The telecommunications industry has been abuzz lately with the launch of Ooredoo and the sale of SIM cards at record low prices. It was not left unan- swered by MPT as it announced the partner- ship with KDDI-Sumitomo Corp., followed by its offering of SIM cards matching the price of Ooredoo, sending the consumers waiting in long queues in mobile phone shops all over Yangon. With much antici- pation, the launch of Telenor later this year is also expected to whip up the same interest the other telcos have generated. The com- petition among the three telcos bodes well for the ordinary person as it provides cheap- er and more efficient service. Moreover, oth- er related products and services are expect- ed to be introduced that will empower the consumers through the ubiquitous mobile phone. One such service is electronic mon- ey or mobile money.
What is mobile money?
Mobile money is basically cash transformed in electronic form and uploaded into a mo- bile phone. The mobile money is now in a mobile phone instead of cash in a wallet. And how can an ordinary person acquire mobile money? In a more practical exam- ple, an individual can go to a cash-in/cash- out (CICO) agent of the telco who will trans- form his cash into a secured SMS or text message. The individual now has the mobile money in his phone, which he can send to another individual. The receiving individual can go to a CICO agent, present the SMS message to receive the cash equivalent of the SMS message.
Mobile money, when fully functional, will result to lower transaction cost, faster trans- action time, and convenience to its users. It is ideal for money transfer and payment, ser- vices most needed in a country with a wide urban-rural divide. Parents who want to send money to their children studying in the city, or workers who want to send back money to their families in the rural areas, would find mobile money a convenient alternative to banks and current money transfer agents. If wired with business establishments, mo- bile money can be used to pay for shopping purchases and even in paying utilities.
In its strict sense, mobile money is a telco service. Its equivalent in the banking in- dustry is the debit card, where charges are made against the deposit account of an in- dividual. Mobile money, on the other hand,is charged against the uploaded value in the mobile phone. A good synergy therefore, between banks and telcos will maximize the benefits of a mobile money platform. The telco can provide the infrastructure for the transformation of cash into electronic form, while the bank will provide the financial re- sources to the CICO agents.
One of the biggest telco in the Philippines, Globe Telecommunications introduced GCash as its mobile money platform. It partnered with its sister company, the Bank of the Philippine Islands (BPI), a universal bank, to form BanKo, a medium-sized bank that offers mobile banking services. This platform is also being used by a number of rural banks in the Philippines.
In Cambodia, WINGS, worked out a mobile money platform with ANZ, a regional bank to provide low cost services to its clients. Of course, the number one success story is M-PESA in Kenya, where 75% of the total population is using its mobile banking ser- vices. Safaricom together with Faulu Kenya set-up M-PESA which was later on joined by Equity Bank offering a full range of bank- ing services – deposit, loan disbursement, collection, payments, micro-insurance and other related services.
Factors contributing to the development of mobile money platform in Myanmar
Myanmar is ripe for the establishment of a mobile money platform. One of the main factors is the large unbanked population as a client base. The just concluded national census placed the total population of the country at 51.4 million. Of the total popu- lation, merely 5% are with bank accounts serviced by formal financial institutions. A lot of people are doing financial transac- tions like money transfer and payments in the old way – physical transfer of cash. Even if banks offer more services, its presence in the countryside is very limited with branch- es concentrated in big towns and commer- cial centers.
As a corollary to this, the number of people with mobile phones is estimated at 10 mil- lion, with MPT having the highest number of subscribers at 9 million and Ooredoo with 1 million. This represents 20% of the total population. Tapping people with mobile phones translates to innumerable financial transactions and enormous flow of finan- cial resources that will help in triggering economic activities in parts of the country reached by telecommunications. As the tel- cos are reaching out to more areas, the num- ber of mobile phone users and the potential mobile money users will also rise.
Challenges
- The need for an enabling regulatory environment. There are two main in- dustries involved in the development of mobile money – banking and telecom- munications. A synergy between these two industries must be forged and this can be done only by the government through enactment of laws on mobile banking and designation of appropri- ate regulatory agencies. The earlier the government acts to address this con- cern, the faster the country can benefit from mobile money.
- Telco outreach and the development of mobile money platform. The telco infrastructure remains to be the basis for faster and wider outreach. Issues 5. related to the slow setting-up of towers in some areas are a concern. Whateverthe cause, it will slow down coverage of the whole country. The technical part however, can be addressed by the telcos themselves. Interface of the core bank- ing systems of the local partner banks can be worked out once an enabling framework is provided.
- Limited Cash-in/Cash-out centers at present. Outreach and volume is a key element in this business. To be more effective, there is a need to set- up a massive network of CICO agents throughout the country. It would be a good opportunity for some enterprising individuals to set up CICO centers, but it needs more than individuals as CI- COs should be made as ubiquitous as the mobile phones. It should be made available so that a person may go out of his house and find a CICO agent just at the corner of the street for him to trans- act business. The need for identifying, vetting, training, and setting commis- sions are but some of the things that has to be defined.
- Initially, clients may have difficulty in using mobile money. Using mobile money requires certain level of func- tional literacy. With a big number of the people having low level of educa- tion, understanding and following the procedures in transforming or receiv- ing mobile money will be challenging. A massive information and education campaign can be done to address this concern and make people aware of the processes and procedures in using mo- bile money. It may be costly at the start but as the people get used to it, it will become an indispensable tool.
- Systems security has to be insured. Myanmar has witnessed several cri- ses that has dent the reputation of the banking industry and eroded the trust of the people in formal financial institu- tions. As such, the system that will be installed to run the platform should be ully secured to ensure that it cannot be accessed and manipulated to the det- riment of the users. Otherwise, it will face the same problem encountered by the banks as customers shy away from supposedly secured institutions.
