M-Pesa is a mobile technology-easy-money: a kind of debit card services in the SMS-based mobile phone."Pesa" in Swahili means "money" and "m" stands for "mobile". (Demonstration of the use of M-Pesa system can be seen in the video below this article photo)
Recognized internationally, this innovation has brought a wave of revolutionary development in Kenya, which makes millions of poor people in remote places, who had never touched the bank,suddenly able to perform various financial transactions with ease.Through M-Pesa,Kenya residents can send money to their families in the remote village,buy clean water,and even pay their seedlings.
The amazing world of technology was first launched in 2007 by Safaricom, Kenya's mobile operators are nothing but a subsidiary of Vodafone, a British telecommunications giant.And is Michael Joseph, CEO Safaricom, which gave birth to the initiative that is now legendary.
Joseph,"bule" born in South Africa,Safaricom led for 10 years since June 2000. Thanks to cold hands,Safaricom grown from a company that was originally only had 17 thousand users to over 16 million customers and then transformed into the most leading telecommunications company in the East African region.
Retired from Safaricom as of October last year,Joseph is now a fellow of the World Bank.A week yesterday,together with the World Bank team he was in Jakarta to explore the possibility of applying the mobile-money programs such as M-Pesa in Indonesia.
"Indonesia is a perfect example where a mobile-money system should be launched," he told Karaniya Dharmasaputra and Nina Rahayu of VIVAnews.com who interviewed specifically in Jakarta,Monday,October 10,2011.
Here's an excerpt (click on the video interview here):
How is the beginning of M-Pesa was created?
We first launched M-Pesa in March 2007, after a trial period in 2006 which is run by a micro-finance institutions in Kenya,as a means to distribute the loans. Within one year we got more than 1 million users.It's really people who come in and then sign up to use M-Pesa.The main reason they use it because they can use M-Pesa to send money to their home in the village.
Anyone inisiatornya?
M-Pesa initial idea came from British donors,the Department for International Development (DFID).They asked a number of companies to submit proposals attractive courses with the theme "The Financial deepening Penetration for the unbanked".
This proposal was greeted by my colleague at Vodafone (parent company Safaricom), who then put a proposal to DFID with the idea of using mobile phones to distribute and pay back the loan funds from micro-finance institutions.
The proposal was accepted.Then DFID invested £ 1 million, and Vodafone 1 million pounds as well.We at Safaricom build its software and then try to implement it in Kenya.
M-Pesa is considered a very successful program. How to define your own success?
This is a very important question. In my opinion, the success of M-Pesa is not on the number of subscribers, nor because the number of outlets we have. The important thing is how many transactions that our customers are doing on the system. In Kenya, the average customer we do at least two transactions per month. That's what we call "success".So, people really use this system for their interests. Not just simply check the amount of their money, but actually engage in financial transactions, which include: sending money from one person to another, or from one institution to another institution.
Would you explain the success it is statistically?
We now have 15 million subscribers who use M-Pesa a regular basis. We have a total of 18 million mobile phone users, meaning that 80 percent of those using M-Pesa. So, very dominant.And we note there are 2-4 million transactions per day at the M-Pesa. On Friday,before Christmas Day,or before the school season arrives, the transaction volume is much greater even than that.
What is it worth in dollars?
Approximately U.S. $ 1 billion per month. So, this incredible amount of money that large. And please bear in mind, this transaction involves the deposit, transfer, and withdraw money,and pay for goods and services, buy credits, and so on.
That is what percentage of the total population of Kenya?
Kenya has 40 million inhabitants.But,if you do not include children and people who are very old,perhaps there are about 25-30 per cent of Kenyans use M-Pesa a regular basis.
In everyday conversation, even the M-Pesa now has become a substitute for action verb send money - as well as Fed-ex or Xerox. Thus, M-Pesa has become part of everyday activities in people's lives Kenya-sent money to the parents in the remote village, send pocket money to children in another city, or even pay for a glass of beer at the bar, including the current fund accounts for collection in church . It's almost like a debit card on your cell phone.
What are the main obstacles that you face before the M-Pesa to be so successful?
There are two major challenges as you build a mobile-money system such as M-Pesa. The first one, you have to have outlets everywhere. You must have a place where people can transfer and convert electronic money into money rill, or take cash from the system. So, you need a lot of distribution outlets. My idea was: people will not want to walk for miles, or take a taxi or bus to take the money. I want people to be a short walk to the nearest outlet. And it was a serious challenge.
This is not the outlet of the new building. It's kind of stalls or small shops that become "agents" we. Requires a lot of effort to make them implement the system M-Pesa, to their branding, making it look decent shop, they are managing, and disciplining them.
The second challenge, you need the approval of regulators. In our case, we obtained approval from the regulator, not consent, because at that time Kenya did not have regulations on mobile-banking. There is now, but when it does. This problem requires us to work even harder.
Only, we were lucky because the Kenyan central bank governor at that time was an academic who can see the benefits of M-Pesa to deepen penetration of financial systems in the community. In Kenya, including in Indonesia I think, there are many transactions that take place informally and the government usually can not reach this type of transaction. Through a mobile-money, so the central bank can monitor and reach.
Can you tell me one of the best examples how the M-Pesa has helped the lives of the poor Kenyans?
In Kenya, where there are many areas and remote villages, many families send their children to boarding school in another town. The problem that many people face from Kenya: to pay their school fees, they must pay in cash or use checks. For the poor who usually do not have a bank account (unbanked), is certainly very difficult to pay to use a check. So, they have to pay in cash. The problem is, if they deposit cash into their children, sometimes the school money is lost or robbed. It's often a big problem before the school starts. Well, after the M-Pesa, a parent simply sends an SMS to pay their school fees.
In addition, there are many other examples. For example, how the villagers use the M-Pesa to pay for water.
Paying the water?
Yes, pay for water. In Kenya, particularly in areas of very arid, people had to pump water from the soil. Villagers usually cooperate to establish the water pump, and every person who takes water from it should pay for every liter. They use M-Pesa to pay. This is incredible. So, by cell phone, they pay for water, and the money was then used to maintain rural communities and purchase a water pump.
Another example is also interesting, is if the villagers could buy a bag of seeds, they are able to opt in (registration) in the M-Pesa to buy insurance on a bag of seed. So, if they fail to harvest crops - due to lack of rain or the land that is not good - then they will get compensation. Insurance premiums are very cheap price.
According to you, to what extent mobile-money system can be developed?
I see mobile-money is moving to the next level, to a level which is very important. I see mobile-enabling people to save money more easily and in much smaller quantities than the conventional banking system is possible. And once we can get people to save money with ease via the mobile phone, if you know how much money was spent on water-time (pulse) they, you know how much they save, and you know where they are, then you can also make they do credit too easily.
For example, on weekends you may have problem to get cash quickly. For example, there are relatives you die and you have to pay for funeral expenses, or you must buy something to fix your car, then you just send an SMS via your mobile system-money. Once you send an SMS, then the system will immediately say whether you can or can not obtain credit - small amounts of short-term loans for emergency situations. After that, once you press "yes" in the Text menu to "short-term emergency loans", then we will immediately send the borrowed money to you immediately.
Another thing that may be performed by a similar mechanism is to buy insurance, accident insurance, life insurance, or motor vehicle insurance. You can buy them for a period of a week or a month, for example.
So, I see the mobile-money system can be developed into a financial system that is actually on your mobile phone.
Now you are in Jakarta. Do you think the M-Pesa system can function equally well in Indonesia like in Kenya?
Well, this is my second visit to Indonesia. This time, I went to Medan and look at the PNPM (National Program for Community Empowerment) in rural areas. In my opinion, if we look at Indonesia, Indonesia was almost as designed for mobile-money. The main reasons are: first, you have a mobile user population is very large. Almost everyone here has or has access to mobile phones. You do not have a penetration rate of the bank. Thus, the gap between the penetration of the bank or ownership of a bank account with a mobile phone penetration is very large.
The second factor, this is a very large country with a challenging geography, there are many mountains, there are many islands. There are many people who live in rural areas who need access to money or financial services. And Indonesia is also a fairly prosperous country and growing economy. I guess, Indonesia was almost perfect for the mobile-money such as M-Pesa. I think this is one of the countries in which the system such as M-Pesa will achieve great success.
M-Pesa in Tanzania attempted, but reportedly not very successful.
Now start working. Their main problem, they do not want to allocate funds to build an extensive distribution outlets such as in Kenya.
M-Pesa was first launched as a private-public partnership program. Whether Indonesia should take the same path if you want to launch M-Pesa?
I think, to get adequate support, you should involve as many players involved. I guess you have to involve mobile phone operators, banks, and of course, government. I think these three groups of actors should be involved so that you can program a success. You need a mobile phone network operator, the basic system of banking, and government support because the government is a major player in moving money to different parts of the country.
If you look at the M-Pesa in Kenya or in the number of countries that started using it, which creates value for society is enormous. Social impact on society remarkable. And if you go to Kenya now, you'll see how to do business and how daily life changed because of the total community of mobile-money system is.
What steps have you done with the World Bank to explore the application of M-Pesa in Indonesia?
I have tried to talk with government and regulators Indonesia, explain to them the benefits of mobile-money so they want to modify or change the regulations so that this system can be applied later. The biggest challenge you face today is from the point of regulation.
Because, from glasses regulator, there are a number of things that worry about - money laundering, consumer protection, and in Indonesia must clearly there are many outlets where people can make cash-in and cash-outs. And in Indonesia regulators set specific location and require a permit to institute mechanisms that will run every cash-in and cash-outs. I think this is the biggest challenge to launch a mobile-money system in Indonesia.
What about the fraud (fraud)? M-Pesa is also facing this problem in a certain scale.
Yes, of course. When you try to bring the financial system to the root level in the pyramid of society, that means you bring into the banking system which had not previously been in contact with the bank. These conditions also create opportunities for the fraudsters to outsmart the system. But the problem was also encountered in the conventional banking system or credit card.
The key is how you manage it. Any financial system must have some problems with fraud in some degree. In our experience in the M-Pesa, the level of fraud is just 0.5 percent, which we calculated as the loss is lost due to fraud.
However, do not forget, mobile-money system is dealing with transactions in small amounts. The average value of transactions in M-Pesa in Kenya is U.S. $ 35. So, if we are going to be as concerned about money laundering arena, I think it is difficult to money laundering transactions with an average of only U.S. $ 35.
Also worthy of note that mobile-money is not just an extension of the traditional banking system - where the level of fraud usually reach the 1 per cent of the total value of the transaction. This is a new way of banking. So, of course we will face many issues that we encountered and had never thought of before. But we must dare to confront it, because the benefits of mobile-money is far greater than the challenges dimunculkannya.
The problem, in Indonesia is now emerging public distrust of mobile phone service over the rampant cases of theft of credit.
This is obviously a serious problem. The success of mobile-money is very dependent on the element of trust inherent in the brand. In the case in Kenya, because we were quite dominant and as a company Safaricom Kenya, not foreign companies; Kenyan communities trust us. If you have a customer mistrust problem, then obviously the operator must immediately deal with it.
Mobile-money desperately need the public's trust. This is not mere business call or SMS service. You should make sure that if customers send money via their mobile phones, so the money would actually get to the intended party. There should be no customers lost money in the system. The system must be designed having an 100 percent reliability.
The problem was obvious mistrust issues that can be addressed and not the reason that Indonesia could not launch a mobile-money system.
So, how confident you can successfully implement the Indonesia-mobile systems such as M-Pesa money?
Again, Indonesia is a perfect example where a mobile-money system should be launched. In my discussions with the regulator in Indonesia, it is clear they are interested. They have even been to Kenya to study the M-Pesa and they are convinced that this system can operate well here. All parties - regulators, banks and telecom operators, I think already have this belief. Thus, all factors necessary I think is ready. Moreover, Indonesia has a number of large-scale social programs, such as PNPM, which is very fitting for mobile-money and can make it run more effective programs.
I guess I was very confidence. My confidence level of about 60-70 percent. I strongly believe mobile-money system will be successful in Indonesia
No comments:
Post a Comment