Tag Archives: Mobile Money

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

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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.

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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

 

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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.

 

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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!

 

POST BLOG UPDATE:

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!

 

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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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http://www.linkedin.com/in/charmaineoak

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Nurturing Mobile Money ecosystems to scale

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For a service to reach scale one needs to create a healthy ecosystem in which all the key stakeholders can thrive. While it is vitally important that consumers get services at the right price, we should not lose sight of the requirements across the entire ecosystem.

While mobile money ecosystems have grown and reached scale in many African countries, the model has proved hard to replicate outside of Africa. Indeed, for a while it was hard to get the model to work beyond M-Pesa in  Kenya. This month I took stock on the services we monitor on the Shift Thought knowledge base, and I depict below some of the key services now available in Africa.

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As of today the GSMA registers over 242 deployments, with over 13 deployments having more than a million active accounts.

 

In “Can Mobile Money be 'Free'?” the last of an excellent series of posts of business models for mobile money, CGAP authors Kabir Kumar and Toru Mino discuss whether and how mobile money can be “free”. They argue that “free” could lead to greater profits as offering everyday transactions could drive adoption. Indirect benefits of mobile money – cost savings on airtime or retained ARPU from churn reduction — become significant drivers of profitability only at greater levels of adoption.

Unfortunately as every mobile operator in a country offers their own service, the argument regarding churn (customers changing operator) tends to lose it’s charm. We get a different perspective from GSMA in their “Insights into mobile money agent networks” . That report quotes a manager of a successful mobile money service :

“If I could have done just one thing differently,

I would have gone to market with higher tariffs”

 

As substantial amounts move through mobile money platforms, another key stakeholder, the government, starts to be concerned about what providers charge. In Uganda with an estimated 5 million active mobile money users, people opting for bank accounts continues to drop. The Uganda Revenue Authority (URA) continues it’s campaign to get more mobile money agents to register and pay tax (See: Mobile money agents set to enter tax net).

As more of the money flows through the new systems, the expectation of taxes from these systems begins to move higher on the agenda. Indeed there have been cases in the recent past where governments have intervened as price wars reached a crescendo, in one case actually forbidding a provider from pricing that involved scrapping certain fees.

In my view it is critical that such timely interventions do take place to help to maintain the balance in these ecosystems. This week a survey by MicroSave and The Helix Institute of Digital Finance reports that Kenyan agents are finding it hard to survive, with 17% not profitable, and close to half anticipating to exit the business, in this, the largest mobile money market in the world today.

If prices are to remain low enough to keep the services accessible, yet high enough to sustain agents and keep the systems secure and scalable, we at Shift Thought see only one real way forward. That is to introduce shared processes, services and infrastructure, certainly within the countries but also across countries. We see other such models developing in markets we’ve recently studied, and visualise rich possibilities from interoperability. We therefore welcome the GSMA Interoperability initiative in which over 9 high profile telecoms companies already participate. The signing of the first interoperability agreement between Tigo, Airtel and Zantel in Tanzania this month opens the possibility of further co-operation, that we hope will help to create equations that add up for every major stakeholder, as only then can these systems thrive and grow.

Come join us on the new Digital Money Group on Linked In where we regularly share the latest Shift Thought research. We welcome all our readers to post interesting discussions, to make payments “come alive” for all of us.