This presentation was given at the 'Beyond Scaling Up: Pathways to Universal Access' workshop which was held at the Institute of Development Studies, Brighton on the 24-25 May, 2010. This event was co-sponsored by the Future Health Systems Research Programme Consortium and the STEPS Centre. Batchelor presented on mobile banking in Africa.

1. Mobile Phone Enabled
Payments – an example of
“Beyond Scaling”?
Simon Batchelor
Impact and Learning Team
Seconded from Gamos
For Date:25/5/10

2. Mobile Phone enabled payments
How are new technologies such as ICTs, new diagnostic technologies and other
major information systems-related developments affecting the structure of
health systems, the capacity for rapid change and our understanding of
concepts of scaling up?
This is a story of a fairly significant change in the structure of the financial
sector
To what extent do they (ICT) facilitate greater agency by local actors?
New local actors have been able to enter the financial sector.
What are the implications of the rapid increase in the number of actors
producing and disseminating health-related information?
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3. Mobile Phone enabled payments
What is the basic story?
Did we achieve anything - where are we now?
What were the drivers?
What were the barriers?
Any principles/lessons to take away?
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4. Storyline - the backdrop
Western world had tried mobile phone enabled payments, with mild
success (unashamedly using wikipedia at this point)
• “Mobile commerce was born in 1997 when the first two
mobile phone enabled Coca Cola vending machines were
installed in the Helsinki area in Finland. They used SMS text
messages to send the payment to the vending machines. In
1997 also the first mobile phone based banking service was
launched by Merita bank of Finland also using SMS.”
• In 1999, two major national commercial platforms for m-
commerce were launched with the introduction of a national
m-payments system by Smart as Smart Money in the
Philippines and the launch of the first mobile internet platform
by NTT DoCoMo in Japan, called i-Mode.
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5. Storyline – backdrop failure
European m-payments scheme SimPay collapses
– The SimPay brand was launched by T-Mobile, Orange,
Telefónica Móviles and Vodafone in June 2003 with the
overall objective of creating an open and interoperable
framework for mobile payments in Europe.
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6. Storyline – informed by research
Africa studies show behaviour of the poor
– In 4 countries, researchers observe behaviour - using
airtime as a means of transferring money over distances
(2002).
Desk research reveals the importance of Remittances
– At that time approximately $100 Billion was being remitted
to the South.
– The global average remittance cost was 12% (higher if you
send a smaller amount).
– Awareness of Japan moves by NTT DoCoMo.
Researchers get inspired by research and become Champions
– Ask themselves – what if....
– Set a target – 10 years “accelerated” reduction to 11%
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7. Storyline – active communication of research
Research practitioners share findings with private sector in
Mozambique
– contributes to Mcel being first to introduce credit swapping (2004).
Research practitioners undertake political lobbying
– creating growing statements and high level political interest (Africa
Commission 2004, G8 Gleneagles 2005)
Research practitioners share findings with donor contacts
(international)
– contributes to donors being willing to invest in mobile phone
enabled payments systems (2004), and making alliances with
private sector.
Research practitioners approach private sector (International Telcos) to
explore possible Mpayment systems
– contributes to a key stakeholder undertaking key pilot and key
commercial product (2005), and several other stakeholders
discussing it at a serious level (2005 onwards) and then
7 implementing systems latterly (2008 onwards).

8. Some people say it was
9,000,000 Users
a stabilising element in the
political troubles of a few
years ago
Affordable, average
Special registration Transaction reducing
Changes the ball game on KYC
From about 700 Bank branches
To over 12,000 places of cash in cash out
International
Forcing lower prices
And now a savings account!!!

9. Global picture
Game changing rule change on banking regulation
– Championed by UK Financial Services Authority
– Slowed down due to crisis
Major international players jumping in
– Mastercard, Visa, Western Union, ++ all jumping in
– Remittances have grown to $360 Billion (no link with this
story)
– Remittance average transaction cost reduced to 10%, and
coming down
Different models piloted in different countries
– Eg Cambodia (independent but financed by bank)
– Kenya now has three systems!
Smart phones, Near Field Communication chips, fibre optic
9 cables in sea around Africa – will change context again.

10. Drivers?
Built on existing behaviours
– Very contextual, multispatial households, airtime transfers,
Trust in Telco
Political mandates logged
– At International level, National level
Donor seeding private sector
– Very important for getting through the immediate “profit”
culture
Persuasive Commercial factors
– Dropping ARPU, reduction of Churn, new billion market
Immediate benefit to user
– Seen as safe, good conflict resolution, reduction of
transport costs
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11. Drivers?
Donor harmonisation
Kenyan government (Central Bank) - Willingness to risk
Completely different market than Developed countries
New local actors – agents
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12. Barriers?
New behaviours didnt always take - Afghanistan
Political mandates hampered by
– vested interest,
– perceived user security,
– major terrorist incident
Commercial imperative to make a profit (which then became
driver when Mpesa “succeeded”)
Resistance by other parties (eg Mpesa audit by the banks)
Policy regulators on other countries “just dont get it”
Price points in other systems
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13. Takeaway lessons?
Per poor research? (per-poor innovations (by the poor and for
the poor)
Step by step change
Political positioning
Donor harmonisation
New cross sectoral alliances (and role for donor stimulation)
Engage private sector at start (and dont be afraid that you cant
control the process?)
Market analysis
Anticipate market/technology changes?
Needs Champions?
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14. Beyond Scaling up?
Was not more “bank branches” - uses new pathways to engage
local actors (Mpesa 12000 cash in cash out agents)
This was a political as well as technical process (If anything it
was mainly political)
It shifted power from the normal “providers” to new players
It is an example of a flexible learning approach
It might thought of as a disruptive technology affecting the main
financial sector approaches?
It works with the economy, both formal and informal?
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