South. – The global average remittance cost was 12% (higher if you send a smaller amount). – Awareness of Japan moves by NTT DoCoMo. Researchers get inspired by research and become Champions – Ask themselves – what if.... – Set a target – 10 years “accelerated” reduction to 11% 6
  7. 7. Storyline – active communication of research Research practitioners share findings with private sector in Mozambique – contributes to Mcel being first to introduce credit swapping (2004). Research practitioners undertake political lobbying – creating growing statements and high level political interest (Africa Commission 2004, G8 Gleneagles 2005) Research practitioners share findings with donor contacts (international) – contributes to donors being willing to invest in mobile phone enabled payments systems (2004), and making alliances with private sector. Research practitioners approach private sector (International Telcos) to explore possible Mpayment systems – contributes to a key stakeholder undertaking key pilot and key commercial product (2005), and several other stakeholders discussing it at a serious level (2005 onwards) and then 7 implementing systems latterly (2008 onwards).
  8. 8. Some people say it was 9,000,000 Users a stabilising element in the political troubles of a few years ago Affordable, average Special registration Transaction reducing Changes the ball game on KYC From about 700 Bank branches To over 12,000 places of cash in cash out International Forcing lower prices And now a savings account!!!
  9. 9. Global picture Game changing rule change on banking regulation – Championed by UK Financial Services Authority – Slowed down due to crisis Major international players jumping in – Mastercard, Visa, Western Union, ++ all jumping in – Remittances have grown to $360 Billion (no link with this story) – Remittance average transaction cost reduced to 10%, and coming down Different models piloted in different countries – Eg Cambodia (independent but financed by bank) – Kenya now has three systems! Smart phones, Near Field Communication chips, fibre optic 9 cables in sea around Africa – will change context again.
  10. 10. Drivers? Built on existing behaviours – Very contextual, multispatial households, airtime transfers, Trust in Telco Political mandates logged – At International level, National level Donor seeding private sector – Very important for getting through the immediate “profit” culture Persuasive Commercial factors – Dropping ARPU, reduction of Churn, new billion market Immediate benefit to user – Seen as safe, good conflict resolution, reduction of transport costs 10
  11. 11. Drivers? Donor harmonisation Kenyan government (Central Bank) - Willingness to risk Completely different market than Developed countries New local actors – agents 11
  12. 12. Barriers? New behaviours didnt always take - Afghanistan Political mandates hampered by – vested interest, – perceived user security, – major terrorist incident Commercial imperative to make a profit (which then became driver when Mpesa “succeeded”) Resistance by other parties (eg Mpesa audit by the banks) Policy regulators on other countries “just dont get it” Price points in other systems 12
  13. 13. Takeaway lessons? Per poor research? (per-poor innovations (by the poor and for the poor) Step by step change Political positioning Donor harmonisation New cross sectoral alliances (and role for donor stimulation) Engage private sector at start (and dont be afraid that you cant control the process?) Market analysis Anticipate market/technology changes? Needs Champions? 13
  14. 14. Beyond Scaling up? Was not more “bank branches” - uses new pathways to engage local actors (Mpesa 12000 cash in cash out agents) This was a political as well as technical process (If anything it was mainly political) It shifted power from the normal “providers” to new players It is an example of a flexible learning approach It might thought of as a disruptive technology affecting the main financial sector approaches? It works with the economy, both formal and informal? 14
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