Research for Global Development

New Pakistan Data Shows Potential, Challenges for Mobile Money


Pakistan is a fascinating case in the global geography of digital financial inclusion. The market is dynamic, thanks in large part to the work of the central bank and other regulators to create an enabling environment for deployments. Four products have launched since 2010 and another five are currently in the pilot phase or on the drawing board, according to this recent CGAP report. The market leaders, both of which debuted in 2010, are United Bank Limited’s Omni, and EasyPaisa, run by Telenor Pakistan and Tameer Microfinance Bank. A relatively extensive banking network also holds promise for facilitating liquidity management by agents – often  a key bottleneck to smoothly-running cash-in/cash-out (CICO) networks.

From a demand-side point of view, Pakistan features two key attributes for robust m-money uptake: broad-based mobile phone coverage and use, and a high percentage of the population who is currently unbanked. This came through in data from the Financial Inclusion Tracker Survey (FITS) of Pakistan conducted during May-September 2012, portions of which have just been loaded onto InterMedia’s Mobile Money Data Center. Users can see and analyze results from the Pakistan, Tanzania and Uganda FITS, with results displayed in tabular, graphic and map-based formats. (FITS data from Tanzania and Uganda is highlighted in this blog post by InterMedia’s Michelle Kaffenberger and CGAP’s Claudia McKay).

The Pakistan FITS data is based on interviews with heads of 4,940 households in Punjab, Sindh, Balochistan and North West Frontier provinces, which together include 95% of the country’s households. The data show that about 88% of households include at least one person with a mobile phone, and many count two or more people. Only 8% of households count a mobile money user, but we expect subsequent FITS surveys early this year and in 2014 to show notable growth in this figure.

The defining characteristic of mobile money use in Pakistan is the focus on what is referred to as over-the-counter (OTC) transactions, in which an agent performs the money transfer for a customer on an agent-owned phone. This means that most customers don’t register and own personal accounts. OTC’s predominance raises red flags for supporters of digital financial inclusion because they reckon that the lack of personal accounts creates a barrier to linking people with mobile-driven financial products that could be useful to them, such as savings, insurance and loan products.

In fact, the Pakistan FITS data included only negligible levels of registered accounts, so few that the sample was too sparse to analyze on a product-by-product basis, as we did in Tanzania and Uganda. We focused our analysis exclusively on OTC customers. Among this group, we were encouraged to see that a significant number reported using such services at least once a month in the six months prior to when the survey was conducted (see chart below). This holds true even for rural users (the green columns), 19% of whom said they even used m-money services between two and five times a month in the past six months.

Another positive signal for usage patterns: Many OTC customers said their use of mobile money has become more frequent compared to when they first used such services. The chart below breaks down their responses by three income categories, and we were surprised to see that many respondents in the lowest category said they are now more-frequent users.

On the flip side, we also asked the many non-users of mobile money services why this was the case. The leading responses indicated a general lack of knowledge about the services, as well as a perception among respondents that they do not need the services because they do not send or receive money regularly. The first response (chosen by nearly 60% of those interviewed) pointed to a need for more effective and widespread publicity about mobile money, while the latter response (at nearly 70%) suggests a need by mobile money stakeholders to better understand Pakistani individuals’ and households’ financial habits and needs so that digital products can be tailored to them.

We encourage you to explore the FITS datasets in more detail on the Data Center. Our analytical reports for both Pakistan and Tanzania will be posted soon on the FITS page of the AudienceScapes portal.

InterMedia

New Pakistan Data Shows Potential, Challenges for Mobile Money


Pakistan is a fascinating case in the global geography of digital financial inclusion. The market is dynamic, thanks in large part to the work of the central bank and other regulators to create an enabling environment for deployments. Four products have launched since 2010 and another five are currently in the pilot phase or on the drawing board, according to this recent CGAP report. The market leaders, both of which debuted in 2010, are United Bank Limited’s Omni, and EasyPaisa, run by Telenor Pakistan and Tameer Microfinance Bank. A relatively extensive banking network also holds promise for facilitating liquidity management by agents – often  a key bottleneck to smoothly-running cash-in/cash-out (CICO) networks.

From a demand-side point of view, Pakistan features two key attributes for robust m-money uptake: broad-based mobile phone coverage and use, and a high percentage of the population who is currently unbanked. This came through in data from the Financial Inclusion Tracker Survey (FITS) of Pakistan conducted during May-September 2012, portions of which have just been loaded onto InterMedia’s Mobile Money Data Center. Users can see and analyze results from the Pakistan, Tanzania and Uganda FITS, with results displayed in tabular, graphic and map-based formats. (FITS data from Tanzania and Uganda is highlighted in this blog post by InterMedia’s Michelle Kaffenberger and CGAP’s Claudia McKay).

The Pakistan FITS data is based on interviews with heads of 4,940 households in Punjab, Sindh, Balochistan and North West Frontier provinces, which together include 95% of the country’s households. The data show that about 88% of households include at least one person with a mobile phone, and many count two or more people. Only 8% of households count a mobile money user, but we expect subsequent FITS surveys early this year and in 2014 to show notable growth in this figure.

The defining characteristic of mobile money use in Pakistan is the focus on what is referred to as over-the-counter (OTC) transactions, in which an agent performs the money transfer for a customer on an agent-owned phone. This means that most customers don’t register and own personal accounts. OTC’s predominance raises red flags for supporters of digital financial inclusion because they reckon that the lack of personal accounts creates a barrier to linking people with mobile-driven financial products that could be useful to them, such as savings, insurance and loan products.

In fact, the Pakistan FITS data included only negligible levels of registered accounts, so few that the sample was too sparse to analyze on a product-by-product basis, as we did in Tanzania and Uganda. We focused our analysis exclusively on OTC customers. Among this group, we were encouraged to see that a significant number reported using such services at least once a month in the six months prior to when the survey was conducted (see chart below). This holds true even for rural users (the green columns), 19% of whom said they even used m-money services between two and five times a month in the past six months.

Another positive signal for usage patterns: Many OTC customers said their use of mobile money has become more frequent compared to when they first used such services. The chart below breaks down their responses by three income categories, and we were surprised to see that many respondents in the lowest category said they are now more-frequent users.

On the flip side, we also asked the many non-users of mobile money services why this was the case. The leading responses indicated a general lack of knowledge about the services, as well as a perception among respondents that they do not need the services because they do not send or receive money regularly. The first response (chosen by nearly 60% of those interviewed) pointed to a need for more effective and widespread publicity about mobile money, while the latter response (at nearly 70%) suggests a need by mobile money stakeholders to better understand Pakistani individuals’ and households’ financial habits and needs so that digital products can be tailored to them.

We encourage you to explore the FITS datasets in more detail on the Data Center. Our analytical reports for both Pakistan and Tanzania will be posted soon on the FITS page of the AudienceScapes portal.

Marketing Materials

Contact Us:

InterMedia Headquarters

1825 K Street, NW
Suite 650
Washington, D.C. 20006
+1.202.434.9310
FAX: +1 202 434 9560
Contact | View Map

InterMedia Africa

UN Avenue, Gigiri Nairobi
Box 10224
City Square 00200
Nairobi, Kenya
+254.720.109183
Contact | View Map