Mobile Banking : EasyPaisa in Pakistan

The concept of M-PESA is remarkably similar to that of EasyPaisa in Pakistan, which basically translates into “Easy Money”. Launched in 2009 by Pakistan’s second largest telecom network, Telenor, EasyPaisa is a mobile financial service in a market that had a paucity of bank accounts yet a multitude of mobile connections. Telenor was able to offer this service as in late 2008 it took over 51% of Tameer Microfinance bank, a fully licensed institution under the State Bank of Pakistan. This allowed Telenor a banking license and led to the start of its financial services wing.

To find the reasons for starting such a project one simply needs to look at the numbers; 88% of Pakistani’s do not have a bank account as compared to 65% of Pakistanis that have mobile connections.  The problem is even more pronounced in the rural areas where there are 2,500 banks serving  up to 105 million people, that’s 42,000 people per bank! The EasyPaisa scheme includes a mobile account that basically acts like a virtual bank account similar to the one in M-PESA. There are thousands of shops that have been identified as EasyPaisa shops and they serve as access points for these banking services. These can be regular grocery/departmental stores or even high end cosmetics dealing establishments. Users can go to any of these access points and deposit or withdraw cash from their accounts.

The service primarily started as a way of facilitating the low-income earning bracket. Individuals who were working in cities doing menial jobs would now have an easy way to send remittances back to their families who were mainly located in villages.  The service also allowed for you to pay your utility bills directly. Telenor has also now included the option of transferring money from abroad to Pakistan. This is a huge benefit to approximately the 7 million Pakistani’s living abroad who send across nearly $8 Billion in remittances annually. Realizing the importance of these transfers to Pakistan’s economy the government has assisted the introduction of cross-border payments at a regulatory level.  As of now there are 18,000 EasyPaisa merchants spread across 700 cities/towns in Pakistan, that’s four times the number of ATM’s in the entire country. A total of $1.7 Billion has been transferred by EasyPaisa since its inception and over 75 million transactions have taken place. For more information regarding the project you can look at http://www.easypaisa.com.pk/index.php for details.

The question that I would like to pose for this week though is what is the single most important factor that would be a good indicator of the success of such a program? For example the program was successful in Nigeria and Pakistan but failed in Tanzania. In both Nigeria and Pakistan there was regulatory support but in Pakistan Telenor was not the market leader as in Nigeria. Also there was no reason to fear the safety of your money in banks as in Nigeria due to the civil strife. There must be some underlying rules that would allow us to gauge whether a country can be receptive to such a solution. What these rules are though is what needs to be answered with a greater level of clarity.