New Orange Money Service allows in Store Mobile Payments in Botswana

Mobile money has seen an exponential rise in the developing world and much of its success has centred around Kenya and Safaricom’s M-PESA service. Recent research from the GSMA highlighted the fact that 74 per cent of the adult population in Kenya use mobile money, and 31 per cent of Kenyan GDP is transacted through mobile money services.

Mobile money however is not all about Vodafone’s M-PESA, as Orange demonstrated with its recent launch of the Orange Money International Transfer service which will operate between Mali, Senegal and Ivory Coast – the first such service in the region. Every year, about 200 million Euros are transferred between the three countries. According to Orange, there is an urgent need for a more convenient and secure transfer service in the area. The service will allow Orange Money customers to transfer money between friends and family within the 3 countries using a mobile device and simply dialling #144# from the mobile phone and entering the recipient’s telephone number and the amount to be sent. Orange is desperately trying to compete in the ever-growing mobile money market in Africa. Their goal is to expand this first-of-a-kind service in Africa to other  countries in which the Group is present. Orange Money is already a significant player in the region and this transfer service is likely to expand its influence. Available in 13 countries in  Africa and the Middle East, Orange Money has more than 7 million  customers today.

The Orange Money International Transfer service announcement has been swiftly followed by an Orange partnership with Visa. Currently, Orange Money allows customers to use their mobile phones to transfer funds to any mobile phone subscriber in or outside the country, buy airtime, and pay bills. From August this year, registered Orange Money subscribers in Botswana will be able to use their Orange Money account to make Visa enabled payments and pay invoices at stores, international online merchants and at over 300 Visa ATMs across the country. To access these services, Orange Money subscribers will need to apply for a Orange Money prepaid Visa card, which will be instantly linked to their existing Orange Money account. The card, secured with a PIN code, will then allow them to use funds to make point-of-sale payments at retailers and withdraw cash at ATMs. This is a significant move forward in the African mobile money movement and could pave the way for the mobile device to become a real means of payment on top of a means of money transfer in Botswana and beyond. It could well be Africa leading the way in mobile payments with the likes of the UK learning from its efforts.

The Orange Money Visa card will be available to all sectors of society, including the unbanked, helping to reach those most in need of financial services. Botswana is the first country in the world where this new innovative program for enhanced mobile payments will be launched, following the announcement of a group-wide collaboration between Orange and Visa in 2012. Other countries in Africa and the Middle East, where Orange Money is already available, will progressively offer the Orange Money prepaid Visa card.

This is a significant milestone in the financial and mobile industry to drive financial inclusion and will contribute to drive the mobile money revolution in Africa.

MMU releases infographic on Kenyan mobile money journey

Flag of Kenya

Flag of Kenya (Photo credit: Wikipedia)

As Nairobi jostles with the likes of Accra, Lagos and Johannesburg to become the continent’s technical innovation hub, mobile money continues to drive the Kenyan economy and is at the forefront of reaching the unbanked. Mobile money started as a simple money transfer system driven by a lack of entrenched financial systems and operates through a vast system of mobile money agents, enabling people to “cash in” and “cash out” using their mobile device. Safaricom’s hugely successful M-PESA is synonymous with the term mobile money, and has since launched in other countries in Africa as well as India, and now allows users to pay for goods and services using their mobile device.

The Mobile Money for the Unbanked (MMU) is a department within the GSMA and works with mobile operators and the financial industry to accelerate the access to financial services across the developing world. The following link is an infographic highlighting the Kenyan journey from 2006 to today, and outlines the exponential rise of mobile money.

http://www.gsma.com/mobilefordevelopment/wp-content/uploads/2013/07/MMU-Infographic-The-Kenyan-journey-to-digital-financial-inclusion.pdf

Highlights of the report are are:

23m Mobile Money users in Kenya. 74% of the adult population

31% of Kenyan GDP transacted through mobile money services

96,319 mobile money agents in Kenya

Orange opens up Mobile Money in Africa

Orange Shop

Orange Shop (Photo credit: Wikipedia)

Mobile Money has brought a great number of benefits to parts of the developing world including financial independence and improved security. Until now, Safaricom’s M-PESA has dominated this ever-growing market. However, it comes as little surprise to many that Orange is now trying to stake its claim. Orange Mobile has just rolled out its first international mobile money transfer service called “Orange Money International Transfer” which will operate between Mali, Senegal and Ivory Coast – the first such service in the region. According to Orange, 200 million euros are transferred between these three countries every year. Can Orange cut it in the ultra-competitive world of mobile money in Africa?

A customer in The Ivory Coast will now be able to send money directly to friends and family in Mali or Senegal with their Orange Money account. The sender simply needs to dial #144# from their mobile phone, and enter the Orange telephone number of the recipient and the amount to be sent. The money is immediately available in the recipient’s account to make payments, pay bills, purchases and transfers, or alternatively it can be withdrawn at a nearby location from any Orange Money distributor, also known as a Mobile Money Agent.

Mobile Money is the simple transfer of money through SMS based services. Its success in Kenya has been replicated in many parts of Africa, and more recently India. The system has flourished due to a lack of traditional banking infrastructure (consider the costs of building ATMs and bank branches in Africa’s remote, rural areas), the relative low cost of the service in comparison to bank charges, as well as the fact that the mobile phone has become ubiquitous in the developing world over the last decade. Mobile money has been particularly successful in reaching the ‘unbanked’, those most at need in society. A mobile phone is an essential device to many people in the developing world, and mobile money is simply an extension of this.

The mobile money system is dependent on a network of people who are in essence the face of the business called Agents. Agents can be anyone from people working in neighbourhood shops, petrol stations and lottery ticket stalls. These agents are the “face” of the business and determine customers’ trust and willingness to transact over the mobile platform, and allow people to cash-in and cash-out money when required. The whole mobile money system is dependent on this network. If the network of agents is too large, then there are too many agents who are not transacting meaning they have no incentive to ensure they are ‘topped up’. If the network is too small then there aren’t enough agents to enable consumers to transact meaning the network falls down and the whole system loses credibility. This loss of credibility was particularly prevalent in West Africa, which until Orange’s foray has had limited exposure and success in mobile money. It is costly to build and manage the agent network, but these costs are worth incurring in order to get to scale and they will eventually pay off – as some of the more successful mobile money experiments are showing.

The success of mobile money depends on the network of agents to build up trust, and to be readily available for people to cash-in or cash-out. Success for Orange in West Africa will depend on the quality, training and commitment of its network of Agents. The jury is still out on whether Orange will succeed in its Mobile Money roll-out in West Africa. What is evident is the necessity of an excellent network of Agents, a build-up of trust amongst the everyday user in Africa, as well as gentle persuasion that mobile money is a more cost-effective way of dealing with money that traditional everyday means.

Why does Africa lead the way in mobile money?

Satellite image of Africa, showing the ecologi...

Satellite image of Africa, showing the ecological break that defines the sub-Saharan area (Photo credit: Wikipedia)

Mobile payments,  mobile wallet and NFC are seen as the next big things in the UK mobile advertising landscape. The opportunity around the use of mobile data such as GPS and payment history to allow advertisers to target potential customers dependent on where they are and what they’ve bought is much hyped. It is seen as such an opportunity that former enemies Vodafone, EE and O2 have combined forces to form WEVE, a joint venture allowing advertisers to run targeted campaigns across the 3 giant UK telecoms operators networks. Mobile payment is seen as the future. However, while systems such as NFC limp along in the UK, Africa is at the forefront of mobile payments and it is the African continent that is most likely to teach the rest of the world valuable lessons.

It is important to separate mobile banking and mobile payments. In the UK, mobile banking often refers to an extension of the services of a traditional bank ‘s services and is widely used by consumers. In Africa, mobile money has been driven by the mobile operators and allows people to transfer money, pay bills, and purchase goods and services using a mobile device, all without accessing a traditional bank account. Mobile money, often associated with Kenya’s M-PESA, is aimed at serving the unbanked, the under-banked and the under-served. Mobile payment is an extension of mobile money and involves the use of the device itself to pay for goods, and Africa is likely to see a surge in this over the next few years.

Why is Africa so far ahead of the UK in terms of mobile money and payments?

A lack of entrenched payments systems in Africa

Africa is a continent that is rich in technological innovation and some of this can be attributed to an open-mindedness, a determination, and no fixed way of doing things. There are no preconceived ideas around debit cards and credit cards being used for payment. Mobile payments have therefore seen an early adoption on the continent. Whereas there are countless ways of paying for goods and services in many parts of the world, this hasn’t been the case in Africa, making mobile money a straightforward choice for many.

A tool of necessity for the unbanked

Many Africans fall into the unbanked category and don’t have access to traditional financial services that are taken for granted in the developed world. Mobile money is therefore a ‘must have’ service for many people. It is not a question of being ahead of the curve,  it is a necessity.

Minimal fees associated with mobile money

Fees charged by services such as Safaricom‘s M-PESA  are minimal compared to traditional banks so mobile money is tempting for many cash-strapped Africans. Despite an increase in the fees charged by mobile money agents in Kenya over the last few months, the total value of Kenya’s Mobile Money market hit $5bn dollars in the first quarter of this year.

Geographical distances and city workers

M-PESA was originally designed as a system to pay back microfinance-loans which reduced the transaction costs, allowing for lower interest rates. However, in a country like Kenya where lots of people work in cities like Nairobi and Mombasa and transfer money back to families in rural areas, the M-PESA service became increasingly used as a mobile transfer system. The distance that often separates the main bread earners and dependants in Africa is often vast. This has contributed to the exponential increase in mobile money usage in Kenya.

The integral role of mobile in Africa. Mobile money is simply an extension

Mobile is often an essential part of people’s lives, from agriculture, health care, to education, so it’s use for payments is a natural step for many people to take. If you’re an expectant mother receiving regular SMS updates that offer pregnancy and childbirth advice, why wouldn’t you use your mobile for payments?

Lack of regulation and restrictions

Safaricom’s M-PESA system was launched with very little resistance and it was allowed to flourish without the sort of restrictions we would see in the UK. It began in an experimental way with very little marketing around it and has benefited because of the lack of bureaucratic red tape as well as Safaricom’s dominance of the Kenyan market. This dominance has also meant a simple solution, whereas in other countries the launch of mobile money products has been ineffective due to too many players in the market.

Technology seen as critical in Africa, mobile much the same

The African continent is currently undergoing a technological boom, with mobile at the center, and this entrepreneurial spirit lends itself well to mobile money adoption.

We cannot mimic all of Africa’s success with mobile money, however many areas can be ‘copied’. Indeed, M-PESA is starting to do well in other countries, including Afghanistan, and it recently launched in India. In the future, mobile payments will extend to areas over and above the transfer of money, and devices will continually be used to pay for goods and services. This is happening now and will be even more prevalent  in Africa as sub $100 smartphones begin to flood the market. For this next stage to really take off, there needs to be a one system-fits-all approach across devices and network operators. There also needs to be a clear benefit for consumers to pay for goods using their mobile device such as loyalty schemes, offers and location based incentives. The future in mobile money and payment systems is likely to be driven by Africa.

Kenya’s Mobile Money Transfer hits $5billion in Q1. But doesn’t tell the whole story

English: Mombasa ferry, Kenya Русский: Паром в...

English: Mombasa ferry, Kenya Русский: Паром в Момбасе, Кения (Photo credit: Wikipedia)

A Central Bank of Kenya report has shown that mobile phone based transactions across all networks reached $5bn in the first 3 months of 2013. This was an increase of $0.76bn on the same period last year. The CBK said Kenyans made the most transactions in January, when transactions were worth $1.69 billion. In February, the value dropped marginally to $1.68 billion. This fell again at the end of the quarter to $1.6 billion in March. This month on month drop does not reflect what happened in the same period last year, when the value increased month on month significantly.

This drop in value is a slight concern and coincided with M-PESA‘s increase in charges because of the government’s introduction of a tax on mobile money transfer.

What is mobile banking?

Safaricom launched the mobile banking M-PESA service in 2007 and its simple premise is to allow people to transfer money and pay bills who don’t have access to traditional financial institutions. Its success and uptake has been revolutionary in Kenya and the M-PESA service has since launched in other parts of Africa and India. Many Kenyans live and work in big cities like Mombasa or Nairobi and send money home through their mobile devices to families living in rural areas. The system is quick and easy and, crucially, M-PESA has gained the trust of millions of Kenyans with an estimated 17 million Kenyans using mobile banking in what is currently the world’s hotbed for mobile money. As one of many unexpected consequences of the service, mobile money was also credited for easing tensions in Kenya after the post-election violence in 2008 by allowing people to receive money when trapped hiding out in slums.

With mobile banking there is no need for a smartphone or an updated handset which is essential on a continent where the basic feature phone is still very much the phone of choice. Customers hand cash over to a mobile money agent, their mobile account is then credited, and can then send mobile money to a recipient who then cashes it in at another agent through a secret code. Commission is then paid to the agent. However this fee compares favourably to bank fees. The reduced costs coupled with the exponential uptake of mobile devices in Africa and the ease with which you can begin begin mobile banking have been the major reasons for its success.

However does the increase in mobile banking in Kenya tell the whole story? What should we take from the fact that the overall value of transactions fell month on month in the first quarter? What else needs to be done to improve access for the unbanked?

According to a new report from the International Telecomms Union (ITU) the number of mobile phone subscriptions is expected to pass seven billion by early 2013, surpassing the world’s population of 7.1 billion soon after. In Africa, despite the exponential uptake of mobile phones over the last decade, the continent still lags behind in terms of number of subscriptions per head. The poor and those in rural areas are often the ones lacking mobile devices and subsequently excluded from the mobile banking system. Governments need to do more to encourage the uptake of mobile devices or subsidise contracts for the poor to ensure everyone benefits.

Questions around trust in using a mobile device for the transfer of money still remain. Just as in the UK there probably needs to be a UK-wide advertising campaign to persuade people of the security around mobile payments and NFC, so do African governments need to reassure the population around the security of mobile transfers.

People also need to be persuaded of the benefits of mobile banking. What can mobile banking bring to a market trader in rural Kenya who has been using cash all her life?

Despite the success of Kenya’s M-PESA, more needs to be done to ensure the poor are not left behind and the gap between rich and poor is not widened. The premise of mobile banking is to reach those who had previously been unreachable, particularly those in rural areas, and its uptake needs to be stimulated by governments, NGOs and mobile operators.

Mobile’s role in the workplace across the developing world

Jaron Lanier

Jaron Lanier (Photo credit: Wikipedia)

The science pioneer and ‘visionary’ Jaron Lanier has recently published “Who Owns The Future” which discusses the Internet and its detrimental impact on job and wealth creation. The book wages war on digital utopianism and highlights the way in which the Internet threatens to destroy the global middle class by eroding jobs, wealth and the various “levees” that give people stability. In the prelude of the book, he offers the example:

“Here’s a current example of the challenge we face. At the height of its power, the photography company Kodak employed more than 140,000 people and was worth $28 billion. They even invented the first digital camera. But today Kodak is bankrupt, and the new face of digital photography has become Instagram. When Instagram was sold to Facebook for a billion dollars in 2012, it employed only 13 people. Where did all those jobs disappear? And what happened to the wealth that all those middle-class jobs created?”

Lanier, however, still does see the potential in digital technology but just wants it reoriented away from its main role so far, which involves “spying” on citizens, creating a winner-take-all society and eroding professions. I would stress the role in mobile technology in the developing world and its positive impact on business – both on the employee and employer side of the spectrum. With rising unemployment an issue in both the developed and developing world, mobile solutions have the potential to create jobs, help employees and save companies money. Whether it is mobile monitoring of the supply chain or using a mobile phone to pay employees’ wages, the potential for positively transforming the workplace in developing markets is significant.

I have highlighted a few areas in which mobile technology can and currently is having a positive impact on the workforce in the developing world, from a societal level to a personal one.

Helping employees find a Job

Mobile devices can act as mass communication tool for potential recruiters in looking for employees. Job Finder is a subscription-based service designed to link workers to jobs using an SMS-based platform and works on all mobile devices. The Job Finder service compares the job and worker profiles and sends SMS alerts to workers when a suitable job opportunity arises. This simple SMS tool, which suits the African continent where the feature phone is still ever-present, is a cost-effective way of bring employers and employees together.

Mobile Education and mLearning

On the education front, Mobile devices can be used to provide primary school teachers with regular updates on educational content to assist with classroom teaching. A scheme in Nigeria will be delivered by UNESCO and does exactly this. It opens up a far-reaching, easy to implement and cost effective mobile educational tool to teachers allowing them to run their classroom programmes more effectively.

On the employment side, mLearning can deliver basic skills and job-related training via a mobile device by voice, SMS or USSD. The primary audience would be employed workers, where mLearning could offer specific job-related training and updates around product knowledge or health and safety issues. Well prepared and delivered mobile training could enable more people to access education, while reducing the need for costly training facilities. Simple SMS based services give workers a sense of empowerment, independence and improve engagement with the company. As smartphones begin to replace basic phones in the developing world, the mobile training on offer is likely to become a more interactive, one-to-one experience.

Payroll and Microfinance

Microfinance is the provision of financial services to micro-entrepreneurs and small businesses that lack access to banking and related services due to the high transaction costs associated with serving such clients. The rise of the microfinance industry has been driven by a simple premise; get capital into the hands of those entrepreneurs who are cash starved and don’t have access to traditional ‘bricks and mortar’ financial institutions. The development of microfinance itself has been hugely beneficial in stimulating small business growth in parts of Africa and Asia.

mPayroll is an extension of microfinance and is a reliable way of using mobile technology to make secure, cost-effective wage payments to ‘unbanked’ workers, who continue to make up the vast majority of the workforce in the developing world. Their salary can then be delivered securely direct to a mobile wallet such as Vodafone’s M-Pesa. This offers the security that workers in developing countries often need and ensures they are paid the full amount by preventing their seniors siphoning off ‘tips’, which can of course be a huge problem in corrupt businesses.

Worker Panels

Worker Panels gathers anonymous data about working conditions directly from workers to enhance visibility across global supply chains. The Worker Panel solution can be used on a basic mobile device at low cost. An SMS/instant message questionnaire would be used to ask workers about their working conditions, rates of pay, concerns and general feelings about their job.

The system could potentially be used by factory management to collect feedback from their workers and allow two-way communication so that management could also send alerts and information back to workers, thus improving trust and transparency. The mobile device will serve as a tool of empowerment and is likely to open up employment-focused social networks and stimulate workers’ rights groups. In a continent like Africa, massively diverse with companies and employees often separated by huge distances, the mobile tool will act as an essential portal to access information and act collectively on workers’ rights. The mobile device could even eventually act as a  trade union tool.

Tech Cities – job creation

There is a new technology movement in Africa, with mobile at the centre. Cities like Cape Town, Accra and Nairobi are vying for the top position as Africa’s central innovation and technological hub. This has created thousands of job across the continent and is also providing the impetus for countless schools and universities. Kenya’s “Silicon Savannah” has recently begun construction in Konza City, about 60 miles south of Nairobi and aims to be  Africa’s most modern city with 200,000 jobs created by completion in 2017. Projects like Micorsoft’s iHub provide resources for technologically minded entrepreneurs and act as meeting points for young, ambitious Africans.

Despite the need for a healthy debate around the Internet and is potential corrosive effect on wealth and jobs, it should also be highlighted ways in which mobile technology is playing a decisive and positive role in stimulating employment and helping workers in the developing world.

How mobile technology can empower women in the developing world

English: Mobile phone evolution Русский: Эволю...

English: Mobile phone evolution Русский: Эволюция мобильных телефонов (Photo credit: Wikipedia)

The proliferation of mobile phones in the developing world has been both rapid and remarkable and it opens up possibilities to engage with the most vulnerable and marginalised in societies, which in many cases are women and girls. The 2013 Women Deliver conference takes place at the end of May in Kuala Lumpur, Malaysia, and offers the opportunity to galvanise the global community to invest in mobile technology and highlight all the opportunities it brings, some of which I have outlined below.

So, how is mobile technology helping women and girls and what are the potential opportunities?

Mobile devices are improving access to financial services

The move towards mobile banking in developing countries opens up opportunities for women to have more control over their finances. This is particularly relevant in developing countries where the purse strings are traditionally held by men. Mobile payments from work can be made directly to a woman’s phone which offers an additional level of financial control and independence, as well as assurances that the full salary is paid.

Mobile banking systems, such as Kenya’s hugely successful M-PESA, open up financial access to millions of the ‘unbanked’, a large percentage of which will currently be women. The ease with which a mobile bank account can be opened up is vital in allowing women to gain financial control and independence, particularly in countries without access to traditional ‘bricks and mortar’ financial institutions.

Mobile technology, in particular SMS systems, are improving access to healthcare 

Mobile technology circumvents geographical obstacles . It sounds almost too obvious to say, but the mobile device of course removes the need to travel to receive information. In a huge continent such as Africa, which often lacks traditional transport infrastructure, the mobile device can act as an excellent tool to disseminate information from malaria SMS warnings to maternal healthcare and advice. Nothing can replace seeing a doctor, but regular communication via SMS is the next best thing in providing potentially life saving information.

South Africa uses text messaging to improve Maternal Health Access
The mobile phone evokes a feeling of connectivity and independence amongst women

People often refer to ‘the next billion’ when it comes to internet access, and how a large percentage of these users will be from the developing world and will use their smartphone to access the internet. For the moment the basic feature phone is ubiquitous, but the African continent is currently experiencing a boom in its consumer class who are demanding access to the same technology we have in the west. This demand combined with a potential flood of cheaper, Chinese produced smartphones will open up the internet to millions of people who traditional lacked access. For women, the mobile device will serve as a tool of empowerment and is likely to open up female-focused social networks and stimulate women’s rights groups, in areas such as employment. In a continent that is hugely diverse, the mobile tool and the access to the internet it offers will act as an essential portal to access information and act collectively on women’s rights.

More empowerment for women leads to more women in the workforce and greater economic prosperity for a country

It is a fairly broad statement, but the engrossing Hans Rosling puts it very eloquently in a TED talk. The birthrate of a country has nothing to do with religion, but is more closely linked to the number of women in the workforce. As mobile devices offer women access to financial services, educational tools, and health care advice, it will also act as a tool to boost the number of women in the workforce and allow them to contribute economically at a personal and societal level. The more women in the workforce, the more the childbirth rate of a country decreases, the less strain there is on a country’s resources.