Transcript - CCCOBIN

Mobile Payments; A Telco’s Perspective
Abiodun Ogunlabi
Senior Manager, VAS, Content & Data MTN Nigeria
[email protected]
08032001343
Background

Demand for modern banking services is increasing across Nigeria
but bank branches availability remains low outside key urban
economic centers. ~ 1 bank branch for every 50000 inhabitants

Banks in Nigeria are focused on rich urban customers through
high cost channels

Low income individuals do not have access to financial services
resulting in a substantial unmet demand for financial services

Telcos have recruited over 90million users (MTN > 40millin users)
in less than 10 years compared with the banking industry that
recruited only 30million account holders after several decades
Mobile Payment Models
 Bank –Focused- Financial Institutions
as Lead Initiator
 Bank Led – Financial Institution(s)
and/or its Consortium as Lead
Initiator
 Non-Bank Led- A corporate
organisation as Lead Initiator
Technologies for Mobile Money
 Short Message Service (SMS)
 Unstructured Supplementary Services Delivery
(USSD)
 WAP/GPRS
 Phone-based Application (J2ME/BREW)
 SIM-based Application
 Near Field Communication (NFC)
Nigeria - High density urban centres account for
less than 50% of the population
Page 5
Nigeria – GDP composition and growth
8.0%
7.0%
6.0%
5.0%
4.0%
3.0%
2.0%
1.0%
0.0%
2005
2006
2007
2008
Nigeria Real GDP Growth
Finance & Insurance ,
4%
Wholessale & Retail
trade, 13.60%
Manufacturing , 3.80%
1% of the population.
Average income $80,000
4% of the population.
Income $40,000 - $80,000
Agriculture, 38.60%
10% of the population.
Average income $20,000
15% of the population.
Average income $4,700
Crude Petroleum &
Gas, 24.30%
35% of the population.
Average income $1,200
Livestock, 2.60%
Nigeria GDP composition (2005)
Sources: The Economist Intelligence unit
35% of the population.
Income lower than $470
Nigeria Socio Economic Segmentation (2007)
Life in rural Nigeria
Life in rural Nigeria
Lagos
Lagos
Mobile phone is used for more than talk…
A current Money Transfer method in the informal market in Nigeria
Sending money via prepaid airtime scratch card
Dare has a younger brother who attends school and is often short of cash, and on occasion calls
his older brother to ask for money. Dare then sends an SMS with a scratch card PIN. The brother
sells the PIN to a Scratch Card Dealer, who in turn gives him cash.
Dare buys a N3000
scratch card in
Lagos
Dare sends an SMS
with the PIN code
to his brother
Hello brother.
Here is a PIN
for N3000 for
your school
fees.
Love, Dare.
069371121036
Send
Source: Ericsson primary research in Nigeria – 2007
Back
The brother sells the
PIN number at a Dealer
and gets cash (N2700)
The estimated commission for converting a
N3000 card to cash is between N300 – N500
(10% – 15%)
M-Banking: Banked vs Unbanked
 Bank penetration is relatively low
 85% of adult females are unbanked
 86% of rural population are currently
unbanked
 Only 21% of the adult
population has a bank
account, which is equivalent
to 18 million people
 74% of the adult population
have never been banked, which
is equivalent to approximately
64 million people
40 millions may require
financial services according
to the Central Bank of Nigeria
Source: Efina
Constraints to the Un/Under Banked
 Illiteracy (KYC form…)
 Far from bank culture (dressing code…) Sweaty, not
feeling welcome in banking agency
 Deposit/withdrawal to low
 Bank opening hours
 Transport/Opportunity cost
Needs of the unbanked
 An easy way of saving money with easy access
to funds
 Access to basic financial transactions
 Sort out security concerns related to cash
 Move from informal sector
Constraints to the Banks
 Too busy to cope with
heavy traffic
 Closed after 4pm
 Deposit too low (3,000)
 Paper based business cost
too high
MTN’s Role
 Provision of the technology platforms that will
facilitate the rendition of mobile money services.
These are
 Messaging technologies and associated encryption
systems ie SMS, USSD, IVR
 Transaction processing platform
 Provision of necessary customer care infrastructure that
facilitates issue resolution for GTBank
 Putting in place measures to mitigate technological
risks that could arise from the deployment of
MTN’s infrastructure
 Facilitate access to MTN’s vast agent network for
the benefit of the service.
Challenges
Standards
 Lack of cohesive technology standards that can provide a
universal mode of payment.
 The lack of standards will give rise to fragmented versions of
m-payments offered by different stakeholders (network
operator centric models and bank centric models). Standards
need to address security and privacy concerns of consumers as
well as interoperability between various implementations.
Business Models
 Since there are several stakeholders in the system, a viable
and sound business model needs to be developed that will
provide a framework for revenue sharing.
Regulatory Issues
 The regulations for players in the financial industry are
different from those governing the telecommunications
industry, which means that each industry has its own particular
standards body to comply with.
Key Mobile Money Services
Money transfer
(MT)
• Phone to Phone
MT
• Phone to Cash MT
• International MT
Cash in / out
• Load MT Scratch
Card
• Load from Bank Acct
• Cash-in
• Cash-out from Dealer
• Cash-out from ATM
Airtime top-up
• Prepaid airtime
top-up
Account
Management
Bill payment
• Balance enquiry
• Statement
• Change PIN
• Utility bills
• Goods & services
• Restaurants
Key to Success In Nigeria
 Ubiquitous Distribution Network
 Stable & Reliable services
 Affordable fees
 Innovations
 Enlarging the addressable market
THANK YOU