Growth of Pakistan telecom industry took a hit in recent months because of economy and regulation of SIMs. Even though the number of new subscribers slowed down and the revenues per user remained low, Pakistan telecom industry has shifted to a whole new set of services which provide value and convenience in ways not possible before.
One of the interesting trends of 2009 was the rush to offer financial services via mobile phones aka mobile financial services (MFS). These services include transactions such as remittances (person-to-person payments), payment of bills and others commerce enabled by mobile/cellular technology. This post provides an overview of MFS in Pakistan.
In Pakistan, the widespread infrastructure of mobile operators provides them strong advantages to serve as an important link in the financial services value chain. As we have seen in Pakistan, banks and mobile operators have partnered up to start MFS. This generated a wave of marketing activity (see these commercials) which also extended to social networks such as Twitter and Facebook, highlighting the competition among mobile network operators.
One may ask why did it take so long for MFS to start in Pakistan? Well, unlike entrainment or information services, financial and commerce related services require coordination of multiple institutes and approval of government regulatory agencies. Security, accuracy and establishment of trust of users is also very important.
Easypaisa. An example of this is ‘easypaisa’ from Telenor Pakistan and Tameer Microfinance Bank. Interesting thing about this service is that money can be sent and received without a mobile phone. However, using a mobile phone provides convenience as confirmations are sent as sms. Any person with a valid Nadra CNIC can send money or receive money. Sending/Receiving can be done from more than 4,000 easypaisa shops all over Pakistan. The transaction is encrypted and the process has been approved by the State Bank of Pakistan. Details on how this works are available at easypaisa website and on YouTube.
Regardless of one’s opinion on the convenience and the fees, one must admit that introduction of MFS such as easypaisa changes the status quo for payments which has been around till now in Pakistan.
Telenor is not the only company with plans for mobile financial services. Ufone started premium banking service for customers of Ufone who have account with one its partner banks. This is a different approach where an application on the handset allows eligible customers to carry out financial and non-financial transactions. Mobilink, the largest cellular company by subscribers, is also gearing up for MFS. In July, Orascom announced its plans for MFS:
Mobilink and Citibank will utilize Mobilink’s extensive retail infrastructure to extend the reach of financial services to the previously un-served masses. Using Mobilink’s cutting edge technology, Mobilink users will be able to open branchless bank accounts through a simple and convenient registration process via authorized agents across the country. The service will allow users to maintain their accounts through their phones and make secure peer to peer money transfers to any Mobilink number simply via SMS.
At telecompk.net we have extensively covered the potential, opportunities and market size of MFS.
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@Adnan – easypaisa is different from paypal in many ways. But it does allow a new way of sending money to others so it shares that feature with paypal.
@Saleem – I think the coverage will improve as more players jump in. This is just the beginning.
@Matt – completely agree with you about the education and the need for the regulator to watch this carefully.
When EasyPaisa was launched, it was impossible that one can watch TV for half-an-hour and escape its commercial.
On the ground, however, network of associated partners seems rather thin. I have mostly come across mobile phones and accessories shops to be associated outlets, which is not the place where a common man does his grocery as shown in adverts.
Babar bhai, is this service something similar to Paypal which is popular for micro payments?
AS: NIFT has been doing it for long time.
http://www.nift.com.pk/
Does anyone know whether there is a central clearing house/ check/cheque clearing mechanism? that would speed up MFS quite a bit if not alredy in place.
There is great potential in these technologies but there can also be dangers when the consumer is not educated enough or when advertising is too aggressive. That is why you also need better regulatory oversight.