EasyPaisa, the m-banking service by Telenor and Tameer, went live on Oct 14. They call it the “largest branchless banking service in Pakistan” on their website where you can watch a couple of the ads that people may have been discovering on You Tube.

Photo courtesy Patrick Cooks

3000 agents have been set-up to handle both bill payments and remittances. They aim to have many more trained and branded by Jan. They have covered the country with marketing, promoting the brand everywhere and pushing people to the agent network. The advertising has generated a lot of buzz and interest and their two call centers are fielding over 5000 calls a day. As of two weeks ago, they had all the major billers signed up and those previously not interested were now calling them (see here about a minor scuffulle in the media about billers which seems to have passed).

They are seeing modest success. Within the first few days, they handled 20,000 bill payments ranging from very large to small at an average ticket size of $13.

Why is this launch any more interesting than what we are seeing in other markets?

First, it is true that even in Pakistan, m-banking services have been live for a while. Mobilink partnered with the post office chain and has been in the market for almost a year. But what is unique about EasyPaisa is the business model. Telenor owns part of Tameer and that provides for unique advantages on the cost side and benefits in terms of product design.

Second, the partnership illustrates the possible tie-ups between a MF provider and a MNO. In this case, the MNO bought the MFI. In other cases, the MNO could strike a revenue sharing arrangement with the MFI in exchange for access to its distribution.

Third, the partnership illustrates how regulation and policy decisions from both the banking and telecom side can add up to produce impact. On the banking side, regulation opened up the market for the use of retail stores as agents (CGAP has been involved with branchless banking regulation in Pakistan from the beginning). Regulation made it possible for a bank and telecom operator to enter into unique partnership arrangements.

On the telecom side, MNOs are in a race to the bottom in their core business. Prepaid ARPUs are half of what they were three years ago. This race to the bottom has been precipitated by new licenses (there are seven operators in the market today) and number portability. MNOs had to climb the value chain of services faster than what you might see in the other markets.

The EasyPaisa service is within the bounds of the vision and strategy CGAP set out with Tameer Bank originally: it is both bill payments and remittances (our original financial model was with bill payments); people have the option of opening a savings account; KYC is automated using the national ID which now covers over 50 million people.

We have a lot to be optimistic about but one of our main concerns right now is that account opening is possible only at a subset of agents, roughly a third of the network. This is because of SBP requirements over account opening. While EasyPaisa locations where you can open an account are still sizeable in number, we know from the M-pesa experience (and common sense) that you want to make it as easy as possible to get people to start transacting. People will be able to do cash-only transactions (cash to cash or cash to account) at all EasyPaisa locations; so that helps. But we are figuring out a way to make account opening possible at all agents – possibly a specialized device or a document management system or something else.

-Kabir Kumar