Could new regulatory guidelines in Bangladesh turn MFS into “nobody’s baby”?

With the recent release of new draft guidelines for mobile financial services (MFS) in Bangladesh, I caught up with payments expert Raihan to get his views on the state of play of the market, possible outcomes from the guidelines and how we may see Bangladesh consumer financial needs better addressed over the next 5 years.


Raihan, to set the scene could you please share a bit about your role in the Bangladesh payments scene?

When I joined Grameenphone in 2006 on completing my studies in the US, these were early days for mCommerce in Bangladesh. We designed it all from scratch - processes for financial operations, reconciliation, the channel commission, payments, fund management and more. Seeing our BillPay service so popular in Bangladesh made it all worthwhile. I then moved to airtel where even in a bank led model we have built an award-winning mCommerce portfolio with specialized products such as micro credit disbursement together DBBL, our banking partner and 13 MFS partners including bKash.

What is the current state of play of the Bangladesh MFS market?

Bangladesh MFS market is now 5 years old. The top 2 operators bKash and DBBL together accounts for an estimated 74% of the market, with bKash leading since launch in 2011. A recent cGAP study estimates that 30% of Bangladeshi adults have used bKash while 4% have used the DBBL service. bKash users are more likely to be active, with 81% account holders active, compared with 67% for DBBL users. DBBL users are more likely to be registered users with 44% registered as compared to 23% for bKash.

As of June 2016, there are 36.2 million mobile banking registered accounts but only 13.3 million are active users. However, this data does not represent the number of unique users of MFS.

What’s behind this success of bKash?

I think this is due to the awareness that bKash was able to create ever since their launch and also their extensive retail reach. In terms of transactions, bKash still leads with over 80% market share although their annual growth in revenue has come down to 50% in 2015 from 81% in 2014.

What challenges do you face regarding user identification, AML and KYC?

OTC (Over-the-counter) continues to be hugely popular in Bangladesh, with 2.5 times more users than registered mobile wallet users. Retailers often transact on behalf of customers and this could create AML/KYC issues.

In 2016 we have started National ID verification process for mobile subscribers as Instructed by our regulators. Fortunately, as 90% or more of the active users of Telecom Services registered their SIMs, this may not impact the revenue and transaction volume of MFS.

Regarding usage pattern, I notice that unregistered users are more likely to use basic money transfer services while registered users also use advanced services including bill payment and mobile top-up. Today an estimated 8% to 15% of mobile top-up is done through MFS.

How is sticking with OTC a drawback to poorer users who only need basic services?

Today almost everyone has access to a mobile phone. Hence a poor person living in the remotest corner of the country can get registered through MFS and enjoy proper financial inclusion with the kind of services that are normally only available over a banking counter. Transacting through someone else’s wallet rather than your own is almost like a “Digital Hundi” or Sending money through the courier service which was actually one of the ways to send money in Bangladesh prior to the launch of MFS.

What was the motivation for new regulatory guidelines for MFS in Bangladesh?

MFS has always been a key focus for the regulators, specially Bangladesh Bank. Despite the rapid development of MFS and the huge potential to grow and reach the remotest corners of Bangladesh to boost financial inclusion, complete financial inclusion via mobile banking has yet to reach its full potential. OTC or unregistered use of MFS is one of the biggest drawbacks of the service.

This is why the Bangladesh Bank has been working towards a revised guideline that can encourage appropriate business models that help the market reach its potential and create a win-win situation for all the entities in terms of equity shareholding. I believe that with a few minor changes, this new guideline could help boost MFS growth and ensure financial inclusion in Bangladesh

So what are the new guidelines, and do they help address the issues?

Here I’d like to discuss two of the major clauses included in the new Draft Guideline:


Clause 4.1

BB shall permit delivery of the following broad categories of financial services by scheduled commercial bank-led Mobile phone based Financial Service (MFS) platforms in Bangladesh.


The scheduled commercial bank-led MFS platforms may have both banks and non-bank entities including Mobile Network Operators (MNOs) as equity holders, subject to banks holding majority beneficial ownership in total equity, no bank or non-bank entity holding more than fifteen percent beneficial ownership in equity, and Beneficial ownership of MNOs in an MFS platform not exceeding thirty percent of its total equity.


In Clause 4.1 we see that it remains a bank-led model as specified by the previous guidelines published in 2011. However, Clause 5.2 requires that no bank or non-bank entity hold equity share more than 15% individually. Banks must have majority ownership and Telcos may not collectively hold more than 30%. This means MFS projects will become nobody’s baby! This potentially creates a huge issue in regards to ownership.

What is the alternative you recommend?

In my view, we should first study what’s happening worldwide and learn from that. We should deploy a model which will be beneficial for the people of the country and will be owned by both Telecom and Banks. Telcos are good at things like branding, marketing campaigns, product management, agent management. Banks are expected to safeguard funds. Hence a model in which each of these players can execute to the best of their capability will be a successful one. My proposal would be that there should not be any restriction on the ownership of MNOs or any other equity holders. We should follow the good examples available across the globe.

Apart from equity participation, in what other ways are Telcos held back due to the guidelines?

There are several other areas where Telcos are not allowed to participate in the current MFS services. For example, Telcos are not allowed to promote the product, brand the product or launch different campaigns to promote MFS services. Telcos are only allowed to offer Telecom Data or talk time) for MFS promotions.

How do you see the market developing as we move towards 2020?

In the next 5 years, I expect the MFS market to be more mature and more compliant. SIM verification and re-registration will be imposed on MFS as well which will eventually limit the OTC usage and encourage use of mobile wallets. More advanced services will be launched so that people start to use MFS for services other than the basic money transfer.

Government already disburses payments (G2P) through MFS. In 5 years from now, I expect P2G to increase in a big way, so that payments including fees and taxes reach the government through MFS. Mobile Top Up usage will increase even more and may reach approximately 50% of total Telecom Top Up value.

MFS providers will further pursue Omni channel strategies, with some already providing the service through apps and the web. MFS services will be offered through other mediums such as NFC and it will not be only limited to USSD, apps or web and launch of 4G services will further boost usage.

Mobile Number Portability will be introduced in the country and, the need of having more than one MFS account with different Telecom operators will gradually decrease.

As stated by Bangladesh Bank, over the last couple of years, we have found that people at the “bottom of the pyramid” have been able to greatly increase their economic activities and that volume is increasing significantly each day. This contribution directly impacts the transactions volume in mobile banking.

Overall I look forward to MFS playing a major role in the growth of GDP of our country.



Ruhullah Raihan Alhusain is a payments professional with over 12 years of work experience in Mobile Banking Field. He graduated from the University of Texas at Arlington with Honors as Bachelor in Business Administration and led the Grameenphone mCommerce Operation Finance team before moving to airtel where he is Head of mCommerce Operations

Trends in Payments in India – from the eyes of the leading merchant acquirer


Today we are with Nitish Asthana of First Data, who provides insights on the fast moving payments scene in India, at this historic stage in the move towards non-cash payments. In this exclusive interview, we touch on key changes that could transform the card industry, and discuss a broad range of topics including E-tailing, Modern Retail, POS and the advent of mobile payments. Nitish shares four major trends that are transforming the way 1.2b consumers pay, as well as creating new opportunities in merchant-to-merchant payments potentially worth over $20b.

 india shopkeepers 1 so

Thanks for taking time out from your busy schedule Nitish! As context please could you share a bit about yourself and your role at First Data?

I am the VP & Head of First Data India Ventures and have also led First Data’s merchant acquiring business in India. At First Data India ventures, we focus on venture investments in POS, e-commerce, mobile commerce and digital payments.


First Data is the global leader in payment technology and services solutions, operating in over 70 countries with relationships with over 3,500 Financial Institutions and offers a range of services including POS, E-Commerce and mobile (on internet and POS).

In India we are one of the leading merchant acquirers, providing services to over 250,000 merchants. First Data operates through an alliance with ICICI Bank (India’s largest private sector bank), ICICI Merchant Services. Our two lines of business are Merchant Services and Issuing. We offer POS, online, mobile and merchant processing and settlement for a broad range of consumer and business payments. Our issuing platform business runs on VisionPLUS, a First Data product and powers our service to leading banks in India.


Nitish, from your key perspective, which market segments seem to hold the most promise?

Activity in the payments space crosses a wide range of transactions across a set of vertical and horizontal segments.

In terms of vertical segments, E-commerce and especially E-tailing (Retail Sales on the Internet) is really important for us. Travel booking on the internet is already heavily penetrated, covering almost 100% of bookings and accounting for 75%-80% of online payments but this is fast reducing to 55% as online payments for retail, telecoms, utilities, insurance and tax take off. We also talk about point-of-sale (POS) as a vertical, within which Modern Retail is progressing very well, growing from just 5% of retail to 20% by 2020.

In terms of horizontal segmentation, large merchants of the country have already progressed in electronic payment, but today we see a lot more opportunity with small stores that accept only cash.

Overall in the market today card payments is a very small market as compared to US, UK, Australia and others but we expect 25-35% growth over the next few years.


The overall economic trends are also looking up?

Certainly, if you look at GDP growth, positivity is back! We are looking at a 7.5% growth in GDP expected to be the highest in the world.

A bigger driver for electronic payments is that currently over 90% of retail payments are in cash. The Government vision for less-cash is expected to bring out specific exemptions. Some are likely to relate to tax incentives for merchants and consumers to pay electronically.

If that happens, what is expected to be a $150b card industry over next 4 years could be pushed 50% higher going up to $250b-$275b by 2020. This would be much higher than current estimates, and we would reach an inflection point sooner with this planned government intervention.


What about the progress of Aadhaar-linked bank accounts and other key enablers?

Aadhaar has been an incredible journey with millions of customers enrolled. This received a massive boost from the launch of the Pradhan Mantri Jan Dhan Yojana (Prime Minister’s Benefit Fund) launched a year ago. It has created the rails to transfer benefits from the government, for instance LPG and fertilizer subsidy. NPCI recently confirmed that over 150m bank accounts have already been linked to Aadhaar numbers. All 170m beneficiaries were to be brought under the program by June 30, 2015. Banking inclusion has been greatly enhanced.

Regarding debit card infrastructure, India now has over 560m debit cards. Credit cards have been leading in the last 25 years, but debit cards are a more recent development. 60% of payment volumes are on credit cards despite them being fewer in number. The story so far was around credit but will be around debit cards going forward. I expect the ratio to reach 75% debit to 25% credit in terms of payment volumes.

In short we have a number of key enablers working together: the Aadhaar system enrolling people into electronic id, the push to mobile banking for the unbanked, the push to bank accounts, the roll out of debit cards and new POS infrastructure.


Could you please explain India’s position on merchant infrastructure?

In terms of a high level snapshot on merchant acceptance infrastructure, India has about 15 million merchants of which only 1 million accept cards. This is why card payments traction is so low. The barrier to acceptance is that terminal infrastructure is expensive, at a cost of around $150 - $200 per terminal. At this level return on investment on new terminals is difficult to justify. We have focused on bringing down the cost of a terminal to $25-$30, through the use of mobile POS. When you look at the last 8-9m merchants, mobile to mobile payments without infrastructure is the way to go.

POGO1First Data has launched our Pogo solution in July 2014, deployed at smaller merchants. At current take up levels the price point is higher but merchants do not pay upfront, we recoup the cost from on-going payments.


Could you tell us about the new services you launched recently?

We are one of the leaders in E-Commerce payments and operate across a number of categories. To simplify customer experience we are looking to launch our revamped internet payment gateway which would also work from mobile phones. Universal payment options also cover internet banking, integration to wallets, EMI products, payment in home currency and seamless plug in to all shopping carts and a mobile optimized interface as well. We are looking to launch this in next 2-3 months.

We are also adding a number of features to our MPOS launched last year. At that level of transactions we can simplify documentation for a merchant to quickly come on board. We’re launching a product for payments and other applications such as ERP, accounting, loyalty and a hardware/software.

Essentially small sized retailers have not invested in counter top infrastructure. Some may have PCs, some may not even have that. What we want to provide is a package deal for a small player by “miniaturising” the functionality used by large merchants: ERP, bar code reader, printer and other features. We believe that addressing the needs of small merchants is of great importance.


How about merchant to merchant applications and do you have estimates on how much the India B2B market is worth?

If you look at B2B, that too is very interesting for us as we address cash and carry. In India the market includes stores such as Walmart and Metro Cash and Carry. We’ve done a prepaid program, also a credit card with limit, accepted by closed group of retailers. Other interesting opportunities are around travel, for low cost airlines to sell their inventory and enjoy more card acceptance. The third interesting area is procurement that can help both parties optimise working capital.

Our own best estimates for the size of the B2B market is $15b to $20b of available market across the country.


How has the Indian payments market changed over the last year?

The first major trend has been the move from credit to debit. In the past cards were used more for discretionary expense, now the trend is towards non-discretionary, as consumers use cards instead of cash in their wallet. Supermarkets are adopting cards and issuers have provided a lot more debit cards.

Secondly, it is contactless. We were the first to introduce contactless terminals. For small value transactions, you can now tap and go. I believe Contactless could be very important going forward.

The third trend is mobile especially through mobile internet. India has 900m mobile phones and 300m smartphones, growing to 500m. People prefer to shop on their mobile rather than using their laptops or PCs. This is higher even than the US, and considering how important the Indian market is apps are being rolled out and payment systems are evolving fast. Mobile optimised pages and plug-ins are being rolled out. We expect this market to reach $35 million.

The fourth major trend has been the growth of our local network, RuPay, similar to China UnionPay. In the past Visa and MasterCard held dominant positions in India, but issuance in the last 18 months has changed things. NPCI RuPay has issued a huge number of cards and will play a very important role as all the new bank accounts use RuPay.


How important will the physical card be in India?

I think plastic cards will continue to be very relevant in the near future. Mobile wallets have not been adopted as fast as hoped and have been around prepaid rather than card in store.

I believe however that the form of plastic will change though, with more Chip & PIN EMV cards being rolled out as we speak.


Do you have any idea of the number of contactless cards and terminals?

I’d say terminals accepting contactless cards are in the region of 20,000-25,000. Also, if you talk to top acquirers, they’re all talking of deploying a large number.

We expect pretty much all of our new deployments to be contactless this year. Over 80% of the transactions on POS are less than $30 and could qualify as contactless. Some categories would go better, for instance super-markets and transit.


Transport has not come up as much as it could, do you see this changing?

A number of metros are leading in the investment in tap and go. Toll is not yet integrated and as it is not interoperable it means that people cannot yet buy prepaid. With regard to Prepaid, services Mobikwik offers card payment service for Android and iOS users and now supports paying for Uber.

The form factor of cards will change, as this increasingly moves to Chip & PIN and contactless rather than magnetic stripe as the price of contactless terminals is not that much more.


What significant changes are likely in the way people pay in India over the near future?

We are keen to look at in particular in terms of how government participates. Deploying acceptance infrastructure and now systemic incentives will help non-cash payments to reach tipping point.

Everyone understands the cost of cash. The goal is to get people to prefer electronic payments over cash. However affinity to cash is too high and must be broken. Government incentives made available to all, including merchants, consumers, acquiring banks and others, will help to lower costs and promote adoption.


Nitish, thanks for sharing your insights with us. I wish you the very best for your initiatives as India continues to adopt non-cash payments at this unprecedented pace.


imageNitish Asthana is the VP and Head of First Data India Ventures, focused on venture investments in POS, e-commerce, mobile commerce and digital payments. He has led the merchant acquiring business for First Data- ICICI Merchant Services (ICICI MS) and had overall responsibility over ICICI MS revenue lines across the company’s POS and Ecommerce businesses, acceptance and acquiring product solutions, sales, business development and marketing.


LIviewport_india_2014 For more information on “Digital Money in India”, Shift Thought’s unique 360-degree coverage of the Indian payments scene, or to gain access our self-service portal with the latest knowledge on the ecosystem, initiatives, regulations and more,  just email us at

Payments and Remittances Industries meld further into Digital Money as PayPal acquires Xoom


When I first entered the remittances industry the separation of these two industries was seen to be one of the laws of the universe, just as mobile was seen to be a desirable channel for which new silos were being built.

paypal   xoom

I wrote The Digital Money Game to address the issues I foresaw with the convergence of industries and services into a multi-trillion dollar space we at Shift Thought continue to map out as Digital Money through our research in each country, as it transforms industries we have so far taken for granted.


While the remittances industry is alone worth over $580billion, when you consider the melding of industries into Digital Money the prize increases exponentially as I prove in my book. Why would a consumer care to sign up  to a new service (with perceived security, identity and operational inconveniences) for executing what is likely to be at most a single transaction a month? Would the consumers who choose to stay with cash as an economy goes digital really be the segment the brand wishes to deepen relationships with?


So it is no surprise that PayPal announced a few hours ago that it acquired Xoom for $890 million, as it prepares to leave eBay. As I see it, there was no option. When viewed from the Western perspective PayPal seems like a market leader, but as I studied each Asian country in depth, many challengers came to light as far back as 2011, when we announced that Alipay was claiming to have way more digital wallet users than PayPal. Since then Alibaba has grown substantially and Ant Financial Services has become a comprehensive digital money brand, as we report in our China analysis.


In our recent analysis of PayPal versus Alibaba’s ANT Financial Group we discovered that while PayPal, Paydiant and Venmo together form a strong capability this leaves a big gap to fill. To what extent will Xoom help fill this gap? This will depend on how soundly it goes international with PayPal’s help.

Xoom founded in 2001 today operates only to send money from the US, with 1.3 million active customers who send $7 billion to 37 countries, and this will have to change rapidly. Xoom has been recently entering emerging markets such as Mexico, India, Philippines, China and Brazil, but this has been in terms of receiving money electronically. What Xoom has capitalised on is the real-time payment infrastructure beginning to be established around the world, and this is how it entered India for instance. What is has yet to do is to establish Send operations from other markets.


So for me the success of this venture hinges on the question of whether with Xoom, PayPal has better success in the last mile in India and China, and other key emerging markets. To achieve the ubiquity of Western Union and MoneyGram PayPal will need to address remittance corridors in 200+ countries and territories, and do this rapidly.


As I’ve said before, brands are being built and broken by the trend towards Digital Money and we’ve entered the age of mega-groups, but it will not be easy to get this right. There are substantial differences between the market segments, as I’ve learnt through numerous studies, focus groups, interviews and research we carry out in each part of the world. However it is well worth attempting, and indeed as I repeat, I see no other option.

Citi’s view on being a global digital bank


Today I am delighted to share highlights of my interview with Aditya Menon, Managing Director, Digital Strategy at Citi. Citi is one of the largest banks in the world and has long been at the forefront of innovation.

Aditya Menon explains why the bank, already known as the world’s leading digital bank is focusing now on simply being the best bank, backed by the power of technology. We learn of the journey over 2014 and how this is likely to further play out over 2015.




Aditya, I am excited at this opportunity to benefit from your deep knowledge on trends in global digital banking and especially delve deeper into developments in the US and India markets. Could we please start with a bit of background about your remit and the deep experience you have in payments?


As Managing Director, Global Digital Strategy at Citi I work on Citi’s global digital strategy for stakeholders in our consumer bank including card and Citi retail services in the US.

We do 3 things for our internal stakeholders. Firstly we assist them to formulate their digital strategy, particularly on payments, commerce, capability and technology. Secondly, an area in which I am most involved in is informing on the digital capability we need to grow and compete with banks and non-banks. Thirdly, we define and drive alignment around key strategic initiatives including key digital metrics and KPIs – both internally and against competitors.


Citi plays so many different roles around the world in Corporate Finance, Retail Banking, Investment Banking and more. How does your digital strategy support all these areas?


There are three key strategic imperatives for us to deliver on:

  • Firstly we must be Customer Centric and from a digital perspective this requires that we track metrics such as net promoter score, to recognise and reward the segments we want to serve with valuable personalized services.
  • Secondly this must be Globally Common. Globally, we serve approximately 200 million client accounts and operate in more than 100 countries. The challenge we address is to deliver globally common services across all these markets. For instance, taking the example of high net worth individuals, they do have certain globally common needs that we identify and help address.
  • Thirdly, it is about being Digitally Connected and creating digital partnerships. We see financial flows are digitising and we need to be in the middle of those flows, to drive greater access to our core products through digital channels and strategic partnerships.

For each of the three areas we have launched initiatives that help us to further enable our core business, go beyond the core and finally, drive innovation by creating disruption.


What led you to select this digital strategy for Citi?


At Citi we studied how digital disruptions eroded value across multiple industries including news, travel, video, music and advertising. Across these industries we found that over 10 years there could be a substantial market share shift. If we take year zero as being peak of physical manifestation of an industry, we saw a typical trend play out for each. An initial gradual decline was followed by an inflection point between year 2 to 4 and then a rapid transition from physical to digital.

In most of these industries the disruptor was not one of the incumbents. In most cases the total revenue of the entire industry declined over time due to disruption and commoditisation and revenues never really returned to the earlier peaks. This is interesting as it means that fewer players at end of year ten have to share a smaller pie and a number of incumbents make a loss.

Extrapolation to US retail banking made it clear to us what strategy we had to adopt.

We then extrapolated to see what this could mean for the US retail banking industry. We expect to see a substantial share shift over 10 years. Looking at payment and retail banking industries separately we expect retail banking to see even more disruption than payments in terms of value.

Our conclusion is that over 10 years the laggards could lose a major share of their revenues and profits, while leaders will gain moderately. So clearly it pays to be a leader, and as a laggard one could get into a vicious cycle which takes you down a point of no return.

We concluded that Citi must therefore rapidly enact a strategy that would help to best position our bank with respect to the digital disruption trends across the world.


What are some of the important ways this strategy was enabled by Citi in 2014?


Our strategy of globally common enablers has led to the launch of our award-winning retail banking mobile app that we deploy globally. In the area of corporate banking our Citi Velocity digital platform is the world leading FX trading app in terms of volume and value. We also have CitiDirect BE Mobile, which allows our corporate treasurers to use our payments infrastructure to complete payments anywhere.

With respect to driving disruptive innovation, we have brought out the Citi Wallet in partnership with MasterCard. We were also one of the first banks to launch with Apple Pay. The strategy played out in many ways across the world. For instance we launched a contextual offer and wallet platform in Hong Kong that went beyond the ordinary, to create contextual experience using location based services.


I am curious, considering Citi’s size and global footprint, how do you still manage to achieve high levels of innovation?


We place a lot of importance on innovation through a number of initiatives, of which one example is our Citi mobile challenge initiative.

Our US challenge in December was a great success and we just kicked off the same challenge in EMEA.

We have already got innovation labs set up around the world and the work there feeds into our business of crafting new services for the future. For instance our innovative work with our API opens up transformative potential through third party development.


Over 2014 what were some factors blocking the progress of money going digital?


This has continued to be a time when financial institutions must transform themselves in line with the demands of the economy and to support evolving consumer needs. This involves considerable rebalancing within the business.

Regulatory pressures and the need to balance AML requirements and security against innovation and superior consumer experience continues to make this process challenging.


From Shift Thought’s recent work in India we identify it as one of the most complex, yet promising markets for digital money. Please could you share your thoughts on this?


In the Indian market the regulator helped to create clear and transparent regulations for mobile banking, prepaid and agent banking. To my mind we have the clearest set of regulations that exist for digital payments and money anywhere in the world.

Although early services did not take off as the initial players in this space found it hard to sustain repeat usage as customers had no way to cash out But more recently, after giving banks and nonbanks a chance, what has lifted off well is the NPCI IMPS project. There has been steady growth in mobile-to-mobile payments.


What has worked well for India and what are some things the market may not have anticipated?


Perhaps one thing unique to implementation in the Indian market that was a unique requirement, but turned out to be a bit of a sticking point for adoption, is the centricity and early introduction of MMID. To my mind this could be the biggest barrier to adoption, a point I’ve raised in public forums recently.

Regarding unintended consequences, one interesting trend we’re observing is the use of the services for cash to bank account transfer. Consumers are starting to give cash to the banking agents who help to deposit this into their accounts. This use case is seeing a huge volume and value traction over NPCI rails.


What is the key development you expect in India over 2015?


Earlier in 2014, regulators asked for a new kind of institution to be created, that of a payment bank.

Alternate networks did not really work so this new type is expected to greatly help in getting subsidy programs and other important initiatives off the ground. This requires the creation of a massive number of bank accounts through a business model that works with lean 1% commissions to offer services to people who may be on or below the poverty line.

Half a dozen payment banks could be created in the near future and a number of telcos have applied for this. Under this new scheme payment banks will be permitted to operate savings and current accounts but will not be allowed to lend, thereby opening up the possibility of partnerships with scheduled commercial banks.


Aditya thanks so much for taking the time to so generously share with us your thoughts and findings. I have personally benefited so much from these discussions with you over the years and I take this opportunity to wish you every success in your plans in 2015 and beyond.


imageAditya Menon is Managing Director, Global Digital Strategy at Citi.

A pioneer in the field of payments and a true entrepreneur, Aditya has helped to shape mobile payments through his work at Obopay and Yes Bank Ltd. Aditya is hailed as a visionary leader who can inspire teams to deliver their best.




Easypaisa Pakistan: A 5-year journey from OTC to digital money

Easypaisa from Telenor Pakistan and Tameer Microfinance Bank has now woven 50,000 small stores into a brand new fabric of financial services that help move Pakistan from a cash based economy towards a position where the mainstream population can avail of a range of financial services that better their lives.


easypaisa1Easypaisa, a pioneer of branchless banking (BB) in Pakistan, today plays a key role in offering services through which customers can make payments in an assisted model as well as from digital wallets linked to their mobile phones.

Today I have the privilege to speak to Omar Moeen Malik, Head of Strategy & Projects at Easypaisa. Omar shares about his 5-year journey, some of the key strategic decisions Easypaisa took along the way and what excites him about the future.


Omar, thanks very much for your time today. Could you start by telling us a bit about yourself and your role

As Head of Strategy and Projects for Easypaisa, I am responsible for developing and driving the strategy for Easypaisa. I head the key strategic projects as well as the product development for Easypaisa and I am responsible for developing our mobile money financial ecosystem in Pakistan through strategic partnerships. I was part of the core team that first conceived and implemented the project in 2008.

I designed and deployed the OTC and e-Wallet businesses back in 2009, launching the first mobile money service in Pakistan, and was involved in multiple functional areas over the years. I’ve played an important role in developing and managing the distribution channels for Easypaisa and have a key responsibility of interacting with the Telco and Banking Regulators on the Regulations for Branchless Banking (BB).


Congratulations on celebrating 5 years of Easypaisa last month. Could you please share a bit about the early days of the service

Back in 2008 we were captivated by the possibilities of bringing financial services to over 100 million adults in Pakistan, of which just 15 million were banked, but an estimated 70 million were mobile phone users. Inspired by success stories from Kenya and the Philippines we knew that as telcos we had the dual advantage of accessible technology and a vast distribution network across the country. The last 5 years has been a journey to leverage this to offer a full range of services, while working with our partner Tameer Microfinance Bank and our regulators to create enabling regulations to make this possible.

Once Branchless Banking Regulations were issued by the State Bank of Pakistan (SBP) in March 2008, we were the first in the market, with Easypaisa launched in October 2009. We achieved this through our strategic partnership and investment in Tameer Microfinance Bank Ltd (TMFB), the first recipient of the Branchless Banking license, so as to offer services under the bank-led model.

Today as the leader in BB with 57% of the volume of transactions, we serve 7 million customers across Pakistan on a monthly basis – they walk in to a shop to pay bills, and send money or receive money. These services are not limited to Telenor subscribers, but any person in the country can avail these OTC services. However, this is still a small number compared to the potential - there is a lot of work ahead of us still!


What kind of work do you see ahead of you?

The big piece is our on-going struggle with our largest competitor – Cash. Moving toward non-cash payments requires the development of entire ecosystems, and while we have a key role to play some of the work we’re doing is opening up big potential for our partners.

Then there is the OTC/ mobile wallet issue. How do we move from transactions to customers, and how do we get customers to keep money digital?


So why did you choose to go with OTC first, and how has that worked out?


We launched Easypaisa as an over-the-counter (OTC) service, whereby all transactions were agent-assisted and no registration was required.

We did this for 3 main reasons:

Firstly, this model made it possible to serve all mobile phone subscribers instead of only Telenor Pakistan customers, moving the needle on potential market size from 21 million to 110 million adults.

Secondly, for the agents, the cash in-cash out (CICO) business could just not be enough to establish branchless banking as a serious investment. OTC services, with their pricing model allowed for generous commissions to agents, compelling them to invest in Branchless Banking. Even if we had a wallet model we would need a CICO system anyway, and had to set up agents for this all over the country.

Thirdly, we believed in laddering the services for our customers. We started with OTC because OTC services entail the least behavior change. Customers were already used to walking into a Bank branch to pay their Utility Bills. All we asked them to do was to walk into an agent location. Customers would never have been able to do all these services on their own from a wallet. The low levels of literacy and use of technology meant customers prefer to have someone else carry out the operation for them.


I believe we were probably one of the first in the world to launch this assisted-model method for branchless banking. Although we only proposed to start this way and expected to soon move customers to the use of a mobile wallet, this shift has proved harder than we expected.


Please describe how you leverage your top-up network of a quarter of a million to build your agent network that grew from 2,500 to 50,000 agents today

clip_image006The key thing was to give the agents sufficient business and provide our customers with an incentive to use the money from their mobile wallets rather than withdrawing and spending in cash.

Over the last 5 years we’ve worked on many levels – to improve the customer experience and make it easy to use services from their mobile phones, but also to create the assisted model for bill payment, utility payment and services that people need to use for their daily lives.


As Easypaisa celebrates 5 years of touching the lives of millions of people in Pakistan, could you please give us some background on the services such as this, offered by Easypaisa today?

Today in addition to our walk-in customers, we have more than 3 million customers subscribed to Easypaisa Mobile Accounts. Nearly 400,000 transactions take place on Easypaisa each day and in 2013, Easypaisa moved 1% of Pakistan’s GDP.

This new network supplements the 11,000 bank branches and 6,000 existing ATMs that were all that customers had to serve them across the whole of Pakistan at the time of our launch. From walking in to stores just to top-up their phones, anyone in Pakistan with a valid Nadra CNIC can now send and receive money and enjoy a lot more services as well.




We chose services that would help customers easily move away from cash. In addition to a range of payments and insurance services we’ve added some unique new products.

So for instance, there is a lot of interest in holding savings in gold. We recently launched two unique products with ARY Digital, a popular Pakistani television network available in Pakistan, the Middle East, North America and Europe and a subsidiary of Dubai-based ARY Group. Now customers can deposit an amount of their choice into an ARY gold account.

Life insurance, government benefit disbursement and other key services are helping to make the lives of people more secure while also helping the government address concerns relating to money laundering and terrorist financing.


Omar, like millions of others around the world, I am deeply inspired by Malala, the youngest Nobel Laureate winner in the world. How do you see Digital Money initiatives furthering the cause of education?


This year Easypaisa worked with Sindh Education Reform Program (SERP) unit for educational stipend disbursements and we have a number of projects such as disbursements to 400k students and social payments to 1 million women through government social cash disbursement programs. We are also enabling about 50,000 retired Government pensioners collect their monthly pensions


Easypaisa is one of the few mobile money services that support international remittances into wallets. What’s your experience with this? Does this drive the take up of wallets? Do people like it?

International remittances for Pakistan are considered the backbone of the economy. Yearly an estimated $20b comes in from large diaspora in Middle East, Europe and America. SBP estimates an equal amount could be moving informally that would mean a total market of $40 billion per year.

Initially we enabled our agent network to cash out remittances. However the value cashed out tended to be almost as much as their investment in provisions in their entire shop. We now find it a better model to ask customers to open a mobile wallet first. Today customers can withdraw this money directly to their wallets, making it safer and more convenient.

However in order to make this service really useful we need to have regulations appropriate to branchless banking, as these are not yet in place.


Omar, what do you find most exciting in terms of new services going forward into 2015?

With the platforms and network we now have in place, as well as the entire ecosystem getting established across Pakistan, I see literally billions of services that could take off. I am most excited about the immediate potential from online payments, retail Payments and merchant payments.

Paying for goods and services online has huge potential as more customers start to expect this service. Similarly we’re introducing ways to pay at the store through a customer experience that is actually the simplest of all services and we expect this to vastly help in the uptake and use of our mobile wallets.


Could you please share a bit about the huge potential of merchant payments in Pakistan and the project you recently launched for supply chain management?

We’ve recently launched a very successful initiative to streamline the supply chain for FMCGs and their distributors, leveraging our Easypaisa merchant network. This has worked out very well and is one of the transformational services that will further develop over 2015.

Starting with a paper-based system for order management, inventory and payments we’ve been able to create ways for our agents, who are also small stores, to order from and pay their distributors. This reduces wastage and risk for distributors while also helping our agents – a clear Win Win that we hope we can now replicate with our merchants in Pakistan.


Omar, speaking to you today has sent tingles down my spine. I am captivated by the vast transformational potential of what you have done and what you plan to do going forward. Thanks for so generously sharing your experiences and I wish you and the entire Easypaisa team the very best for achieving your ambitious goals.



Omar Moeen Malik, Head of Strategy & Projects, Easypaisa

Prior to his 5 years of experience in Mobile Financial Services, Omar headed the GSM Value Added Services Products unit at Telenor. He has also worked with Teradata and has experience in Advanced Analytics with Data Warehouses for mobile operators and banks in the MEA region.

A graduate of the University of Texas at Austin, Omar also has 3 years of experience in working as a Software Engineer with different organizations in the States including IBM. He also holds a MBA degree from the LUMS, Pakistan.


Email for details

Part of the Global Interview Series by Charmaine Oak

Author of The Digital Money Game, co-author Virtual Currencies – From Secrecy to Safety

LIDMGCover vcbookcover 

Join me on Twitter @ShiftThoughtDM and The Digital Money Group on LinkedIn

SMART unlocks mobile operator revenues in the Philippines with multiple World firsts


For the Philippines, remittances is a game-changer, showing healthy growth over the last 5 years and a highly competitive set of services from players across a wide range of industries. Philippines became the first country to introduce mobile money in 2000 and is a pioneering example for many different digital money services today. It is therefore highly instructive to hear from the experiences of Smart (PLDT), the largest mobile network operator in Philippines, and one of the very first to launch Smart Money as a mobile operator-based solution.


UN ban ki-moon2Today I am delighted to share with you some brilliant examples that use the concepts of digital money to unlock revenue streams.

I have with me Lito Villanueva, Vice President and Head, e-Money Innovation, Digital Ecosystem Build & Global Engagements at Smart Communications, Inc. Lito shares how 14 years down the line, SMART is launching innovative services to create new revenue streams.



Mobile Operators in Financial Services

Financial services were once seen as a certain business model for new revenue streams for mobile operators. However this has proved to be harder than expected. This year Host Card Emulation (HCE) has sharply focussed on the fact that mobile operators are no longer the sole gate keepers to Mobile Payment NFC revenues. The GSMA has this year promoted Interoperability initiatives that hold a promise of better mobile money adoption, but this is not an easy solution as mobile operators do need to make the business model work through better churn reduction.


The Filipino Context

Although 12th in terms of population, The Republic of the Philippines is the third largest receiver of remittances in the world, with $22.7b for 2013, forecasted to rise to $28 million in 2014. Remittances touched a new monthly high of $2.286 b in Nov 2013, 7.5% higher than previous year due to Typhoon Haiyan (Yolanda), giving a boost to the new aid-oriented services.


Makati_skyline_j_0_n philippines


SMART Money evolves into a “surround” experience


At Shift Thought we have for some years described how mobile phones are the magic sauce, but not the sole ingredient in a mobile operator’s toolkit for succeeding in financial services. It is important to create rich customer experiences across multiple channels and services, that I have termed a “surround” experience.

I think one of the markets in which we see good examples of a diverse set of services is in the Philippines. On a visit to the country to trial the service I found it delightfully simple to use my SMART Money card to pay for provisions at a department store as well as transfer money to other users.

I was interested to see the new Smart Postpaid app that was launched a few days ago as a one-stop portal to manage postpaid accounts. For use on Android and iOS devices, this makes it easy to access a range of features through one number *121#. It is products like this that can create consumer experiences that put the customer in charge.

Now this month SMART launches something revolutionary: A unique solution branded as  LockByMobile. I was delighted to hear all about it from Lito.

My interview with Mr. Lito Villanueva follows. Enjoy!


It is great to have you here today Lito. Could we begin with a bit of background about yourself and the unique expertise you bring to the industry?

I currently lead initiatives at SMART to unlock the potential of e-money, extending beyond mobile money. Naturally we seek to leverage our unique capabilities with respect to mobile services.

Our mission is simple – to keep pioneering world-first solutions and unlock digital finance services to meet the unique needs of Filipinos including those in high growth and emerging markets.

Take for instance our world first anti-fraud and security solution. This month we are rolling out this solution to allow our customers in the Philippines to lock and unlock ANY ATM or credit card using its patented and proprietary LockByMobile.

We all know how important it is to control card security especially as online card-not-present use cases become more prevalent. Using our service people can finely tune what their card is allowed to do and lock down services themselves to prevent fraud.


You have been at SMART in the early days, back in 2007 – how has your strategy regarding financial services changed since then?

Well, for one thing, we did not have smartphones back then. Today over 10 million of our 70 million user base access our services via smartphones.

The Philippines is very much an Android market, and as the cost of handsets gets lowered we’re able to enhance the user experience of our services.


Yes, I’ve just been analysing implications of the launch of Android One, shortly planned for the Philippines. But what of the recent Apple Pay announcement?

Apple Pay is expected Q1 2015, but our NFC service will be launched ahead of that.

In November, we plan the first wave of a contactless payments rollout to our 2.5 million post-paid subscriber base. This is in partnership with Visa and Citi and will let people pay at Starbucks, McDonalds and other retail stores for face-to-face or via Paywave POS including our massive online merchant base such as Zalora, Easy Taxi, and a lot more in partnership with Rocket Internet for online commerce.

Remember that our parent company PLDT invested Euro333 Million into Rocket Internet representing approximately 10% equity share.


I understand you are also innovating with mobile loans services?

Yes, we offer salary loans via mobile to over 120,000 employees at 260 government agencies in Phase I.

This will extend in Phase II to include up to 20 million employees of private companies. They get access to what we believe is one of the lowest interest rates, at just 0.83%. This is touted to be the world’s first mobile-based paperless and fully electronic credit, savings and insurance in one.


What about money transfer and international remittance services?

At present domestic money transfer is big – it represents 70% of the volume, with international remittances accounting for 30%.

We’ve not so far made a big dent in this huge opportunity. One reason for this is the Philippines is a key market on which banks and money transfer operators in the key send corridors remain sharply focussed.


What are the differences that SMART Money has brought about in the Philippines?

Over 8 million of our 70 million subscribers use our services today. SMART is cited for being proactive and dynamically focussed on financial inclusion initiatives.


help.PH gsma2


Three innovations launched by wireless services leader Smart Communications, Inc. (Smart) and its subsidiary Smart e-Money, Inc. (SMI) were recently ranked among the world’s best by

Smart Money Padala was nominated this year as Best Mobile Payment Solution. It serves the domestic and international money remittance requirements of Filipinos. With this service, Pinoys can transfer funds to tens of millions of Smart subscribers at the speed of a text message.

Smart Money Padala boasts of a large remittance network, with 95,000 international and 27,000 local remittance partners.


What are the biggest challenges faced?

Since our last conversation, we continue to be very focussed on customer education, and increasing the number of value added services.

Customer education is very important in order to lift the percentage of active subscribers from the current level of around 20%. It is a steep learning curve for customers to change the way they pay and we continue to create campaigns to address this.


What is your vision for 2015?

Our vision is to harness digital commerce to support every customer’s digital lifestyle. The time is right – the time is now. Things have come together to let us move from mobile phone payments to a much broader spectrum and support across an entire set of use cases.

No less than our chairman Mr Manuel V. Pangilinan is a firm believer of democratizing data by making free and available across our prepaid base of over 66 million. This is a strategy to shift our customers to the digital marketplace!


Thanks very much for sharing your thoughts with us Lito. We wish you the very best for 2015 and beyond!


imageLito Villanueva is Vice President & Head for Payments Innovation, Digital Ecosystem & Global Engagements at Smart Communications, Inc.

Lito has unique expertise that crosses multiple segments and services from his work at SMART, IFC-World Bank and Visa. He is one of the few mobile money global practitioners to have a mix of experience in both banking and MNO sectors with a great deal of exposure in multi-market interventions and global best practices with established relationships with key stakeholders including international funding agencies.



Shift Thought has recently published “Digital Money in Philippines 2014”, a detailed study on the complex Philippines market. We have also created a unique research document focussing in depth on the remittances opportunity with respect to the Philippines.

Contact us today at  to get access to this and other recent research on the Philippines and each of the emerging markets around the world. Each reports uses our proprietary Viewport format to create a highly interactive experience connected into our unique portal.




A navigation guide into one of the most complex markets for Digital Money in the world


Focus on India Series : Having recently completed our in-market analysis of the emerging payments market in India, I’m confident in saying the country represents one of the world’s most complex, yet promising, battlefields for digital money. India is poised on the brink of a huge economic transformation and making money digital is a crucial part of the solution.



Digital money has a tremendous future in India, and I see a convergence of several factors that combine to create an unstoppable wave. Yet for this country of over a billion people, of which May 2014 World Bank estimates show 179.6 million live below the poverty line, money is going digital in a variety of ways and the savvy providers need to recognise this in order to make their business models work.




India’s Demographic Dividend

Even when services are designed to appeal to the under-banked, providers cannot take their eyes off India’s rapidly growing, massive and youthful middle class. Even if one assumes only 30% of the population of India’s population of 1.2 billion is reachable, this is still a sizable 360 million, considerably larger than the 5.4 million population of Singapore and 7 million of Hong Kong, for instance. By 2015, India’s middle class is expected to be in excess of 267 million. What is more interesting is the trajectory, as the size of the middle class (monthly household income ₹ 20,000-100,000)  was a mere 25 million in 1996.


Precipitating Factors

I grew up in India, travelled around the country for the introduction of MICR and worked with RBI, SBI and several banks in India to help computerise different areas of banking, in my early work at Wipro and my own company Visionix. More recently I have personally visited the country to attempt to implement financial services since 2006. It was, to say the least, a test of endurance. However, many recent developments favour payments going non-cash and give me cause to believe that 2015 will be an important year for India.

Firstly, mobile penetration is remarkable and is aided by the September release of budget Android One smartphones that appeal to a highly price-sensitive market.

Secondly, a highly thrifty, large population desperately needs convenient ways to save and spend.

And, last but not least is the will of the government. The recent meeting between Mark Zuckerberg and Prime Minister Narendra Modi highlights the opportunity that digitally connecting remote villages presents to businesses around the world from a wide variety of perspectives.


Evidence on the ground

The cash-centric Indian economy is at last moving towards non-cash payments. By end of September 2014 more than 53 million new bank accounts were added in India to disburse benefits and social security to recipients. This is one example of initiatives from the Modi government, strongly backed by the Reserve Bank of India led by Governor Raghuram Rajan.

India’s US$4 billion e-commerce market is set to soar to US$20 billion by 2020.2 E-commerce is being driven by cheap handsets and mobile data plans that enable consumers to buy from their increasingly smart mobile devices.


Born Digital Money

As in Africa, mobile money is poised to strongly support financial inclusion goals. But there is more.

In my book “The Digital Money Game” I describe how people expect a whole package of services across online, mobile, social and local situations, creating a multitrillion-dollar industry worldwide. India’s market is a perfect example and consumers are demanding convergent financial services from the start, as opposed to the mobile-centric services that took off in Africa.

This requires, for instance, the ability to provide a service not just using mobile phones but through multiple channels and the ability to offer not just one service but many. Our research this year confirmed that this is needed to compete in emerging markets, and India is a prime example.


Reaching previously unreachable markets

Underpinning the non-cash transformation is Aadhaar, the world’s largest biometrics project that goes across all segments of the population. This paves the way for middle-class consumers to make payments to their domestic help, for instance, while also using their new wallets to pay for higher-value airline tickets, goods and services. The rise of mobile Internet access aided by smartphone penetration is bringing young and highly connected shoppers online and is creating conditions for prepaid and digital wallets to thrive.

India’s 1.25 billion people are spread across 29 states and seven union territories and, as a consequence, the complexity of the market has been likened to that of all the European markets put together. Marketing in this highly fragmented environment is challenging due to differences in regulations, income, religion and culture and, notably, the lack of government-issued identification. With just 58% of Indians registered at birth, it’s no wonder that India is the largest user of cash among all emerging countries. With little to no ability to verify their identities, unsurprisingly, just 48% of people have access to bank accounts and traditional payment cards.


The emergence of Cash-on-Delivery (COD)

Around 20% of Indians have Internet access, so online sales have only just begun to grow, but the opportunity is immense, particularly as consumers look for ways to digitize cash. So far Indian consumers have not given up their reliance on cash to shop online. Instead, cash-on-delivery (COD)—a uniquely Indian phenomenon—has penetrated many urban markets. This involves consumers ordering online and paying for the goods when they’re delivered, generally at home. Flipkart popularized this convenient way for consumers to shop online with confidence and without plastic cards, and the company has been rewarded with wave after wave of investment.


In pursuit of Cash-before-delivery

But launching truly digital money services requires that players connect the dots between the online and mobile worlds and the offline world. As the Indian e-commerce market matures, COD is giving way to CBD (cash-before-delivery). COD has caused some problems for e-commerce merchants because many consumers refuse to accept items on delivery, after the initial flush of an impulse buy has faded. To meet the demand of merchants and to fit into the increasingly mobile-centric consumer lifestyle of Indian consumers, mobile wallets and prepaid payment instruments have flooded the Indian market and challenged the prevailing COD model.


Connecting the dots

Our studies show that global e-commerce companies are busily pursuing their strategies to enter this nascent market and rub shoulders with the home-grown services, both categories of players must be mindful of competition from outside their immediate vision.

For e-commerce players, digital money solutions that incorporate CBD will be critical. The race is on between Amazon, Flipkart and Snapdeal. So far Amazon, which recently invested US$2 billion in India, spent this Diwali in hot pursuit of Flipkart consumers. Meanwhile Flipkart shut its payment gateway Payzippy within a year of launch and its recent acquisition, Ngpay, is expected to provide the next platform for its attempt to extend into digital money.

As what we term as a new “nationalised liberalisation” emerges and global players ramp up investment, taking advantage of new ease of doing business in India, Shift Thought offers a range of consulting services, research and portal access that offer timely and vital knowledge on how to navigate the still murky waters of building new brands in India.


Shift Thought offers a Navigation Guide

Recently released Shift Thought research explains why and how e-commerce strategies must evolve to compete in the new digital money industry. Our report provides facts and figures not just on the mobile wallet services that have been launched—and the unique way in which prepaid services are taking off—but on the whole set of services we term digital money. I believe that is the game that global providers will need to get right to capture the new opportunities presented by the Indian market.

Our Digital Money in India 2014 Viewport released this month explains how the competitive landscape is unfolding in India, with case studies of how providers are creating unique solutions, and this article is part of our Focus on India Series through which we share highlights of our research.

Whether you are interested in taking up the challenge of entering the market, or simply wanting to know more about what’s happening, just drop us a line today at and we will be delighted to talk you through some of the key trends that affect you and the various options available through which we can help.


Join us to discuss this further and add your valuable comments at my post on LinkedIn



Some parts of the blog have been published in my blog “India’s E-Commerce Boom Paves Way for Digital Money” on PAYbefore Op-Ed. 


Disruptions in the smartphone market take a toll on Samsung results


Samsung announced their Q3 2014 earnings shows a substantial Q-on-Q decrease due to decline in their mobile business caused by intense competition in the smartphone market. Further to my post on How Apple play affects the Digital Money Game, as China Mobile starts to eliminate $2 billion smartphone subsidies, the cost of high-end devices is impacted and affects both Samsung and Apple, benefiting low-cost manufacturers like Xiaomi.


Headquartered in South Korea, The Samsung Group operates through over 150 subsidiaries, including 73 domestic affiliates as of June 2014, having been first established through Samsung Electronics Industry Co. Ltd back in January 1969. The company manages 3 divisions: CE (Consumer Electronics), IM (Information Technology & Mobile Communications) and DS (Device Solutions.


Anticipating consumer desire to interact with the Internet, Samsung focused early on smart TV sales, leading the market in 2011 with the launch of smart TVs and hub-based apps.


In 2014 the mobile phone market is expected to reach 1.8 billion units, with 1.2 billion of them being smartphones – this represents a growth of 7% since 2013. However Fitch Rating expects Samsung shipments during the period to remain flat.


Samsung has maintained a No. 1 position in the smartphone global market, with strong take up of the Galaxy S series and the Galaxy Note. However with Apple’s release of iPhone 6 (4.7”) and iPhone 6 Plus (5.5”) compared to the previous 4” models, these phones now represent a substantial threat. Low cost Xiaomi (low-cost devices) was already resulting in tough competition, especially across the Asia Pacific region. The figure below shows the impact on first half performance in 2014.




Samsung’s share in the global smartphone market dropped from 31% in 2013 to 25% in H1 2014. They announced mid to low-end shipments were down due to weak demand in the EU and lower 3G demand coupled with intensified price competition in China.


Samsung expect that in the second half of 2014, strong seasonality will help to boost smartphone and tablet demand. At the high-end, they expect growth to be led by TD-LTE expansion in China and lower inventory level in Europe. At the mid to low end they expect growth led by emerging markets, and this is where we are likely to see the competition heating up with new product launches expected.


Meanwhile Samsung Electronics plans to build a $14.7 billion semiconductor plant south of Seoul, in an attempt to make up for touch competitive pressure on its smartphones with new growth in its most profitable semiconductor division.

Remittances remain buoyant but cross-border mobile remittance still less than 2%


World Bank’s recent reports on remittances indicate a welcome continued buoyancy. India remains the largest receiver, as growth in 2014 is led by East Asia and the Pacific, South Asia, Latin America and the Caribbean. However MENA flows are affected due to disturbances in the region, and ECA countries traditionally receiving inflows from Russia are badly affected. While mobile money has been adopted for domestic money transfer, 7 years on it has yet to make the inroads into cross-border remittances that was originally expected.


Good news as global cost of remittances falls from 8.9% to 7.9%

The global average cost of sending $200 fell from 8.9% in 2013 to 7.9% in Q3 of 2014, as remittances go online and digital. Account-based money transfer (cash-to-account is the lowest-cost method today). However although mobile money is being used for domestic money transfers, and is making an impact on sending money from urban to rural areas, its use for cross-border transactions remains limited. Less than 2% of remittance value took place through mobile phones. Yet with global remittance flows at $542 bn this even now represents a flow of $10 bn.

However Bill Gates believes that even with all the regulatory compliance it should be possible for pure digital to digital transactions to be moved at less than a percent. We are still far from achieving this goal. Is it a case of further enablers or something else that is needed to make this this possible?


Global remittance flows to developing countries are projected to reach US$435 billion in 2014


At a much welcome 5% increase over last year, the growth is expected to continue into 2015, though at a reduced rate of 4.4%. Total flows are expected to rise from US$582 billion in 2014 to US$608 billion in 2015.


Forced migration is at an all time high with 73 million forced to leave home

The main message from the latest World Bank report on migration is that forced migration due to conflict has reached the highest level since World War II. Of the 73 million who had to leave their homes, over 51 million were forced to move due to conflict, and 22 million moved due to natural disasters.


India remains largest recipient at estimated $71 billion

Highest receivers are India ($71 b), China ($64 b), the Philippines ($28 b), Mexico ($24 b), Nigeria ($21 b) and Egypt ($18 b). Yet these flows are not as high as they could be. The largest receiver, India, only receiver 3.7% of GDP in 2013.


Remittance flows respond to natural disasters

Remittances continue to offer a much-needed lifeline of support in times of natural disasters, rising by 16.6% for Pakistan in 2014, and 8.5%  in the Philippines in 2013 in response to destruction from the super typhoon.


Regional trends

Remittances are projected to increase by 7% in the East Asia and Pacific region (EAP) with China and Philippines being the largest receivers. Remittances to South Asia have rebounded strongly in 2014, expected to grow by 5.5% to over $117 bn in 2014, with very strong growth for Pakistan, Nepal and Sri Lanka.

Growth in remittances to Sub-Saharan Africa is picking up in 2014, expected to reach $33 billion in 2014. Nigeria continues to dominate in terms of inward remittances flow, with $21.3 bn forecast for 2014.


imageRemittances to Europe and Central Asia (ECA) are slowing as compared to 2013 affected by conflict in Ukraine and sanctions against Russia. The figure shows how receivers of remittances from Russia have been affected as remittances received continue to decelerate.







Another affected region is the Middle East and North Africa, but despite the volatility, remittances represent substantially larger and more stable sources of inflows. Remittances to the region are expected to grow by 2.9% to reach $51 bn. Remittances to Egypt are expected to stabilize in 2014,  after the 2013 decline of 7.3% in remittances to Egypt (biggest receiver in the region, 6th worldwide).


For the full World Bank report click here: Migration and Development Brief 23 


Charmaine Oak, Practice Lead, Digital Money

Author of The Digital Money Game, co-author Virtual Currencies – From Secrecy to Safety




The MMPL Story: Innovating through the Assisted Model for e-commerce in India


Today I am joined by Shashank Joshi, serial entrepreneur and Managing Director of My Mobile Payments Ltd (MMPL), which he set up in 2010. Today MMPL is one of the companies that are driving the war on cash in India. They make it easier for consumers to keep their cash and cards away and just carry their mobile phones.


Through an extensive network of 225,000 small stores and a multi-lingual app that supports 10 languages and a proposed first support for payments through WhatsApp, MMPL today provides 24 X 7 mobile payment services to subscribers and merchants under their ‘MoneyOnMobile’ brand.

It was great to hear of the multiple innovations and the insights that Shashank had that led to his innovations that bring the uniquely Indian ‘Assisted Model’ of service to use in serving the needs of the unbanked, while also creating profitable transactions for merchants.

Shashank, thanks very much for your time today. Could we begin by understanding your main motivation for getting into the mobile money business in India?

I’ve been a serial entrepreneur for 22 years, having started my first company before leaving college. From 2003 to 2010 I was heavily involved in payments in the US, managing the whole merchant acquiring process from card swipe to settlement and underwriting. My first plan was to start a POS solution in India. However when I did my feasibility study in 2009 it was the exponential growth of the use of mobile services that set our direction and this led to my embarking on money on mobile in June 2010.


How did things evolve from SMS based payments to the mobile wallet app you support today?

At first we started with text messaging. As you know, India is a highly price sensitive market and back then we could expect zero Capex when starting our business. We planned for something that needed no change of handset, was not operator led and worked on all networks and I’m glad to say we got some great numbers in our first 3 years.

Today we provide a mobile app and our customers are the small retail stores. Consumers go to these outlets to recharge mobile phones, pay bills and buy tickets and more.


Please give us a bit of context on the Indian payments scene (especially the PPI business) and share some of your key learnings in bringing services to market

The Indian payments market is indeed pretty unique. I’ll share three of our key learnings to put some colour on this.


Key Learning 1: To succeed in India, Apps must be multi-lingual

India skipped the desktop generation, going direct to mobile. So mobile apps are important, but English only on an app is a deterrent as every state speaks a different language. We modified the app we’d launched last year and now support top 9 regional languages + English. (Ed: Did you know there are 1,683 mother tongue languages in India, with 780 different languages in use today?)

We support Android as that’s a more realistic $65 price point as compared to Apple/ BlackBerry. The unbanked is our primary segment and they have been taking to cheaper smartphones with data plans, to avail of WhatsApp messaging. In fact, MMPL expects to be the first company in India to launch on WhatsApp in the near future. We are also the first to have launched a multilingual app of this kind.


Key Learning 2: Ability to convert cash to digital currency is a game-changer



We have focussed on building our key asset in terms of cash network. We already have the ability to convert cash to digital currency at 225,000 “Mom & Pop” outlets in every state across India barring J&K. Going forward we are aiming to increase this to a million by end 2015 (we estimate approximately 4 million small stores exist in India just now).


Key Learning 3: Move from COD to CBD

You know how India has developed this unique Cash on Delivery (COD) model. Well the thing is, as many as 8 of 10 cases may be impulse buys – satisfying wants rather than needs. By the time the delivery is on your doorstep in 4 days, quite often that impulse has faded.



E-Commerce cannot be profitably built on a COD model alone: it needs to be a payment first model. At MMPL we are building a Cash Before Delivery (CBD) model. This is a payment method in which an order is processed when received, but is shipped only upon receipt of full payment. Consumers pay from money on mobile wallet to the e-commerce provider, who gets a settlement as he gets from Visa and MasterCard. His payment is now in the bank before the goods are shipped.


That is fascinating, thanks Shashank. But I’m still a bit confused about B2B v/s B2C. As you mention that your customers are the stores, could you tell us how this unique model works in India?

In India the B2C model is protected by RBI who must protect consumers. On the other hand the B2B model, where we are talking to the stores is not directly regulated by RBI. In India the B2C model is not seeing so much traction due to the current RBI restrictions on Cash Out. It is rather the B2B model that is growing fast. If you put  ₹ 10,000 on your phone, you can only use it to pay for services, not extract any of it back if you need it.


Please tell us a bit about the unique “Assisted Model” of service unique to Indians, and how you innovate to serve the payment needs of the people with this model

People have the tendency to come into the store and ask someone to do the transaction. At first I thought this may be a language issue, but it goes deeper. The self-serve model that is popular in the Western world simply does not work here, is not in the Indian DNA. Look at hotels – there is no such thing as a self-check in hotel here. There is not a card on file concept.

The B2B model really facilitates this assisted model. The outlets are not branded; they are small convenience stores which people visit daily. These retailers have a prepaid arrangement with MMPL – I give them a consolidated balance from which they can then do bill payments, top-up recharge and other functions on behalf of consumers. They hang a small sign outside their shop to let people know the walk-in services they offer, as a footfall driver.


Shashank, how do you see regulations evolving in India in the near future?

We are currently involved in a pilot with RBI using Aadhaar card authentication. In another 3 months we should heva the results of the pilot. The pilot has seven participating companies and began two and a half months ago. It’s quite low key for now, on RBI’s stipulation – we can’t do a lot of advertising about it. In fact RBI has been very helpful in evolving these new regulations, and certainly the new government and the highly progressive RBI Governor’s vision greatly helps in evolving services in a way that will help the cashless models of the future.


Shashank, it has been fascinating to talk to you and to understand your story. Although I am only just back from our detailed market study for creating our “Digital Money in India 2014”, speaking with you has added more dimensions already, and it just shows how fast the market is evolving and growing. Wish you the very best for the rest of the year, and for your ambitious goals for 2015!



Subsequent to this interview MML won the ‘Best Wallet’ award at The Emerging Payments Awards held in London on October 23, 2014, withstanding stiff competition from major international m-wallet brands such as Starbucks Mobile Wallet UK, EE Cash on Tap and JustYoyo. Congratulations to Ashank Joshi and the MMPL team!



Shashank Joshi is the Managing Director of My Mobile Payments Ltd, a leading mobile payments solutions company based in Mumbai, India, which owns the "Money-on-Mobile" brand. A serial entrepreneur, Shashank has over 22 years of professional experience of leading companies in the areas of IT and ITES, Outsourcing, Transition, Management consulting and Mobile Solutions. He pioneered the successful execution of Merchant Cash Advance and Merchant Processing businesses through the offshore route. Shashank studied Mechanical Engineering from MIT.


Charmaine Oak is Practice Lead of Shift Thought

Author of The Digital Money Game, co-author Virtual Currencies – From Secrecy to Safety

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