Telenor’s Easypaisa Penetrating Pakistan’s Poor, Unbanked Populations
Daniel Radcliffe and Tamara Cook, program ffficers for the Financial Services for the Poor initiative at the Bill & Melinda Gates Foundation, contributed to this post.
Many have claimed that mobile money could have a transformational impact on both the number of poor people who have financial services and the quality and variety of those services. (In fact, I have claimed this in a past NB post!) Mobile money would achieve this by leveraging the billions of mobile phones already in the hands of poor people to create a platform bringing the poor together with financial service providers and allowing each side to transact at a cost that would be orders of magnitude lower than the alternative (which is essentially to build and staff bank branches and ATMs all over the place).
The problem with this grand vision is that, until recently, there has been only one successful mobile money deployment – M-PESA in Kenya – amid a landscape littered with failures. Additionally, there have been many who doubt that mobile money deployments will reach the poor.
But there have been recent signs of “green shoots” outside of Kenya that have some of us excited, including a product in Pakistan called Easypaisa. In addition to building momentum in terms of numbers of clients and volumes of transactions, recent data shows that Easypaisa is used by a surprising number of poor clients.
In 2008 when Telenor, Pakistan’s second largest mobile operator and Tameer, an innovative microfinance bank, came together to establish a joint venture to explore options for mobile banking. Easypaisa was then launched in 2009 with support from the Consultative Group to Assist the Poor (Disclosure: CGAP is a grantee of my organization, the Bill & Melinda Gates Foundation). Since then, the deployment has experienced rapid early adoption of its over-the-counter (OTC) (i.e., non-account based) bill payment and domestic remittance products. In March 2011, 1.3 million customers processed 1.9 million Easypaisa transactions and $39.2 million in transaction flows. Easypaisa has conducted more transactions in its first 18 months than any mobile money deployment worldwide except M-PESA.
In January 2011, CGAP commissioned Coffey International Development to survey 327 Easypaisa customers at 10 locations across rural, semi-urban, and urban Pakistan. Customers answered questions about their use of Easypaisa, about their household, and about their living condition. This allowed the surveyors to estimate users’ approximate income level by comparing their answers to correlates on a nationally representative household survey.
The survey found:
- 69 percent of Easypaisa users live on less than $3.75 per day (in 2005 PPP adjusted dollars);
- 41 percent live on less than $2.50 per day; and
- 5 percent live on less than $1.25 per day.
It also revealed that 45 percent of Easypaisa users lack access to bank accounts, suggesting that Easypaisa has already achieved relatively strong penetration into poor and unbanked populations. Furthermore, three-quarters of the surveyed population felt the service has a positive impact on their lives, and 88 percent of users thought the service was easy to use.
While we don’t have directly comparable poverty statistics for other mobile money deployments, we do know that late adopters of M-PESA have been considerably poorer, more rural, and less educated than early adopters. Assuming Easypaisa follows a similar trajectory, we could expect that it will continue to propagate further into Pakistan’s poor and unbanked population segments as the deployment expands. This offers promising evidence that Easypaisa could be an effective vehicle for increasing financial inclusion among Pakistan’s poor and unbanked populations if it can successfully migrate to an account-based, rather than OTC-based service. Our team is working directly with Telenor and the State Bank of Pakistan to address the remaining commercial and regulatory barriers to account adoption in order to shift the deployment to the account-based model.