two twists to the Kenyan tale that are not widely understood, including the success of one bank that is riding on the coat-tails of the mobile scheme. M-Pesa is also clearly not the only game in town and there are other successful initiatives around the globe. M-Pesa allows customers to buy airtime, send money to an account, pay bills,


withdraw cash via agents or via four ATM networks, and pass money on to another person. From 2.5 million bank accounts in Kenya in March 2007, there were 17 million by 2014, with more than 78,000 agents and 34,700 registered merchants. By virtue of not being a bank, M-Pesa is not allowed to do anything to encourage customers to leave money in their accounts (e.g. pay interest), but the banks have clearly seen it as a threat and have made a much bigger push than in the past to attract customers from the large ranks of the unbanked. The attractiveness of that competition has been highlighted by analysis carried out by microfinance body, CGap. This concluded that the cost of making a $50 payment by mobile was half that of using a bank. M-Kesho, a linked savings account offered by the most innovative of the Kenyan banks, was launched in 2010 by Equity Bank. 600,000 new M-Kesho bank accounts were opened in the first five months and it allowed customers to deposit and withdraw cash using M-Peso, with Equity Bank charging for withdrawals, albeit at around half the fee of withdrawals from its regular savings accounts. In fact, take-up of the account appears to have been relatively slow, for a variety of reasons. Vodafone’s efforts to take the M-Pesa model beyond Kenya are moving forwards in a number of areas. Its long promised launch in India saw a tie-up with HDFC Bank for a pilot in ten villages in Rajasthan. The need for a bank partner had been stipulated by the Indian regulators and had held up Vodafone’s attempt to join the mobile payments fray – unlike in Kenya, it by no means has the market to itself. Not long before the HDFC agreement was announced, Nokia, Union Bank of India and mobile payment specialist, Obopay (part-owned by Nokia and already established in India), tied up to launch ‘Union Bank Money’, which was similarly focused on the country’s unbanked masses but did not take off. There has subsequently been a project between Vodafone and ICICI Bank for M-Pesa in India, with completion of the roll-out across the country announced in mid-April 2014. By around this time, it looked as though the Reserve Bank of India was coming round to a relaxation of rules to help to open up the mobile payments market. Elsewhere, after a sluggish start, the scheme in Tanzania had more than six million customers by late 2010. Other schemes under way by this time were in South Africa, Afghanistan, Fiji and Qatar, with the latter focused on cross-border mobile to mobile payments. In Afghanistan, the mobile is being used for salary payments and this is bringing an important add-on benefit. For policemen, the habit of superior officers siphoning off some of the salary payments can significantly reduce the final mount, bringing it well below the amount paid by the Taliban. This is no longer feasible if the payment is made directly via the mobile. Those policemen can then also securely send the money on to their families without leaving their posts. Other mobile schemes have been inspired by M-Pesa. This was the case for Erste


Bank’s good.bee scheme in central Europe, for instance. Kicking off in Romania in 2008, it provides microfinance and mobile payment services, with flat fees per transaction and a network of local agents (it is not offered via the branch). By late 2010 there were 30,000 clients, of which around 70 per cent were 18 to 25 years old and the majority were in rural areas. It represented a new segment for the bank and was expected to break even in three years. The service was also launched in Hungary in 2013. Orange has several operational programmes in Africa, similar to M-Pesa. By the end of 2010, it was claiming one million customers on the continent, across six


Payment Systems & Suppliers Report | www.ibsintelligence.com 11


market overview


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