Some MNOs are turning to loyalty-based microinsurance to address this challenge.

Telenor Pakistan and Tameer Microfinance Bank have launched one of the more elegant products. Easypaisa Khushaal uses microinsurance to reward customers for keeping balances on their mobile money wallet. Easypaisa customers who maintain an average monthly balance of PKR 2,000 (USD 21) are eligible for life insurance coverage of PKR 50,000 (USD 521) for natural death and PKR 100,000 (USD 1,039) for accidental death.  Higher average balances result in even higher insurance coverage.

The State Bank of Pakistan was congratulatory in their remarks at the product launch, with the Deputy Governor, Kazi Abdul Muktadir commenting, “The State Bank looks forward to the success and positive outcomes of Easypaisa Khushaal and expects more innovative products from TMFB [Tameer Microfinance Bank] for promoting deposit mobilization and financial inclusion agenda.”

Vodacom Tanzania has also recently launched loyalty-based microinsurance. The microinsurance product Faraja does not drive stored value but rather rewards customers for transaction volumes.  Customers who make ten M-PESA transfers per month are eligible for free insurance cover (funeral benefit) of TZS 200,000 (USD 126) in the subsequent month.

Whether encouraging stored balances or transaction frequency, both of these microinsurance products should have the same effect – encouraging more wallet activity.

Is microinsurance an effective tool to encourage mobile money wallet usage? We welcome your feedback: you can post comments below or email us directly at mmu@gsm.org.

For additional details on microinsurance products see MMU publication Emerging Practices in Mobile Microensurance and MMU’s recent blog post on Tigo, Bima and MicroEnsure

Today, we count 34 countries where there are at least 2 mobile money services for the unbanked. In these markets, MNOs launch mobile money not to differentiate themselves, but because they don’t want to lag behind their competitors and lose customers.

With competition emerging in the mobile money space, we now see battles over price, but also attempts to better adjust services to the needs of unbanked customers and to increase the quality of service.

In Rwanda and Tanzania, Tigo illustrates that it is possible for operators to compete successfully in mobile money even when they have been slow to market and/or are not the market leader in the mobile business

The 2011 Global Mobile Money Adoption Survey has identified Rwanda as one of the fastest growing markets for mobile money. In a recent blog post, I explained how MTN Rwanda is now emerging as a new success story in the mobile money space. Two years after the launch of MTN MobileMoney in February 2010, MTN boasted 415,000 registered customers. MTN has a market share of 70% in Rwanda in terms of number of GSM connections. However, the competition over mobile money is fierce.

Tigo launched its mobile money service Tigo cash in May 2011 in Rwanda. It managed to leverage the high level of awareness of mobile money among the population – largely due to MTN’s marketing efforts over the past 2 years – to sign up over 260,000 customers in just one year. This is more than MTN one year after the launch of MTN MobileMoney. Airtel, which became the third operator in Rwanda in March, is also planning to launch its mobile money service by the end of the year.

Vodacom, the dominant mobile operator in Tanzania, launched M-PESA in April 2008. In comparison to the extremely rapid adoption of M-PESA in Kenya, the service grew more slowly across the border.[1] However, Vodacom was tenacious, and by September 2011 it was able to announce that there were more than 2 million active M-PESA customers in Tanzania—one-fifth of Vodacom’s mobile base.

In the meantime, however, competition in the mobile money market had emerged. Zain introduced a rival offering, Zap, in February 2009, a service which was re-launched as Airtel Money in October 2010; Zantel launched ZPesa in 2007 and re-launched it in May 2010; and Tigo brought Tigo Cash to market in September 2010.

The 2011 Global Mobile Money Adoption Survey allows shows that Tigo was able to capture significant share from Vodacom during the first half of 2011. In a countermove, Vodacom recently announced an across-the-board reduction in fees for M-PESA.

Tigo’s early success in Tanzania and Rwanda are important, because it illustrates that it is possible for operators to compete successfully in mobile money even when they have been slow to market and/or are not the market leader in the mobile business.

In Pakistan, competition between Telenor and UBL has led them to differentiate their product offering

There are two mobile money services in Pakistan: Easypaisa, which is offered by Tameer Microfinance Bank, in which Telenor Pakistan holds a 51% ownership stake, and Omni, a service of United Bank Limited. Both services allow customers to transact without first opening an account; for Telenor, the third mobile operator in Pakistan by market share, this decision was motivated by a desire to serve customers without a Telenor SIM.

Mobile money is catching on in Pakistan very quickly: according to the State Bank of Pakistan, transaction volumes have increased from 3.5 million transactions in Q1 2011 to 20.6 million in Q4 2011.

The data show that Easypaisa and Omni have highly differentiated offerings. Easypaisa dominates when it comes to [2] Bulk payments represented 18% of the total number of payments it processed in June 2011—while Telenor had not conducted bulk payments up until June.

[1] “What makes a Successful Mobile Money Implementation? Learning from M-PESA in Kenya and Tanzania”, GSMA, http://www.gsma.com/mobilefordevelopment/wp-content/uploads/2012/06/mpesa_case_study9983.pdf

[2] “Case Study: United Bank Limited Supports Cash Transfer Payments,” Bankable Frontier Associates (http://www.cgap.org/gm/document-1.9.50409/CGAP_UBL_case_study_Jan_2011.pdf)

While mobile platforms have been used by aid agencies to distribute electronic vouchers redeemable for cash or food, such as the UN World Food Programme’s (WFP) pilot project for Iraqi refugees in Syria, mobile money is still relatively new in this field.  Aid agencies are, however, coming to realize the cost effectiveness, speed, and resilience that mobile money payments can provide in emergency situations.

One such agency is Concern Worldwide. In response to the Kenyan post-election violence in 2008, Concern and its local partner the Catholic Diocese of Eldoret implemented a cash transfer pilot in the Kerio Valley (KVCTP). This programme sought to alleviate the food security problems that affected communities faced after the violence by piloting the use of Safaricom’s M-Pesa to distribute payments of affected households. Once beneficiaries (the matriarch of each household) received this electronic value, they could redeem it for cash with any M-Pesa agent and use it to buy the food they needed.

An evaluation of the KVCTP found that, subject to a few conditions, using mobile payments is preferential to food distribution when providing post-crisis support. The pilot highlighted that using the M-pesa system was faster (i.e. overcoming logistical challenges), safer, cheaper, and offered immediate relief to a wider reach of beneficiaries. An added advantage was that beneficiaries stimulated the local food market.  The evaluation also found that the mobile phones distributed as part of the project helped to empower members of the community.  Following this pilot, Concern is implementing a similar emergency cash transfer programme in Niger in partnership with ZAIN’s mobile money platform, ZAP.

Given the size of Pakistan’s displaced population, her damaged infrastructure, the tenuous security situation, and perceived levels of corruption within the government, it is worth assessing the potential of monetary aid via mobile money.

A mobile money platform already exists in Pakistan—Telenor’s easypaisa, which offers the functionality to send money from one side of the country to another.  Could aid agencies distribute monetary aid via easypaisa?  When we caught up recently with the Telenor Pakistan team, they told us that the answer is yes, but noted a few key challenges:

• KYC requirements: a number of displaced families have lost all their belongings, including identification, so how do you make sure payments are getting to the right people?
• Distribution footprint: what happens when there is no local agent to serve affected communities?
• Liquidity: Unless retailers are willing to accept electronic value for payment of goods, customers will want to cash-out their payments, so how do you supply agents in affected areas with cash?

Will mobile money play a role in the relief and rebuilding efforts in Pakistan? For the Pakistani displaced communities, I hope so.

It will be exciting to track the progress of easypaisa in the months to come, but even from day one the service sparks conversation as the model looks more like Grameenphone’s Billpay service available in Bangladesh and less like other mobile money launches that have made headlines in 2009 from the likes of Zain, MTN and Vodafone.

Here are three main ways that Easypaisa differs from others:

1. Primary Focus on Bill Payments

Telenor has focused their consumer messaging on one specific service – bill payments. It’s been publicly acknowledged that money transfer (which was a lead offering from Vodafone, Zain and MTN in their markets) and other services are on the roadmap, but it’s clear that the initial value proposition will seek to address the inconvenience and security issues associated with current options for paying bills. In a country where just 12% of the adult population is formally served with financial services, the potential to add and promote subsequent offerings is immense.

2. Agent Network Designed to Service Customers of Any Mobile Network

Telenor and Tameer Microfinance Bank have created a network of more than 2,000 easypaisa shops at which bill payments can be made. easypaisa is unique in that customers do not need to have a mobile account with Telenor (or even a mobile phone) to pay their bill at an easypaisa shop – they simply present their cash and bill to a representative who completes the payment on a mobile phone (it’s worth noting that the mobile can be used to find out the outstanding account balance of a bill via SMS). The decision to enable anybody to pay their bills at easypaisa shops could stem from the mobile market share structure in Pakistan. Mobile penetration is approximately 56% and the market is fragmented. Three players (Telenor, Ufone, and Warid Telecom) each have roughly 12% market share, while Mobilink (Orascom) has 17%. Thus, restricting access to easypaisa agents would have significantly reduced the addressable market. Additionally, it could be a strategically advantageous to enable customers of all utility companies regardless of network to use easypaisa agents for bill payments as a means to offering them other services at a later stage.

3. Method of Transaction

In the Zap, M-PESA and MTN Mobile Money models, end customers conduct transactions on their own mobile phones and must be comfortable with the idea of storing value on their handset. In the case of easypaisa, it is the agent who actually completes transactions on the mobile phone at this stage. However, in Bangladesh Telenor does enable Grameenphone end customers to make payments from their mobile phones.

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Other ways that this model is unique? Share them below.