Mobile Payments Series Kickoff by mPayConnect. Co-hosted by Wharton MBA and HBS Tech Alumni Clubs in the San Francisco/Bay Area on Sept. 3, 2009. Author: Menekse Gencer

1. Mobile Payments Series TM
From Afghanistan to Silicon Valley:
Mobile Financial Services for the Next Billion Customers
Menekse Gencer
Mail: mgencer@mpayconnect.com Mobile Payments
Skype: meneks80 Series Kickoff
Company: www.mpayconnect.com September 3, 2009

2. Mobile Financial Services (MFS) 101
1. What is it?
2. What’s the opportunity?
3. What are the contributing enablers?
4. What are the complicating factors?
5. Case Study & Questions to Panel
Mobile Payments Series Kickoff ©mPay Connect, Inc.
Sept. 3, 2009 2 mgencer@mpayconnect.com

3. mPay Connect
Linked In: Mobile Payment Series – mPay Connect
Menekse Gencer Background
• 16 years in Wireless, High Tech, and Financial Services
• PayPal Mobile: Led Business Development. Closed PP’s first mobile deal (Sprint “Send Money”)
• mPay Consulting: US prepaid mobile operator, SKTelecom, Citi, Wells Fargo, EARN
• Board Member of Mobile Money Africa, Conference Speaker MMT Dubai, Philippines
• Wharton MBA ‘98, Harvard BA Economics ’93
• Triathlete, Bay swimmer, Local singer, Dive Master, Avid traveler
For more information
mgencer@mpayconnect.com
www.mpayconnect.com
www.twitter.com/mpayconnect
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4. MFS 101
1. What is it?
2. What’s the opportunity?
3. What are the contributing enablers?
4. What are the complicating factors?
5. Case Study & Questions to Panel
Mobile Payments Series Kickoff ©mPay Connect, Inc.
Sept. 3, 2009 4 mgencer@mpayconnect.com

5. What is:
Mobile Financial Services (MFS)?
Using the mobile phone as a channel
to conduct financial services
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6. What is:
MFS?
Mobile Financial Services
Mobile Payments Mobile Microfinance
Microfinance Mobile Banking
Mobile Banking
P2P C2B B2B Loans Transactional Informational
• Mobile Money Transfer • Mobile online • Replace cash in • Disbursement • Mobile bill payment • Alerts
• Domestic or International (e.g. eBay or ringtones) supply chain • Repayment • Brokerage • Account balance &
Mobile remittances • At store • Savings history
(proximity payments) • Insurance
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7. Global Initiatives
Banked vs. UnBanked
Afghanistan
Examples of live or on-going projects in Africa alone
• Kenya: Safaricom launched M-Pesa in partnership with Vodafone Kenya
• Kenya: Zain is re-launching ZAP, their mobile money product; Telkom is preparing
the launch of Orange Money
• Uganda: MTN has launched MTN Mobile Money
• Uganda: Uganda Telecom is investigating mobile financial services with Redknee
• Monitise has received a grant to launch mobile financial services in East Africa
• DRC: Celpay (bank) launched an M-banking offering
• DRC: Zain is initiating talks with the BCC and has partnered with Citibank
Tanzania
• Ghana: Flash me cash is a mobile banking solution that has been launched in
Source: Edgar Dunn, March 2009
Ghana and Nigeria
• Ivory Coast: MTN has launched their mobile money offer, Orange Money was
launched as well
• Nigeria: Zain, MTN, MoneyBoxAfrica are all active present Source: Edgar Dunn
• Tanzania: Vodacom launched the M-Pesa product in the market
Source: Amarante Consulting Intelligence
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Sept. 3, 2009 7 mgencer@mpayconnect.com

8. How does the “mobile wallet” work?
Money In Money Out
At
Agent
or
Cash ATM Customer Mobile Remittance, domestic
money transfer & remote topup
Account
(Mobile Wallet)
Credit / Debit / or Mobile & Retail Purchases
Prepaid Card
Held by
Financial Institution
or Mobile Operator
or 3rd Party
Bank Account Alerts Mobile Bill Payment
Balance
History
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9. Some Key Players World-Wide
MNOs Platforms FIs
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10. MFS 101
1. What is it?
2. What’s the opportunity?
3. What are the contributing enablers?
4. What are the complicating factors?
5. Case Study & Questions to Panel
Mobile Payments Series Kickoff ©mPay Connect, Inc.
Sept. 3, 2009 10 mgencer@mpayconnect.com

11. The Market Opportunity:
$150 Billion in Volume by 2012
Mobile
Network Operators
Direct Rev.: $5 billion/yr
$58b Indirect Rev.: $2.5 billion/yr
Reduce Churn (no dumb pipe)
Source: McKinsey, CGAP
$41b
$52b
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12. Opportunity:
Unbanked = 1 Billion people
World Economic Pyramid
Reach
of
500 Mill Banks
*>$20k/yr Reach of
Mobile
Operators
Unbanked
2 Billion Opportunity:
*$3260 to $20k/yr
Today 1 Billion people
today to
2012 1.7 Billion in
4 Billion 2012
*<$3260/yr or <$9/day Source: CGAP
100 countries, unbanked=50% with 40 countries unbanked=80%
Source: World Resources Institute * In Volume. Source: Ovum Research
(*Individual Annual Income: 2005 USD Purchasing Power Parity)
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13. MFS 101
1. What is it?
2. What’s the opportunity?
3. What are the contributing enablers?
4. What are the complicating factors?
5. Case Study & Questions to Panel
Mobile Payments Series Kickoff ©mPay Connect, Inc.
Sept. 3, 2009 13 mgencer@mpayconnect.com

14. Contributing Enablers to MFS
Investment
Payments Mobile
Technology Technology
Customer
Needs
Transaction Mobile
Types Adoption
Cost Advantages
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15. MFS 101
1. What is it?
2. What’s the opportunity?
3. What are the contributing enablers?
4. What are the complicating factors?
5. Case Study & Questions to Panel
Mobile Payments Series Kickoff ©mPay Connect, Inc.
Sept. 3, 2009 15 mgencer@mpayconnect.com

16. What are the complicating factors?
Network
Regulatory Effect Value Chain Business
Environment? (customers and and Case & Ops?
places to use) partnership
model?
What services to roll
How will cash in and Costs and Revenues?
out? What’s needed?
cash out be Who are they? Churn Reduction?
Geography?
conducted? Market Share/Power? Strategic Reasons?
Banked or Unbanked?
Conducive toward Retail footprint? Implications toward
Current behavior?
MFS? Relationship with other P&Ls?
Mobile Usage?
How to work with customer? Org design?
What UI?
bank? Brand? Exec commitment?
How to achieve critical
Limitations of MNOs? Interoperability?
mass/network effect?
Agent Commissions?
M
F
Platform I
N Co.
O
MNO? Platform Co.?
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17. MFS 101
1. What is it?
2. What’s the opportunity?
3. What are the contributing factors?
4. What are the complicating factors?
5. Case Study & Questions to Panel
Mobile Payments Series Kickoff ©mPay Connect, Inc.
Sept. 3, 2009 17 mgencer@mpayconnect.com

18. Case Study:
Kenya’s mPesa takes off like Wildfire
Mobile money transfers (via SMS) mPesa money out services:
– Mobile payment system built using SMS messaging – Send money (Agent)
– Receive money (Agent)
– Pay for things (Merchant, Bills, etc.)
Registered Customers
8,000,000
7,000,000 7,000,000
6,000,000 (~50% Safaricom
5,000,000 base)
4,000,000
3,367,192
3,000,000
2,000,000
1,000,000
0 268,499
July 2007 July 2008 July 2009
$2 billion moved since launch
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19. Today’s Panel
Monica Brand Aiaze Mitha Camille Busette, PhD Naeem Zafar, PhD
Investment Expert Implementation Expert Regulatory Expert Startup Expert
Base of the Pyramid Afghanistan m-Paisa Formerly PayPal Gov. Relations Advisor, Pakistani startup
Microfinance 15 MFS Deployments to central banks abroad Haas Professor
Menekse Gencer, Moderator
Business Development
Expert
mPay Connect, Consulting
PayPal Mobile
Mobile Payments Series Kickoff ©mPay Connect, Inc.
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20. Final Thoughts:
Big Opportunity = Get Involved
Bay Area World Economic Pyramid
• Technology Know-How
• FI and Business Expertise
• Entrepreneurial Spirit 500 Mill
*>$20k/yr
2 Billion
*$3260 to $20k/yr
Think “Mobile”
4 Billion
*<$3260/yr or <$9/day
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21. Panelist Presentation
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22. Camille M. Busette, PhD
Presented to Wharton West Series on Mobile Financial Services
September 3, 2009
© Camille M. Busette, 2009 22

23. Regulation of mobile financial services varies significantly across
jurisdictions
Predictors of regulatory action
• Degree of decentralization of regulatory oversight of financial services
and telecommunications
– U.S. FCC; Financial Services Regulators; EU –Payment Services Directive
• Political power of wireless carriers vis à vis financial services sector
– U.S.; Mexico; India
• Presence of significant domestic political or policy initiatives which are
relevant to the remote movement of money
– EU- SEPA; Mexico –Anti-money Laundering; greater financial liberalization, consumer
protection
• Significance and profile of remittances
– Philippines (GDP); Mexico (regionally, hard currency); India (counter example)
• Depth of financial services sector throughout the country
– Low penetration tends to favor mobile financial services; South Africa
• Reach of land lines throughout the country
– Kenya (TKL-2006: <1%; SafariCom; Celtel)
© Camille M. Busette, 2009 23

24. Navigating Regulatory Environments is an ART
Factors to consider
• What is the profile of the regulator you are dealing with? Are they
political appointees? Do they represent a particular ideological
viewpoint?
• How entrenched are wireless carriers; what is the competitive
landscape?
• How powerful is the traditional banking sector with regulators? And how
is power distributed among various national regulators?
• Does the regulator or government have a particular set of policy goals:
i.e. liberalizing the financial sector, decreasing rural poverty, etc
• How central is the country to international flows of illicit money?
• What key international relationships are significant for the country –and
how have they tried to use regulatory stature to influence those
relationships?
© Camille M. Busette, 2009 24

25. Thank You
cbusette@sbcglobal.net
© Camille M. Busette, 2009 25

26. Naeem Zafar
www.NaeemZafar.com
Haas Business School at University of California Berkeley

27. Huge Need – Slow Deployment
• Telco-led or bank-led models
– Philippines:
• Remittances from CA, Globe with 60% market
share
– Kenya: M-Paisa
• Safaricom with 80% market share
• Did not work in other countries
27

28. We Need a 3rd Option
• Intermediary models when:
– Three or more mobile operator
– 12+ banks
– Vast distances
– Illiterate population
• Each country is different
28

29. Base Case: Pakistan
• Most exciting branchless banking market in world
– 6th most populous country: 170M
– Worst banked: 5% have bank accounts
– Bets mobile penetration: 50%+ have mobile phones
– 50M people have mobile phone, digitized national ID
card, no bank account
– Dozens of banks, 5 mobile operators
– Lowest call rates in the world!
29

30. Enabling Payments Between Users
(With or Without Bank Accounts)
Make P2P Users pay bills, send
payments money to others, and
shop through their
amaana account
Shop at
amaana
POS
merchants
Users add money to
their amaana account
through an agent Pay bill and
make purchases

31. Amaana: Branchless Banking
• First viral service: SMS based
• 200K users in 6 months
– These people never used anything but cash before
• New branchless banking regulations
• Secured mobile operator partner
• Company founded in 2006
31

32. Thank you!
To get a copy of this presentation & to be notified of future events, join
Linked In Group: “Mobile Payments Series – mPay Connect”
or drop a card or email:
Menekse Gencer: mgencer@mpayconnect.com
www.mpayconnect.com
www.twitter.com/mpayconnect
Mobile Financial Services Event #2: October (@Google) hosted by Harvard Business School Tech Club
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