Simon Batchelor

Impact and Learning Team

Seconded from Gamos

For Date:25/5/10

Mobile Phone Enabled

Payments – an example of

“Beyond Scaling”?

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Mobile Phone enabled payments

How are new technologies such as ICTs, new diagnostic technologies and other

major information systems-related developments affecting the structure of

health systems, the capacity for rapid change and our understanding of

concepts of scaling up?

This is a story of a fairly significant change in the structure of the financial

sector

To what extent do they (ICT) facilitate greater agency by local actors?

New local actors have been able to enter the financial sector.

What are the implications of the rapid increase in the number of actors

producing and disseminating health-related information?

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Mobile Phone enabled payments

What is the basic story?

Did we achieve anything - where are we now?

What were the drivers?

What were the barriers?

Any principles/lessons to take away?

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Storyline - the backdrop

Western world had tried mobile phone enabled payments, with mild

success (unashamedly using wikipedia at this point)

• “Mobile commerce was born in 1997 when the first two

mobile phone enabled Coca Cola vending machines were

installed in the Helsinki area in Finland. They used SMS text

messages to send the payment to the vending machines. In

1997 also the first mobile phone based banking service was

launched by Merita bank of Finland also using SMS.”

• In 1999, two major national commercial platforms for m-

commerce were launched with the introduction of a national

m-payments system by Smart as Smart Money in the

Philippines and the launch of the first mobile internet platform

by NTT DoCoMo in Japan, called i-Mode.

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Storyline – backdrop failure

European m-payments scheme SimPay collapses

– The SimPay brand was launched by T-Mobile, Orange,

Telefónica Móviles and Vodafone in June 2003 with the

overall objective of creating an open and interoperable

framework for mobile payments in Europe.

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Storyline – informed by research

Africa studies show behaviour of the poor

– In 4 countries, researchers observe behaviour - using

airtime as a means of transferring money over distances

(2002).

Desk research reveals the importance of Remittances

– At that time approximately $100 Billion was being remitted

to the South.

– The global average remittance cost was 12% (higher if you

send a smaller amount).

– Awareness of Japan moves by NTT DoCoMo.

Researchers get inspired by research and become Champions

– Ask themselves – what if....

– Set a target – 10 years “accelerated” reduction to 11%

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Storyline – active communication of research

Research practitioners share findings with private sector in

Mozambique

– contributes to Mcel being first to introduce credit swapping (2004).

Research practitioners undertake political lobbying

– creating growing statements and high level political interest (Africa

Commission 2004, G8 Gleneagles 2005)

Research practitioners share findings with donor contacts

(international)

– contributes to donors being willing to invest in mobile phone

enabled payments systems (2004), and making alliances with

private sector.

Research practitioners approach private sector (International Telcos) to

explore possible Mpayment systems

– contributes to a key stakeholder undertaking key pilot and key

commercial product (2005), and several other stakeholders

discussing it at a serious level (2005 onwards) and then

implementing systems latterly (2008 onwards).

Special registration

Changes the ball game on KYC

Affordable, average

Transaction reducing

International

Forcing lower prices

From about 700 Bank branches

To over 12,000 places of cash in cash out

9,000,000 Users

And now a savings account!!!

Some people say it was

a stabilising element in the

political troubles of a few

years ago

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Global picture

Game changing rule change on banking regulation

– Championed by UK Financial Services Authority

– Slowed down due to crisis

Major international players jumping in

– Mastercard, Visa, Western Union, ++ all jumping in

– Remittances have grown to $360 Billion (no link with this

story)

– Remittance average transaction cost reduced to 10%, and

coming down

Different models piloted in different countries

– Eg Cambodia (independent but financed by bank)

– Kenya now has three systems!

Smart phones, Near Field Communication chips, fibre optic

cables in sea around Africa – will change context again.

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Drivers?

Built on existing behaviours

– Very contextual, multispatial households, airtime transfers,

Trust in Telco

Political mandates logged

– At International level, National level

Donor seeding private sector

– Very important for getting through the immediate “profit”

culture

Persuasive Commercial factors

– Dropping ARPU, reduction of Churn, new billion market

Immediate benefit to user

– Seen as safe, good conflict resolution, reduction of

transport costs

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Drivers?

Donor harmonisation

Kenyan government (Central Bank) - Willingness to risk

Completely different market than Developed countries

New local actors – agents

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Barriers?

New behaviours didnt always take - Afghanistan

Political mandates hampered by

– vested interest,

– perceived user security,

– major terrorist incident

Commercial imperative to make a profit (which then became

driver when Mpesa “succeeded”)

Resistance by other parties (eg Mpesa audit by the banks)

Policy regulators on other countries “just dont get it”

Price points in other systems

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Takeaway lessons?

Per poor research? (per-poor innovations (by the poor and for

the poor)

Step by step change

Political positioning

Donor harmonisation

New cross sectoral alliances (and role for donor stimulation)

Engage private sector at start (and dont be afraid that you cant

control the process?)

Market analysis

Anticipate market/technology changes?

Needs Champions?

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Beyond Scaling up?

Was not more “bank branches” - uses new pathways to engage

local actors (Mpesa 12000 cash in cash out agents)

This was a political as well as technical process (If anything it

was mainly political)

It shifted power from the normal “providers” to new players

It is an example of a flexible learning approach

It might thought of as a disruptive technology affecting the main

financial sector approaches?

It works with the economy, both formal and informal?