Sunday, January 6, 2013

My Five Mobile Money Predictions for 2013

As the memories fade of a short holiday and work starts to ramp up again for the year, I thought it might be interesting to document my five predictions for mobile money in emerging markets for the year. If nothing else, it will be interesting to look back in 12 months to see whether I was accurate, or wildly off the mark! So, at the risk of looking foolish in 2014, here are my five predictions for the year.
  •  Pakistan and Bangladesh will become the new stars of mobile money.
  • Agent-initiated over the counter transactions will be recognised as the ‘killer app’ in mobile money.
  • Mobile money interoperability will become a reality in some markets.
  • Google will launch mobile money in more emerging markets.
  • There will be further platform consolidation in mobile money, potentially leaving only three to four big players.
2013 will be the year people stop talking about M-Pesa, and start talking about other successes in mobile money. I don’t think I have been to a conference in the last five years where M-Pesa wasn’t the center of focus. All credit for what has happened in Kenya, but the industry desperately needs more stars, and this year I think we will start to see them. We have a huge growth market for mobile money emerging in Bangladesh, with many banks taking advantage of the regulations to launch agent-banking services. A CGAP blog post and Bangladesh central bank report from July last year were both cautious on the success of mobile financial services at this early stage, however I hear that some of the first movers are experiencing extraordinary growth in customer numbers, and more importantly transaction volume. Pakistan is doing exceptionally well, and in the last quarter of 2012 there were over 31 million transactions and US$1.5 billion in payment volume across the entire branchless banking system. My understanding is that a lot of this volume is coming from Easy Paisa given their position in the market (around US$1.2 billion payment volume in 2012 with 60 million transactions), and this leads on to my second prediction.

Over the counter transactions are becoming the ‘killer app’ for mobile money. Much of the growth for Easy Paisa has come from agent-assisted transactions for bill payments and cash transfers, with over 160,000 transactions every day and around 4 million unique customers per month. Essentially a customer of the service does not need to be registered or have a mobile phone, but can complete a transaction with the agent initiating the transaction on his or her own mobile phone. Of course, KYC and AML processes need to be in place to ensure the transaction complies with regulation, however the process removes the friction of having to register as a customer, and provides the agent with immediate revenue and transaction volume. WING in Cambodia has seen spectacular growth in the last 12 months since the introduction of an over the counter cash transfer product that essentially allows the service to operate as a domestic Western Union system (take a look at their great TV commercial here). The benefit of the over the counter service is that it helps to create a highly trained and incentivized agent network. The challenge is eventually moving customers onto individual accounts, although it is far preferable to be doing this with an existing revenue base.

Interoperability will become a reality in some markets. There has been much talk about the benefits of interoperability in mobile money, but not a great deal of action as yet. Visa announced the launch of Mobile Prepaid in November 2011, with plans for MTN to launch the new product in Nigeria and Uganda. Over 12 months later we are yet to see this launched, however there was a recent announcement on the launch of mVisa in Rwanda, where customers will be able to use shared agent networks of mobile money providers. This is a very interesting project as Visa has the potential to bring years of experience in developing rules and regulations for interoperability as well as technology solutions. The industry should take a close look at how this program develops, as there will be many lessons to be learnt, particularly on commercial models for interoperability.

Watch out for Google. I have blogged previously on the launch of Beba in Kenya. What I really liked about this product is that it uses contactless technology in a very smart way by removing the friction of two major issues seen in both developing and developed markets. Firstly, the contactless acceptance infrastructure, or lack thereof, and secondly, the lack of mobile phones with contactless capability. Google leap-frogged these two issues by firstly picking an industry that caused problems for customers. Over-charging and theft in the public transport industry meant that customers of and company owners of buses were both motivated for change. Google issued the bus drivers mobile phones with contactless readers and issued customers cheap plastic contactless cards that they can top up at agents. By all accounts the service is well received, and Google have plans to expand into Asia and other parts of Africa pending regulatory approvals. So my prediction is by the end of 2013 the launch of mobile payment systems by Google in emerging markets will be a talking point. 

There will be further consolidation in the platform market for mobile money. Over the course of the last few years we have seen Visa acquire Fundamo, SAP acquire Sybase, and most recently Tech Mahindra acquiring 51% of Comviva. Visa and MasterCard have developed outsourced services similar to debit and prepaid processors for mobile money. The platform industry is shifting away from license and maintenance revenue, to transaction-based models with centrally managed platforms that host a number of entities. As the industry shifts, it will become harder for smaller companies that are less well capitalized to continue to invest in development of their technology, and to fund the cash flow needed to support their business with the absence of large license fees. Whilst there will always be some clients who prefer to host their own technology, in 2013 we will see the continuation of a shift from license models which will cause some smaller providers to look for some sort of exit, either through merger or acquisition.

So they are my predictions for 2013 in the world of mobile money. I would be pleased to hear your predictions as well, or whether you think I am wildly off the mark. Feel free to email me at, or leave a comment on the blog. 

- Brad Jones


  1. Great post Brad... I truly believe in your predictions on Pakistan, Bangladesh and Google. These are three quiet achievers that continue to make small calculated progress. You might have seen me mention Google in my recent 2013 prediction ( Google's technologies are in a sweet spot in both developed and developing markets, as the global open source community pushes high tech innovation for developed nations, and impact technologies for developing nations. Grameen's App Lab is a strong example of this.

    Bangladesh & Pakistan are ideally positioned right now. High cash flow velocity amongst an unbanked market with little legacy infrastructure. Primed for success.

    One prediction I would have added is the start of platform replacement projects, as 'sticky tape & band-aid' platforms are decommissioned.

    Definitely an exciting year ahead.

  2. Brad,
    I think you've hit the nail on the head with the agent-initiated transactions. To me, an agent-intiated, over-the-counter transaction (OTC) compares to account-based transactions much as pre-paid mobile phone services compares to post-paid mobile services.
    OTC allows for an almost frictionless transaction, with no need to complete complicated forms, memorise PINs or learn to use a USSD session. It more closely resembles the traditional ways people send money using informal "hawala" or "hundi" networks. We have all been patting ourselves on the back because our account opening processes are so much easier than bank account opening processes, but there is still a long way to go. For someone who is skeptical or wary of mobile money transfers, an OTC transaction is the best way to prove that the service works and suits their needs.

    1. I'd also like to weigh in on "interoperability". This is often seen as an important goal by watchers of mobile money, but I'm not sure we've always thought of what customer benefit it brings.
      True interoperability, with technical integration between different account providers, is very difficult to achieve. What I think customers want is twofold: 1) to be able to send money to anyone, and 2) to be sure they can do their transactions reliably. If you look at payment cards such as Visa or Mastercard, merchant interoperability is the way that similar goals were achieved. But for mobile payments, the solution may not be the same.
      To send money to anyone, interoperability is one solution, but "Over the counter" transactions are also another solution to this problem. Some providers will allow you to send money to anyone - if the recipient is on the same network, it is deposited to an account but if they are off-network, a voucher code and over-the-counter transaction is used.
      In terms of answering the problem of better access to agents, interoperability may help but is not necessarily the solution. It can lower the cost of providing agents because agents can be shared, but may further dilute the branding and benefits of the provider and end up with higher dormancy rates.
      I agree that interoperability is a good long-term goal, but we must be wary in advocating it unless the benefits to customers, agents and providers can be proven.

  3. Hi Brad,

    I agree that the ubiquity of mobile and interoperability are the keys to the penetration of electronic payments. The strategic collaboration between MasterCard, Comviva Technologies and Tutuka will extend financial inclusion to millions of consumers across Africa.

  4. Hi Brad,

    Clear thoughts!

    I'd like you believe that you will be smiling back with all of these coming true at the end of the year. I agree with you mostly except I feel that the OTC and interoperability predictions are conflicting in a way, depending on the type of interoperability you are speaking about (whether it is at the channel, agent or platform level). Obviously you and Michael Joyce are both speaking of agent level interoperability.

    My take is, specially in the Pakistan example, if OTC payments dominate the market (which they do) BB service providers will not see the revenue opportunity in interoperability. This is because customers can already remit cash to anyone based on the national identity card verification and code, so there is no real advantage to the OTC customer.

    And if significant breakthrough happens in 2013 in the area - then OTC payments will loose share and the wallet transactions will pick up since then the real value of wallet will come out and customer preferences will shift, given that the service providers market the new ecosystem well.

  5. Great post indeed. Thank you Brad.
    Maybe some other trends:
    - linking mobile wallet with bank / microfinance institutions' account will start to be more commonstream. Will you start to see uptakes of banking institutions joining together to build common platforms? ...for the uptake, it could be a prediction for...2014 ;>)
    - audit constraints and fight against fraudulent agents will be a little bit more discussed this year...but I don't want to appear as looking only on the dark side of agent-based transactions.

  6. Good post. My two cents;

    OTC: Very much agree for bill payment aggregation. Follows similar pathway to Australia- billpay was aggregated at the Post Office first before people had the capability and trusted online banking payments.

    Trust Banks: Agree with Scott, there are a lot of platform replacement projects in the development pipeline- and as the role of the Trust Bank becomes more widely understood (banks and regulators) the addition of integration/support friendly technology we should see more activity from the big banks supporting this space

  7. Brad, as we discussed in Jakarta, your excellent article pointed out some great predictions for 2013. As promised, I have added my own thoughts, comments, and predictions for 2013 and posted them here

    Let me know what you think.

  8. Brad-I think you made a lot of accurate calls. "Watch out for Google" is definitely right, they are a force to be reckoned with!

  9. Hi, I hope that you will keep on doing such excellent in future too. I thank you sincerely for this useful post.
    singapore money

  10. Proud to be a part of successful mobile money in Bangladesh..Here we Dutch-Bangla Bank(a bank led mobile money) is doing really good and to some extent we have done something really exceptional which other country can follow...

  11. Thanks for the post Saiful. Well done on the work by Dutch Bangla Bank!

  12. While Google is definitely moving into mobile in emerging markets I don't think the infrastructure is there for mobile money industry. At any rate, your 5th prediction seems to be on track!

  13. So how many of the predictions did you get? :)


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