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Mobile money overview. Prepared for the Chamber of Commerce By: Joep Roest (PFIP) Date: 7 April 2011. What can mobile money look like?. m-wallet – Virtual wallet separate from bank account m-banking – Underlying bank account accessed through phone

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Mobile money overview

Mobile money overview

Prepared for the Chamber of Commerce

By: Joep Roest (PFIP)

Date: 7 April 2011


What can mobile money look like
What can mobile money look like?

  • m-wallet – Virtual wallet separate from bank account

  • m-banking – Underlying bank account accessed through phone

  • Linked wallet – Ability to move funds between bank account and wallet


Why does mobile money matter
Why does mobile money matter?

  • m-Pesa

  • 8.3 million users after 4 years

  • 40% of adult population

  • 14,000 cash-in / cash-out stores

  • $650m / month in deposits & withdrawals

  • Demand is high

  • Scalable – no clear limit

  • Cost effective delivery

  • Reach

  • Fast adoption

  • Geography no problem

  • Reporting

  • Speed

  • Security


Generally the following services
Generally the following services…

Send money (ONNET)

Bill pay

Self top-up

Payroll

Send money (OFFNET)


But later…

Micro loans

Online purchases

Microsaving

Supply chain

Payroll

MFI transactions

Micro insurance

ATM cards

G2P

MFI loan collection

Link to schemes (VISA, Mastercard)

International remittances



Is there space for both mobile operators and banks
Is there space for both mobile operators and banks?

What mobile operators value

What banks value

Reduce airtime distribution cost

Deposits

Link a wallet to value added services

First relationship & up sell

What BOTH value

Reduce prepay churn

Corporate & SME customers

Transaction revenue

What mobile operators bring

What banks bring

Customers & brand

Regulatory

Retail & service reach

Trust


Agents
Agents

  • Absolutely crucial

  • Commissions & opportunity cost

  • Super agent structure

    • Recruiting other agents

    • Liquidity

  • Transactions

    • Signing up customers

    • Cash in

    • Cash out

  • Ecosystem


Regulatory considerations
Regulatory considerations

  • Addressing systemic risk

  • Managing money supply

  • Addressing AML/CFT

  • Address liability of agents

  • Enabling Consumers

  • Protecting Consumers


What makes a country right for mobile money
What makes a country right for mobile money?

  • Young population

  • Mobile phone usage is high or growing quickly

  • Cash movement expensive/risky

  • Cash is a large part of how transactions are completed

    • Bill payments

    • Payroll

    • Distribution payments.

  • Geographically dispersed with significant domestic rural to urban migration for work. Need to send money home.

  • Ideally, there are national network chains to partner with (eg Post, banks, distributors)

  • Progressive regulator

  • Enablers (M-Powa, credit transfer)



Agent

Agent

Agent

Agent

Customer

Customer

Customer

Customer

Customer

Customer

Customer

Customer

Q-money

Superagent

Factory

A mobile money platform is a system that records balances held within mobile wallets. These balances represent bank liabilities and are accounted for within a trust account on a bank CBS

Mobile Money system

Bank CBS

Mobile Money trust account

total

$


100

100

100

100

100

100

100

100

2,000

2,000

2,000

2,000

Agent

Agent

Agent

Agent

Customer

Customer

Customer

Customer

Customer

Customer

Customer

Customer

50,000

Superagent

100,000

Factory

The total value of the mobile wallets is represented IN TOTAL in the trust account

Mobile Money system

Bank CBS

Mobile Money trust account

total

258,800

100,000

Q-money


Agent Z

Customer X

Customer Y

$

$

+250

50

260

- 250

Customer X sends 250 Kina to customer Y in Madang

$


Agent Z

Customer X

Customer Y

Customer Y cashes out 260 Kina from Agent Z in Madang

$

$

50

260

360

0

+ 260

- 260

$

+260

1,660

1,740

- 260


Agent Z

Customer X

Customer Y

$

$

10

90

- 40

Customer X cashes in 40 Kina at Agent Z in Madang

$

+ 40

+ 40

1,620

1,780

- 40



Other opportunities for business
Other opportunities for business

  • Bill Payments

  • Bulk payments

    • Worker payments

    • Supplier payments

  • Supply chain

  • Distributor payments

  • Ideas?


Advantages of mm salary payments
Advantages of MM salary payments

Reduces cost of cash-handling for payroll

Large number of workers paid & notified instantly

Security benefits

Reporting

Fewer employees managing payroll services



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