Page 45 - State-of-the-Industry-2013

Part 1 - mOBile mOney

TexT BOx 10
moving beYonD P2P moneY transfers: ecocash in Zimbabwe*

For EcoCash, ofering domestic P2P money transfer services is just the frst step towards a much bigger goal: becoming the domi-
nant payment system in Zimbabwe for the banked and unbanked alike. EcoCash is currently targeting two pain points with major
commercial opportunity: enabling retail payments to merchants and creating a bridge between the informal and formal sectors. To
capitalise on these opportunities, EcoCash is building two important structures: a merchant acceptance network and full interoper-
ability with Zimbabwe’s banks.

SHIFTING CUSTOMER PERCEPTIONS

EcoCash has spent the last 14 months convincing customers that EcoCash is a great way to send money. It is now engaging with its
customers in a new way, working to change the perception that EcoCash is just a P2P money transfer service and convincing them to
see EcoCash as the main fnancial tool in their daily lives.

EcoCash is encouraging this shift with a new marketing campaign, “Live Life the EcoCash Way”. The goal of the campaign is simple,
but ambitious: when someone buys a loaf of bread or pays their child’s school fees, EcoCash wants them to reach instinctively for
their mobile phone, not cash.

INTEROPERATING WITH THE BANKS: LINKING THE FORMAL AND INFORMAL SECTORS

EcoCash sees interoperability with banks as the key to linking Zimbabwe’s formal and informal economies. There is substantial
demand for payment services between these sectors, with money fowing between banked and unbanked families, and between
unbanked individuals and the formal sector in the form of retail payments, school fees, and utility bills.

However, EcoCash believed that wealthier, banked customers would use mobile money services diferently than their unbanked
counterparts. Instead of making transactions through traditional mobile money agents, EcoCash anticipated they would want more
convenient payment options.

Bank interoperability meets this need for convenience by creating a direct link with a customer’s bank account, allowing them to
load their EcoCash wallet directly from their mobile phone. This creates a clear value proposition for a new set of customers and
provides a convenient and practical way for money to be transferred between Zimbabwe’s formal and informal sectors. Attracting
active, high-value banked customers has the added beneft of injecting liquidity into the mobile money system.

* This text box is adapted from a case study by Philip Levin (MMU) that was published on the MMU website on July 1, 2013

the importance of ecosystem development

for mobile money proftability

Building a digital fnancial ecosystem enables customers to perform more digital transactions, hence generating more transaction
revenues for service providers before the cost of cashing out is incurred, which helps to drive the overall proftability of the mobile
money service. Commissions to m-PeSa agents are now the single biggest contributor of direct costs for Safaricom: in the frst 6 months
of the reporting year, 5 billion Kenyan shillings (uSd 60 million) was paid out to agents, compared to voice and SmS interconnect costs of
KeS 3.09 billion and airtime commissions of KeS 4.65 billion. By building the ecosystem, more(non-agent) transactions can happen be-
tween cash-in and cash-out to grow revenues without increasing costs, resulting in increasing ‘the velocity of money’ on the platform. 28

28. these insights were initially published as part of a blog post by Gunnar Camner published on mmu website on november 18, 2013, “reading the m-PeSa half-year results for 2013-2014”, available at
http://www.gsma.com/mobilefordevelopment/reading-the-m-pesa-half-year-results-for-2013-2014
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