Uploaded byRafael Junquera
Comviva 27 9-12
This document provides an overview of mobile financial services in Latin America and tips for accelerating mobile payments adoption. It finds that 22% of operators in Latin America currently offer mobile financial services, with 55% planning to do so. The outlook for mobile payments in Latin America is strong, with users projected to grow from 8.5 million in 2012 to 22.3 million in 2016. Developing a strong mobile payments portfolio and considering factors like each country's unique context are important. Tips for accelerating adoption include focusing on customer experience through awareness, easy signup/use, and relevant services.
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Comviva 27 9-12
- 1. Company Overview Accelerating Digitization of Payments using mWallets Introduction to Comviva TeleSemana Webinar Name 27thSeptember 2012 Title Date 1
- 2. Contents • Mobile Financial Services in LatAm • Developing a strong mPayments portfolio • Tips for Take Off: How to accelerate mPayments adoption • Global learnings from empowering mobile payment services 2
- 3. Mobile Financial Servicesin LatAm 3
- 4. Snapshot of MobileFinancial Services in LatAm Status of Operator Mobile Financial Services (MFS) Offerings & Plans 22% Offering MFS 55% Planning MFS 23% No Stated Plans/No Information Mobile Financial Services (MFS) Offered Prepaid Top-Up P2P Transfers mBanking Alerts Bill Merchant Ticketing Payments Payments 21 20 15 10 3 1 Source: Comviva Research. Total Operator Population of 113.. As of August 2012 4
- 5. Outlook for mPaymentsis bright in LatAm 2016 2012 22.3 million users 8.5 million users Mobile Payment Users (in mn) 2016 2012 Mobile Transactions (in mn) Mobile payment 131 mn 740 mn transaction volume $2.4 bn Mobile payment $16.4 bn transaction value Source: Gartner 5
- 6. Developing a strongmPayments portfolio 6
- 7. mWallets facilitate digitalpayments for banked and unbanked segments Banked Consumers Unbanked Consumers • mWallet is a stored value • mWallet links to bank account account – loaded with cash • Enables payment by credit, debit • Enables payment by cards electronic cash • Facilitates financial and non financial • Delivers greater transactions security, convenience for • Delivers greater convenience for consumers consumers • New revenue stream for • Cost effective channel for banks operators 7
- 8. How can mPaymentsevolve? - essentially, mobile money & banking are a subset of mobile payments Low Complexity High Domestic Money International Proximity Remote Payments Transfer Money Transfer Payments Bill Payments Ticketing Government Payments Salary Payments G2P Ticketing Bill Payment Salary Merchant Wallet Wallet Wallet Wallet Payment Merchant Wallet Payments 8
- 9. How important isNFC to growth? - will ‘tap & go’ replace USSD/SMS/apps for simplicity, reliability, speed? Services Mobile International Domestic Cash-in / banking Mobile payments remittance Self-Care remittance cash-out Access Bearers Handset App NFC WAP/GPRS STK IVR SMS USSD mWallet-enabled mWallet Payment Instruments Debit/Credit Cards Prepaid/Loyalty Cards Cash Customer segments Banked Unbanked/Under-banked 9
- 10. Remember - Notwo markets are identical Approach to mobile financial services depends on the country’s context Brazil Bolivia Nicaragua % of adults with 56% 28% 14% banking access Mobile 129% 77% 73% penetration GDP per capita USD 10,710 USD 1,979 USD 1,131 Remittance inflow USD 4,629 Mn USD 1,041 Mn USD 920 Mn Remittance as a 0.2% 5.9% 11.7% share of GDP Rural population % 13.5% 33.5% 42.7% Recipients of 12.4 Mn 1.2 Mn - G2P payments Source: World Bank and CGAP Note: Remittance and banking access data is for 2011, G2P payment data is for 2008 and all other data points are for 2010 10
- 11. Remember - Notwo markets are identical Approach to mobile financial services depends on the country’s context Nicaragua Brazil • Domestic money transfer Bolivia • G2P payments Nicaragua • International remittance • Merchant Payments • Bill Payments 56% 28% • B2B payments 14% • Mobile ticketing 77% USD 1,979 Bolivia 4,629 Mn USD • G2P payments • Domestic money transfer 5.9% • International remittance • Bill Payments 13.5% - Source: World Bank and CGAP Note: Remittance and banking access data is for 2011, G2P payment data is for 2008 and all other data points are for 2010 11
- 12. Tips for TakeOff Customer Experience • Raise awareness • Availability: easy to sign up, easy to use • Relevant service portfolio Agents • Choose a brand ambassador - not all can sell financial services • Educate & Incentivize • Transactions on consumer sign on Launch • Offer a higher percentage commission than competitors incentive • Offer loyalty points (prizes on reaching targets/milestones) • Track campaign effectiveness/per agent Add • Channel/Distribution Management • System flexibility channel Immediately reward • Flexibility to change the structure • Send commissions in near real-time 12
- 13. Critical success factorsfor mPayments Loyalty Programs Services portfolio Customer profiling: Relevant & different: • Income & spend • Bill, ticketing, merchant, school fee, salary • Incentivize with & government payments campaigns & loyalty • Cash In & Cash Out • Domestic & international remittance • Insurance & banking services Security Fraud avoidance: Marketing User experience • Data encryption • Flexible pricing (3DES) Critical Success Factors • Service usability • Dual authentication for Mobile Payments • Strong merchant base • Identification of • Access channels manipulated data Regulatory Support & Care Policy compliance: Agents & call centres: • Collaborate with banks • Exploit agent network for • Actively engage & Partners reach and assisted influence standards & payments guidelines Onboard partners: • Informed call centre • Bulk payments agents • Banking services • Billers & merchants 13
- 14. Powering Mobile FinancialServices Case Studies 14
- 15. Powering mobile moneyservices in Tanzania 42 mn Financial access in Tanzania 23 mn people mobile 9%2% 2.1 mn users banked 54% 35% Narrow Wide Gap Gap Formal Semi-formal Informal Excluded Need for Mobile Financial Services (MFS) Market context Operator context • 68% Tanzanians earn <$1.25 a day • High urban-rural, rural-rural migration • 7 mobile operators with 55% market penetration • High reliance on insecure informal channels (E.g. buses • Very competitive MFS space: 3 operators have already charge 10% commission) launched services • Need for basic transactional products e.g. fund transfer • MFS key to operator’s growth strategy • Regulation: No objection certificate from Central Bank Source: World Bank, Wireless Intelligence 15
- 16. Tanzanian operator: 24%service penetration • Launched an affordable domestic money transfer product • Added airtime recharge & bill payments (utility & Pay TV) • Focus on product design, distribution and marketing • Among top 5 successful MFS services in Africa • Focus on last-mile network: 8,000 agents, 50% in rural areas • 24% service penetration Shared agent model accelerates scale & rationalizes distribution costs Service penetration Leverage airtime distribution to launch mPayments 25% Penetration (%) 20% Automatic customer registration 15% Agent remuneration linked to mWallet account activation 10% Performance-based incentives on meeting transaction and 5% revenue targets e.g. motorbikes 0% Q3 10 Q4 10 Q1 11 Q2 11 Q3 11 Q4 11 Q1 12 • Incentivize use of the mobile channel to drive volume and velocity of transactions Return 50% of transaction fee for P2P in airtime minutes Monthly double / triple bonus airtime promos 16
- 17. Pan-Africa Operator –Service evolution 8% banked rural community - 10% migrant population - 60% mobile penetration •Micro Credit Mali Financial Services • Micro Savings 3 • International Money Transfer Senegal Niger •Salary Payment Facilities Services • Bill Payment (Partially launched) • Social Disbursement 2 • Merchant payment Ivory Coast Madagascar Cameroon •Money Transfers Basic Services • Cash-in/Cash-out 1 Live MFS (Launched) • mMoney Agents deployments Botswana 17
- 18. Powering IMT servicesin Bangladesh Collaboration between Bangladeshi operator & two large Bangladeshi Banks • 6 million international workers sent USD 10 bn to Bangladesh in 2011 • Unskilled/semi-skilled workers comprise 67% of migrant population – Need earn between USD 500 and USD 2,000 monthly • Average remittals by emigrants between 30% & 40% of total salary • 40% of international remittances sent via informal/illegal channels Demographic Profile 2009 • Operator aimed to tap intentional remittance opportunity to grow top line Skilled Professio 33% nal 0% • Operator collaborated with 2 large Bangladeshi banks & Western Union • Launched Mobile Cash to provide international inbound transfer Unskilled Semi- Solution services to migrant workers 52% skilled 15% • Service supports cash-to-wallet and cash-to-cash transactions • Supports OTC transactions Professional Semi-skilled Skilled Less Skilled • Mobile customers on any network can receive money • ~2,000 International remittance transactions /month Results • A migrant remits money 4 times a year (average) • US$110 is average transaction value 18
- 19. mobiquity™: Addresses alluser segments Flexibility to deliver easy and convenient access to mobile financial services using multiple channels across customer segments • Collates cash, cards and coupons onto a single device NFC USSD Banked • Flexible access Under-banked/ SMS Unbanked mechanisms • Addresses user preferences J2ME mRemiitance • Integrated platform to offer multiple services IVR mPayment mBanking STK 19
- 20. Comviva’s mobiquity™ MFSplatform Platform: Resilient, scalable platform with Partners: Include Western customized delivery capabilities unique to Union, MasterCard, banks and retailers in many emerging markets markets Comviva’s mobiquity Open Collaborative Network 20
- 21. Why Comviva 110 deploymentsreaching 700 million people globally Recharge and mMoney platforms collectively processed $20b payment flows in 2011 mobiquity™ powers one of the top 3 mobile money deployments in the world Well-developed partner ecosystem - alliances with Master Card & Western Union Deep industry expertise with knowledge of country-specific regulations and cross- industry mobile experience Flexible commercial models with shared risks Manage MFS services for a leading African operator across 17 countries – end-to-end technical and business operations support 21
- 22.
Editor's Notes
- #5 Underdeveloped opportunityRegulatory situation ensures banks must lead any banking deployment, doesn’t mean operators cannot lead in other areasThe opportunity for payments is clearly underexploited.
- #6 Mobile has the potential to become a predominant instrument for cashless transactions and payments.Ubiquitous, pervasive, simple to use. Mobile is the preferred communication tool and will dominate in LatAm (vs PC or tablet).How will operators realize these expectations?
- #8 Mobile wallets unite multiple payment instruments on the mobile phone. Some, such as loyalty points and gift cards, can be offered to both banked and unbanked users. The mobile wallet is the way to pay, it isn’t a service in itself.
- #9 Financial transactions are pretty much all related to payments (mMoney is about payments from a person to a person, whereas mPayments also covers P2P, B2B, G2P and vice versa and permutations of this).Complexity grows as you move across the range of potential offerings:Domestic Money Transfer: Operator controls this. Relatively simple to launch – the agent network is in place, educate, incentivize and roll out. More complex to extend outside the operator’s network but stays within the telecom industry/domainMobile Payments:Bill Payments: Sign up the utility providers/pay TV providers etc, integrate the platform, agree commercials, payment either via agent network (assisted) or not assisted (via the mobile phone USSD or other menu). Ticketing: Sign up service providers eg transport/cinema/sports event organizers. Integrate platform. Agree commercials. Deploy.Government Payments: As aboveSalary Payments: As above – automated payment to the consumer’s walletMerchant Payments: More complex as need to sign up a range of merchants (the more merchants, the more attractive the services)ONLINE OR OTC/ASSISTED/NFC: Online relatively simple as enter payee details/PINS and transact. OTC requires education. NFC requires technology to be in place.IMT: May be regulatory constraints. Otherwise, need partner eg Western Union. Greater risk for operator and operator partner as FX risks involved. Need to advertise the offering outside home country (usually) e.g. USA for USA to LatAm markets.Banking: Banking regulations across most of the region require banks to handle provision of financial services, regardless of the channel. The target audience, ie low income unbanked segments, require reach and low cost assistance in using services. Operators collaborate in terms of agent network – signed up as business correspondents. Challenge for operators lies in growing business from ‘non-exclusive’ operator agent network. Key lies in:Flexibility of the distribution management (easy creation of news channels, levels in the hierarchy)Flexibility of commission schemes (ability to granularly and immediately reward channels for high performance/offer preferential commissions to agents in key target locations)Educating agents to ensure full knowledge of offering, speed of service
- #10 NFC is receiving a lot of press. It has 2 key plus points:SimplicitySpeedHowever, the LatAm context requires:NFC capability Smartphones will be first to be NFC enabled (even the iPhone 5 doesn’t have NFC capability). There are low cost options eg stickers (but fall off…)Terminals (new technology will drive down costs but not there yet)Probably looking at 2 to 3 year timeframe for NFC to be affordable and ubiquitous. In the interim, the handset app may prevail (on smartphones and feature phones) and SMS/USSD.
- #11 No cookie cutter model. The market calls for innovative offerings that cater to local needs and conditions.Services have to be designed in line with local market characteristics For instance In Brazil there is a low penetration rate for banking services, with estimates ranging from 30% to40%, the country has an efficient banking sector and well-established informal financial channelsthat make the prospect of mobile payments less attractive. The banking sector is highlycompetitive, with more than 150 banks and over 19,000 branches. Penetration rates for ATMs and POSterminals are also high — on a par with some developed markets such as Germany and France. Banks, ATMs and correspondentbanks can all be used for money transfers and bill payments, and mobile top-ups can be made atcorrespondent banks. Eighty-four percent of the population is in urban areas, so the need fordomestic transfers is relatively low, and most transfers happen within cities. International remittanceis also small: it contributed only 0.3% of Brazil's GDP in 2009 according to the International FinanceCorporation. This situation leaves service providers with opportunities, such as collection ofgovernment benefits, obtaining microloans, P2P transfers for convenience, B2B payments in thefield, and enabling small merchants to accept electronic payments. Oi Paggo, the country's leading mobile payment provider, is deploying services to enable consumers to pay for retail purchases,and small merchants such as street vendors to accept payments via mobile phone. Given thetechnically advanced status of the banking sector, mobile-enabled retail payment may presentopportunities if it offers a good user experience, the right incentives and a competitive fee structure.Note on G2P Payments ( Brazil;) Bolsa Familia in Brazil. G2P Payments reaches 12.9 million families(30%ofpopulation)•2million recipients receive grants into simplified current account accessible via magstripe cardG2 P PaymentsBolivia Scheme is called Juancito Pinto; reaches 1.2 million inhabitants ; minimal annual benefit is USD 28In Nicaragua the situation is diametrically opposite. There is a mixed population of urban and rural residents. High opportunity for IMT and DMT as well as bill paymentsProbably the biggest and best known of all the cash transfer schemes in the developing world is the Bolsa Familia in Brazil. Since 2003, 12 million families have joined the scheme and receive small amounts of money (around $12 a month). Inequality has been cut by 17% in just five years, which is perhaps one of the most dramatic achievements in welfare ever recorded. The poverty rate has fallen from 42.7% to 28.8%.Such is the fascination in this "social technology" that Brazil is now being sought for advice on cash transfer programmers by countries across Africa (Ghana, Angola, Mozambique), the Middle East (Egypt, Turkey) and Asia (including India). Even New York City has implemented a version of the programme.“ Some more informationThere are some aspects of the programme, which have attracted particular interest. The first is conditionality. The payments are dependent on the family's children staying in school until 17, and attendance must be at least 85% up to 14 years and 75% for the remainder. Another form of conditionality is that children get the full set of vaccinations in their first five years and that mothers attend pre and post-natal care."Bolsa Familia has definitely contributed to the improvement in infant and maternal mortality that we are seeing in Brazil,. One clever aspect of the programme was to put all payments through the banking system. Recipients use a debit card to draw out the money from their bank accounts at ATMs
- #12 No cookie cutter model. The market calls for innovative offerings that cater to local needs and conditions.Services have to be designed in line with local market characteristics For instance In Brazil there is a low penetration rate for banking services, with estimates ranging from 30% to40%, the country has an efficient banking sector and well-established informal financial channelsthat make the prospect of mobile payments less attractive. The banking sector is highlycompetitive, with more than 150 banks and over 19,000 branches. Penetration rates for ATMs and POSterminals are also high — on a par with some developed markets such as Germany and France. Banks, ATMs and correspondentbanks can all be used for money transfers and bill payments, and mobile top-ups can be made atcorrespondent banks. Eighty-four percent of the population is in urban areas, so the need fordomestic transfers is relatively low, and most transfers happen within cities. International remittanceis also small: it contributed only 0.3% of Brazil's GDP in 2009 according to the International FinanceCorporation. This situation leaves service providers with opportunities, such as collection ofgovernment benefits, obtaining microloans, P2P transfers for convenience, B2B payments in thefield, and enabling small merchants to accept electronic payments. Oi Paggo, the country's leading mobile payment provider, is deploying services to enable consumers to pay for retail purchases,and small merchants such as street vendors to accept payments via mobile phone. Given thetechnically advanced status of the banking sector, mobile-enabled retail payment may presentopportunities if it offers a good user experience, the right incentives and a competitive fee structure.Note on G2P Payments ( Brazil;) Bolsa Familia in Brazil. G2P Payments reaches 12.9 million families(30%ofpopulation)•2million recipients receive grants into simplified current account accessible via magstripe cardG2 P PaymentsBolivia Scheme is called Juancito Pinto; reaches 1.2 million inhabitants ; minimal annual benefit is USD 28In Nicaragua the situation is diametrically opposite. There is a mixed population of urban and rural residents. High opportunity for IMT and DMT as well as bill paymentsProbably the biggest and best known of all the cash transfer schemes in the developing world is the Bolsa Familia in Brazil. Since 2003, 12 million families have joined the scheme and receive small amounts of money (around $12 a month). Inequality has been cut by 17% in just five years, which is perhaps one of the most dramatic achievements in welfare ever recorded. The poverty rate has fallen from 42.7% to 28.8%.Such is the fascination in this "social technology" that Brazil is now being sought for advice on cash transfer programmers by countries across Africa (Ghana, Angola, Mozambique), the Middle East (Egypt, Turkey) and Asia (including India). Even New York City has implemented a version of the programme.“ Some more informationThere are some aspects of the programme, which have attracted particular interest. The first is conditionality. The payments are dependent on the family's children staying in school until 17, and attendance must be at least 85% up to 14 years and 75% for the remainder. Another form of conditionality is that children get the full set of vaccinations in their first five years and that mothers attend pre and post-natal care."Bolsa Familia has definitely contributed to the improvement in infant and maternal mortality that we are seeing in Brazil,. One clever aspect of the programme was to put all payments through the banking system. Recipients use a debit card to draw out the money from their bank accounts at ATMs
- #13 Choosing agent network is critical to service take off in markets where people want assisted service accessChallenge for operators lies in growing business from ‘non-exclusive’ operator agent network. Key lies in:Flexibility of the distribution management (easy creation of news channels, levels in the hierarchy)Flexibility of commission schemes (ability to granularly and immediately reward channels for high performance/offer preferential commissions to agents in key target locations)Educating agents to ensure full knowledge of offering, speed of service
- #14 Services: Lead with services not offered by competition. Differentiate on pricing plans, loyalty offering, better agent support/customer care
- #18 4 million customers for mobile financial services
- #19 http://www.medianama.com/2011/03/223-idea-cellular-axis-bank-launch-mycash/