Mobile Money Asia

Mobile Money Asia

This blog has been established to share thoughts on the development of mobile money globally, but more specifically in Asia. Over the past six years contributors to the blog have been instrumental in mobile money in Cambodia, the Pacific, Bangladesh, Indonesia and other Asian markets. They have worked in payments companies, start-ups and development organisations, thus providing a unique insight to how mobile money is developing in this region. Thoughts and blogs are those of the authors.

Wednesday, October 1, 2014

Micro and Small Businesses: the missing link for digital financial inclusion?

For most Indonesians, micro and small businesses are a significant part of life; this is especially true for those living below or near the poverty line.  They are more likely to spend their money at a small local shop or business.  If they have a job, it is probably from a small business. And if they ever scrape together enough money to start a business, it will start as a small one.
Despite the huge important of these businesses for people’s lives, most banking products are aimed at personal transactions. This is especially true for mobile money, which has too often relied on the “Send Money Home” template of M-Pesa in Kenya, targeting personal domestic remittances as the key activity that would drive customers to the service.

Credit: Spire Research
TNP2K, in conjunction with Microfinance Opportunities and Spire Research, has recently published research into the behaviours and demand of Micro and Small Enterprises  (MSEs) in Indonesia.  We conducted surveys and focus groups to try to get a picture of the current financial lives of over 400 MSEs and assess the potential demand for Mobile Money and Branchless Banking.
Unsurprisingly, business is done mostly in cash. Suppliers and customers are generally located close by, so transactions are done in cash. There is an opportunity to digitize some of these payments, but businesses are not currently feeling that there is enough pain in dealing with cash for their supplier payments that this will become a compelling transaction.
On a more positive note, businesses are interested in saving their money. About 85 of the respondents have money left over at the end of the day at least half the time, but only a third put this money into the bank. For the others, there is considerable interest in saving the money if it could be made very convenient and fast. Mobile Money or Branchless Banking could fill a significant niche here by giving small businesses the ability to lock away some of their savings at the end of the day.  Traditional banking in developed countries offers a “Night Safe” or a “Night Depository” drop box for small businesses to put their end-of day takings. With some good product design, Digital Financial Services should be able to provide a modern equivalent by allowing MSEs to deposit their money at agents, not only for overnight safekeeping but also longer term savings. 
The full report is available for download from the TNP2K website.


Sunday, September 14, 2014

The Paradox of Calling Mobile Money ‘Mobile’ in Asia

After many years of hard graft, there is an emerging awareness that this mobile money thing might just catch on! The Economist, long a vocal supporter of the growth of mobile money and its transformative power continues to publish positive articles, however there does also appear to be a groundswell of broader interest. Much of this comes from the exciting news of Apple’s foray into mobile payments of course, but there are also a number of targeted articles on developing economies and the ‘buoyant mobile money market’. This is fantastic for all of the pioneers in mobile money of the last decade, as we bear the scars of believing in an idea before the majority. The ‘idea’ was that we could provide efficient and safe financial services to the unbanked, whilst we made a profit and created a sustainable business. Not many people believed in that idea six or seven years ago but the success of companies like Easy Paisa, bKash and WING Cambodia are proving the doubters wrong.

Despite the success of these wonderful companies, there is a ‘dirty little secret’ about mobile money in Asia. Perhaps dirty little secret is a touch too controversial, but the reality is that the success of mobile money in Asia has less to do with mobile, and far more to do with agents. In fact, it would be more appropriate to call the business model ‘agent money’, as the success or failure of this part of the value chain is critical to the operation. A mobile money business must develop an effective distribution network to be successful. Rather than branches, these deposit and withdrawal services are provided by third party agents who may be grocery stores, prepaid airtime resellers or similar. The advantage for the operator is that leveraging agents greatly reduces the fixed costs of distribution however it can be difficult for the provider to control quality and service. Successfully managing this tension between flexibility and quality does take some expertise, and the successful operators have started to master this challenge.  


All three of the companies previously referenced are seen as leaders in mobile money, not just in Asia but globally. All three have slightly different business models, but also one significant similarity, particularly compared to peers in Africa. But first, a quick overview of each business: 
  • Easy Paisa is a joint venture between Norwegian telecom giant Telenor, and the Pakistani micro-finance bank Tameer. Telenor accelerated the joint venture through the acquisition of 51% of Tameer in 2008. Easy Paisa provides mobile money accounts and over the counter services through a network of agents to customers on the Telenor network.
  • bKash is a joint venture formed in 2010 between BRAC Bank, an offshoot of the world’s largest NGO, and an entity formed by Iqbal Quadir, the original founder of Grameenphone. Recently the Gates Foundation and IFC have also become shareholders. The operation connects into four of the six mobile operators for USSD and SMS services in Bangladesh and provides an agent network throughout the country.
  • WING Cambodia is a payment service provider in Cambodia founded in 2008 that is operator agnostic, providing money transfer services, ATM access and e-commerce facilities to merchants. WING also leverages an extensive agent network through every province in Cambodia where customers can do cash in or cash out services, and conduct transactions over the counter.

Whilst all three of these businesses have had very different journeys to success, there is one common thread. Over the counter transactions, or OTC for short, make up the vast majority of transactions. In an OTC transaction the agent effectively conducts the transaction on behalf of the customer. The customer does not need a mobile phone however the agents will use their own phone to conduct the transaction. In the case of Easy Paisa, over 70% of customers were not Telenor subscribers but were leveraging OTC, whilst bKash has had over 50% of their customers leveraging OTC transactions. WING launched over the counter transactions in 2011 only after the original shareholder, an Asian regional bank with a conservative risk outlook, had divested its shareholding. Since then it is claimed that OTC transactions make up 90% of their transaction base and have been a significant contributor to its success. Agents become the critical success factor in the provision of this service, and the OTC model appears to work for both the provider and agent as the margins tend to be better, and the volumes higher, resulting in better income and motivation for the agent.


Over the counter transactions have become a significant accelerator in each of the markets outlined in this blog. In each market the success of the customer proposition has been based on provision of a high quality, liquid and reputable agent network. The agent proposition has been to provide customer footfall, healthy margins for providing the service, and the ability to leverage support where needed. Whilst the mobile channel and user interface is important for the agent, it is far less critical then it would be to the customer as the agent is getting a return for their service. Whilst all operators are keen to migrate customers to mobile wallets over time, the ability to reward their agent network with transaction volume and income from OTC transactions means that the agent network will continue to be far more important then the mobile channel in emerging markets in Asia for the next few years. As a dedicated and passionate advocate for developing markets financial inclusion, I am excited to see the continued success of ‘agent money’ in Asia. 

- Brad Jones

Brad Jones was Managing Director of WING Cambodia from late 2007 until mid-2010. He then worked at Visa on their emerging markets mobile strategy in Africa, Middle East and Asia before spending a year consulting to IFC and a number of other clients. He now works in a transformation and growth role for a bank in Singapore.

Saturday, July 12, 2014

Cambodia Embraces Mobile Money

I have written widely on this blog previously on WING but having just come back from a week in Cambodia on holiday I felt compelled to write a short blog on how the business model is developing. In short the growth and success of the business has been outstanding. 

At the time we launched WING there were a number of opportunities we believed made the business model compelling:
  • There was no national payments system in Cambodia
  • At least US $8 billion of payments lay outside existing formal payment channels
  • The Garment Industry was seeking a solution to its manually intensive payroll process
  • The Cambodian market was ready for a product that could provide basic financial services to the unbanked segment
  • There was an emerging global trend that was seeing convergence of mobile operators and banking services in the mass market.
When I think back to 2008 when we created WING to address these opportunities, it is fascinating to see how WING is performing in 2014. After a year away from Cambodia, the over-riding impression I had on the drive to the center of Phnom Penh was the sheer number of WING Cash X-Press outlets (agents). I was also very interested to see how they had morphed in many cases from mobile phone shops or general grocery stores to become primarily agents. This was clear from the infrastructure paid for and built by agents, including small branch and teller areas. This is a compelling difference from the early days of WING, and I imagine most mobile money providers - agents are now competing to provide the WING business, and will invest in their own shops to attract customers. Whilst I didn't visit the provinces on this occasion, I have been told that the agent infrastructure is of similar quality. 

The second observation I had during my brief time in Cambodia was the number of people who used and knew of WING. Every single remork (tuk tuk) driver I spoke to, every wait staff in shops and restaurants knew of and in many cases used WING. In addition, WING is now providing payroll and commercial services to many corporates in Cambodia leveraging their liquidity solutions. With anecdotal payment volume of US$350 million in June, and a projection for this year of well over US$3 billion, WING has become the national payment system for micro payments and money transfer in Cambodia. 

So, approximately five years after the launch of WING, it is fantastic to see that the opportunities we first identified in 2008 and 2009 have been realised. It is also interesting to speculate whether previous owner's ANZ now have some regret in divesting when they did in 2011, given the success of the business since that time, and the opportunity to offset some of the negative public relations they have experienced in that market recently with a positive story of how WING is helping low income Cambodians to save and send money cheaply. 


- Brad Jones

Brad Jones was Managing Director of WING Cambodia from late 2007 until mid-2010. He then worked at Visa on their emerging markets mobile strategy in Africa, Middle East and Asia before spending a year consulting to IFC and a number of other clients. He now works in a transformation and growth role for a bank in Singapore.

Friday, April 25, 2014

Indonesian regulations favour the Four biggest banks

Since my post of last week, I have obtained a better copy of the new e-money regulations in Indonesia.  It's still an Unofficial Translation and is pending an accompanying Circular Letter which has yet to be released, but it does add more clarity on the uncertain regulatory environment for financial inclusion.

You can download them here https://www.dropbox.com/sh/k439k42jyew8tj2/SYwNnyIPMS or send me an email. 

The new category of “Digital Financial Services” (LKD) is specifically designed for financial inclusion. However, it appears to be identical to other e-money licenses except that it allows Book 4 banks to appoint individual agents. These could be individuals or non-legal business entities such as grocery stores, retail merchants and (phone) credit sellers. Having access to these points will be a serious leg-up to any of the Book 4 banks who are interested in extending their services.  However, this new concept of LKD won’t do anything to benefit the telcos or smaller banks who are seeking to capitalize on their e-money licenses and existing distribution networks; they will still have to rely on companies or institutions with a formal legal entity to act as Cash In / Cash Out agents.

On the KYC front, there is some increased clarity. It is clear that the issuer has responsibility for opening the account, so they will need to dedicate some back-office staff for account approvals. However, it is also clear that the agents are capable of conducting the initial registration and data entry. The account records will need to be in compliance with AML and CTF laws, but according the the accompanying explanation this should, “At least cover name, address, date of birth and other data as stated in the proof of the identity of the holder.” E-money can be either unregistered or registered, so it should be fairly easy for issuers to design a tiered KYC process.

Regarding G2P, there is also mixed news.  These regulations do specify that e-money and LKD can be used for the disbursement of social payments. However, the Ministry of Finance has an outstanding regulation (PMK 81) that specifies these payments must be made through either banks or the Post Office. Again, this will leave telcos out in the cold as they would be unable to deliver these G2P payments unless there is more regulatory reform.

Michael Joyce is a policy advisor working with the Government of Indonesia on mobile money and financial inclusion. He has been working on mobile money in Asia for six years, specialising in risk, regulation and operations. The views on this blog are his own and do not represent the views of the Government of Indonesia or constitute legal advice.


Saturday, April 19, 2014

Had enough of mobile money hype? Look at Cambodia and renew your faith.

I will start this blog post by declaring my bias. I was the founding managing director of WING Cambodia and spent close to three wonderful years living and working in that beautiful and mesmerizing country. I also spent seven years working in mobile money, and have observed business models in Kenya, South Africa, Indonesia, Bangladesh, Pakistan, India and China, in addition to numerous other countries. I have recently moved back into the mainstream financial services world, so now have the benefit of looking at mobile money from a distance. An article was recently published on the growth of mobile money in Asia and sadly there was no mention of WING in Cambodia, despite in being one of the first mobile money operations in Asia and globally, hence I felt compelled to write this blog.

I recently joked with a group of industry friends that ‘2014 was going to be the year of mobile money’. The reason why this was a joke is that we have been saying the same thing for the last five years! Our cynicism is driven by the fact that the success of mobile money has been incredibly hyped. The reality is that there are very few successful mobile money operations in the world, and most media and attention focuses on the same three every time; M-Pesa in Kenya, Easy Paisa in Pakistan, and bKash in Bangladesh, with a liberal sprinkling of MTN in Africa. Without undermining the success of those operations, isn’t it time that other successes be celebrated, particularly in an industry with such little success? So recognizing my innate bias, I challenge the mobile money world to take a closer look at what is happening in Cambodia. Initial owners ANZ started WING in early 2008, and a small and dedicated team managed to build and launch the business within nine months. The first couple of years were tough, with middling interest by the owners, and the normal development time it takes for a payment business to build scale. ANZ divested WING in 2011, and it would not be an understatement to say that the business has gone from strength to strength since that time.

WING broke even as a business in 2013, and reports that it will have its first profitable year in 2014. Whilst a longer period then the original business case estimated, five years to profitability is a reasonable outcome considering the margins on transactions and the need to build sufficient payment volume. Payment volume in 2013 was a whopping US$1.5 billion in a country where GDP is approximately US$14 billion. Contrast this with Easy Paisa in Pakistan who reported payment volume of US$1.4 billion in 2012 after launching at a similar time to WING. The GDP of Pakistan in 2012 was $225.1 billion or 16 times that of Cambodia! So WING is now profitable and has achieved significant payment volume in a relatively small country. Fantastic stuff. However the really interesting development in Cambodia for me as an emerging market payments professional is what WING is now leveraging given its mass.


The core business of WING is similar to that of Visa or MasterCard, with one exception. Visa is a four party model where they bring together the customer, the merchant, the issuer and the acquirer. In the WING model, they are both the issuer and the acquirer, and therefore maintain their own merchant network and issue accounts to customers. Like Visa however, WING is using its volume in Cambodia to leverage into new products. Visa devotes a lot of time and investment to products outside its core in order to maintain its value proposition in a world of challengers. Information products, digital wallets and corporate propositions all provide Visa with an improved ability to drive transactions to the core.

WING appears to be following a similar strategy. As payment volume increases exponentially, WING is finding new ways for customers to transact, and like Visa recognizes that these new products will drive transactions to the core. Here is an example of some of the new products that WING has launched over the last couple of years:
  • eCommerce transactions with PIN authentication on the mobile
  • A joint WING & FTB Bank Visa prepaid card, topped up using a WING account
  • Loan repayments at a variety of microfinance institutions
  • Bill payments at almost all major billers in Cambodia including electricity and water
  • Integration with online games platform including Facebook to allow in-game purchases
  • Payroll and disbursement services

WING is focused on both its core service of transferring money safely and cheaply, but is also leveraging its capabilities by providing an increasingly sophisticated suite of services for Cambodians in urban and rural locations. Coupled with its impressive growth I would challenge the mobile money industry to turn its attention to the success of WING. With its many political and economic challenges Cambodia needs positive media attention and how better to do so then by focusing on how a local company is changing the financial services landscape for the better.

-       Brad Jones


Brad Jones was Managing Director of WING Cambodia from late 2007 until mid-2010. He then worked at Visa on their emerging markets mobile strategy in Africa, Middle East and Asia before spending a year consulting to IFC and a number of other clients. He now works in a transformation and growth role for a bank in Singapore.