Research Problems
Over the past fifteen years, mobile phones have revolutionized telephony, surpassing traditional communication needs Equipped with diverse functionalities, they have paved the way for value-added mobile services, mobile commerce, and enhanced access to information This evolution has created numerous lucrative opportunities for merchants and service providers in the mobile industry Today, mobile phones outnumber any other device used for marketing, selling, and delivering products and services.
The global expansion of mobile services has been remarkable, with the ITU estimating that in 2006, 79% of the world's population had the potential to access these services This widespread availability has transformed communication and connectivity on a global scale.
As of 2009, there were over 4.6 billion cellular subscriptions worldwide, resulting in a global mobile phone penetration rate of 68.2% While developed markets have nearly 100% penetration, developing markets are experiencing significant growth, reaching even the lowest economic tiers In Vietnam, by the end of August 2010, operators reported 142.2 million subscribers, surpassing the population with a penetration rate of approximately 165% This highlights Vietnam's rapidly expanding mobile market.
The rise of mobile phones has paved the way for mobile money, enabling cash transactions to occur as swiftly as sending a text message In many developing countries, people frequently buy vouchers to recharge their calling credits at local shops These small retailers have transformed into banking hubs, allowing customers to deposit cash and credit their mobile-money accounts through a specialized text message This system facilitates money transfers not only to other registered users, who can withdraw funds at local shops, but also to unregistered users, who receive a redeemable code via text for cash withdrawal.
Mobile money has emerged as a significant topic of interest, with Juniper Research forecasting that global users of mobile money transfer services will surpass 500 million by 2014 Recently, numerous mobile money transfer services have launched across various markets, introducing a range of innovative payment solutions These developments offer substantial benefits to consumers, as well as to the operators and banks involved in these services.
Mobile money presents a significant business opportunity in the Vietnamese market for operators, financial institutions, and payment companies MobiFone is well-positioned to capitalize on this emerging trend.
With this study, I want to get a well understanding and analyst the opportunity of Mobile money business on VMS-MobiFone.
Objective and aim of thesis
This research is implemented to obtain the two purposes:
The mobile money sector in Vietnam presents significant opportunities and benefits, particularly for VMS-MobiFone This article explores the potential of mobile money services within the Vietnamese market, highlighting successful case studies that illustrate effective implementation Additionally, it offers preliminary research insights into the advantages of adopting mobile money solutions, emphasizing their role in enhancing financial inclusion and driving economic growth in the region.
• Develop business proposal for VMS-MobiFone: find the suitable models with current situation of VMS and develop a business proposal recommendation
With these above objectives, this thesis aims at giving a basic theoretical foundation of Mobile money implementation in general and how to apply to VMS-MobiFone in particular.
Research questions
The researcher will go to find the answer for questions below:
• What is Mobile Money? Is it a good opportunity?
• What are the models of Mobile money implementation?
• What are the key success factors?
• Is Mobile money an opportunity in Vietnam for the mobile operator
• How to implement to VMS- MobiFone?
Scope of work
This thesis will explore mobile money theory, focusing on its emergence and global impact since 2007, when Kenya successfully implemented mobile money, establishing it as a worldwide phenomenon.
This thesis examines the critical factors influencing the implementation strategy of mobile money, focusing on market strategy—including product offerings and pricing—partnership models, and distribution channel settlements These elements are essential challenges and success factors in the mobile money landscape The study will analyze the current state of VMS-MobiFone's mobile money initiatives, tracing developments from 2005 to the present.
Data resource
For the theoretical part, data sources are textbooks, researches, articles from internet since 2007 As for the case study, data is obtained from questionnaire, interview customers and internal data.
Methods
The thesis uses the empirical method, desk researches, questionnaire, interview and case study in the study process.
Significance of thesis
The thesis highlights the significant potential of Mobile money in Vietnam, particularly for mobile operators, as the country experiences rapid mobile penetration and limited access to financial services With the growing demand for mobile financial solutions in developing nations, the introduction of Mobile money presents numerous opportunities for success in Vietnam's mobile service industry.
Thesis limitation
The primary limitation of this thesis stems from the relatively new concept of mobile money globally, and specifically in Vietnam, where there is a lack of academic reviews and empirical evidence Additionally, Vietnamese operators have yet to conduct any trial implementations of mobile money services.
This thesis has a specific focus on the distribution channel settlement analysis of Mobile Money, acknowledging that it cannot encompass all theoretical aspects of the topic Consequently, the study will concentrate on this particular area when designing an action plan for the implementation of Mobile Money in VMS-MobiFone.
This research utilizes experimental methods, including a questionnaire survey and statistical analysis, to collect data However, it is important to acknowledge some common limitations associated with this methodology.
Expected results
This thesis aims to provide a systematic theory of mobile money, analyze opportunities within the Vietnamese market, and identify strategies for the business development of mobile money services for VMS based on the findings.
Structure of thesis
Apart from the executive summary, introduction, references and appendix, this thesis concludes four parts as follow:
Part 1: Mobile money theoretical overview
Part 2: International MNOs mobile money deployment
Part 3: The case of Vietnam mobile service company
Part 4: Mobile money services business development proposal for VMS.
Mobile money theoretical overview
Mobile Money (MM)
1.1.1 The convergence of Mobile service and financial service
Penetration of mobile services across the world is increasing rapidly
In 1990 there were just over 11 millions mobile phone users worldwide Today, over 4.8 billion mobile subscribers over the world (ABI, Q1 2010)
The integration of mobile and financial services is increasingly evident, with a recent survey by Edgar Dunn & Company and the GSMA indicating that by 2012, 7% of subscribers in developed countries and 4% in developing countries are expected to utilize cross-border remittance services This trend translates to over 248 million subscribers engaging in mobile money transfer services, highlighting the growing importance of these financial solutions in the global market.
Financial access remains a significant challenge for the poor in many developing countries, with only about 0.5 million bank branches and 1.4 million ATMs globally, contrasting sharply with over 4.8 billion mobile subscribers worldwide This disparity highlights the urgent need for improved financial services to bridge the gap, especially considering the global mobile penetration rate of approximately 70%.
Bank transfer and money remittance fees can be prohibitively high for small denomination transfers, making it challenging for workers to send money to their relatives, particularly when dealing with smaller amounts.
According to World Bank reports, the rising costs of retail premises and staff have led to high overheads, making remittance commissions expensive On average, these fees reach 15% per transaction, and for remittances under $100, they can exceed 25%.
Mobile money services are projected to benefit workers by approximately $200 annually, based on World Bank data indicating 12-14 transactions per year These services primarily involve simple, low-value transactions, facilitating cash-in and cash-out processes for transferred funds.
The convergence of mobile technology and finance presents significant opportunities for mobile network operators (MNOs), financial institutions, and consumers alike However, it is essential to adapt financial regulations to accommodate emerging services, diverse service providers, and the unique risks associated with mobile money transactions.
1.1.2 What is Mobile money service?
Numerous terms are being used to describe the ways mobile phones facilitate financial services like: mobile banking, mobile payments, mobile transfers, etc So, what is mobile money?
Mobile money encompasses a broad range of financial services that facilitate electronic transactions via mobile phones Commonly understood as mobile financial services, it includes mobile wallets and mobile payments, connecting customers to financial solutions through their devices.
Mobile money refers to a comprehensive range of monetary transactions conducted through mobile phones Various mobile money applications have emerged, significantly transforming the way individuals manage their finances.
Mobile banking refers to the use of a mobile phone to access bank accounts remotely, allowing users to check account balances and pay bills conveniently This technology serves as a modern delivery channel for existing bank customers while also facilitating the inclusion of unbanked populations into the formal financial sector through transformative models.
Mobile Money Transfer (MMT) is a person-to-person application that enables consumers to send and receive money electronically via their mobile devices This service facilitates both domestic and international remittances, allowing users to transfer monetary value seamlessly from one individual to another using their mobile phones.
Mobile Commerce (Mobile Payments): Mobile payments refer to person-to-business payments that are made with a mobile phone instead of focusing person-to-person money transfers like MMT
Mobile proximity payments utilize smartphones to facilitate transactions at point-of-sale (POS) terminals, often employing contactless technologies like Near Field Communication (NFC) This method serves as an alternative payment channel for both in-store purchases and online transactions, enabling users to conveniently pay for goods or settle bills through their banking or mobile accounts.
Mobile remote payments/ bill payments
Mobile money enables all mobile subscribers, regardless of banking status, to easily deposit funds into their accounts, transfer money to others using their phones, and convert that money back into cash affordably Initially, successful mobile money services focus on straightforward transfer capabilities, but over time, they evolve to offer more advanced features, providing lower-cost savings, credit, and insurance options compared to traditional banking methods like branches or ATMs.
There are some other terms that are often used in association with, or interchangeably with, e-money, mobile financial services include:
Electronic Wallet (eWallet): Refers to the cash value that is stored on a card, phone, or other electronic device
Electronic Vouchers: Refer to definition for electronic wallet
Mobile Wallet (mWallet): An electronic wallet that is stored on a phone GSMA provides the following more specific definition:
mWallet is a mobile data repository that securely stores consumer information necessary for executing financial transactions It effectively translates consumer instructions from mobile devices into actionable messages for financial institutions, enabling them to debit or credit bank accounts and payment instruments.
Stored Value: Refer to definition for electronic wallet
Figure 1.1 Mobile Money services 1.1.3 Opportunities for Mobile money services
Mobile payments have been a focus for mobile network operators since 2000, but initial efforts saw limited success Despite its long history in the telecom sector, the landscape for mobile money solutions has significantly evolved Recent advancements in handset capabilities, chip technology, mobile networks, and point-of-sale infrastructure have fostered better collaboration among various industry stakeholders, including banks and telecom operators, enhancing the potential for mobile money services.
The global recognition of mobile money highlights its significant social and economic advantages, particularly in developing countries with limited financial infrastructure This innovative financial service offers billions of people in remote and rural areas a cost-effective and convenient alternative As a result, the extensive reach of mobile phones facilitates quick and easy access to essential financial services for a larger population.
Firstly, in emerging countries traditional financial services usually haven’t been reached or accessed by a large proportion of the population
Benefit of Mobile money services
Mobile money combines banking and mobile technologies to enhance access to financial services for consumers with limited options This innovation not only benefits users but also provides significant advantages to operators, banks, and payment companies.
Mobile money offers numerous advantages for mobile operators, including enhanced average revenue per user (ARPU), increased data traffic, and improved customer acquisition and retention Additionally, it creates a new revenue stream through shared fees, reduces operational costs, facilitates upselling of mobile content and postpaid services, and strengthens brand image.
Mobile operators generate revenue from various sources, including transaction commissions, potential subscription fees, and the monetization of float paid by end users As customer usage and transaction volumes rise, so does revenue Monetizing float allows operators to earn through short and long-term investments, yielding rates of approximately 12%-15% Therefore, operators should focus on incentivizing usage and enrollment to increase float deposits rather than encouraging cash withdrawals.
Mobile money services provide significant indirect benefits, creating valuable opportunities for mobile operators in emerging markets These advantages include increased Average Revenue Per User (ARPU), lower churn rates, and the potential for upselling and acquiring new customers.
A recent market sizing study by CGAP and GSMA reveals that mobile money customers generate an average revenue per user (ARPU) that is 74% higher than their non-mobile money counterparts Statistics from various countries indicate that operators can expect a direct revenue increase of 5% to 10% in ARPU over several years This finding is especially significant as telecommunications operators seek to expand into developing markets, where ARPU levels have historically been low.
Mobile money services play a crucial role in reducing customer churn, a major challenge for Mobile Network Operators (MNOs) By offering mobile financial services, MNOs can enhance customer retention, particularly among segments that seek more advanced service options.
Mobile Money presents a valuable opportunity for current bank customers and telecom users, enabling up-selling and attracting new clients By introducing innovative mobile financial services, telecom companies can expand their customer base and tap into previously underserved segments This increase in market share not only facilitates the cross-selling of telecom services but also drives significant revenue growth.
Mobile operators can significantly reduce billing costs for both prepaid and postpaid subscribers by enabling customers to make payments directly through their mobile devices This approach eliminates the need for MNOs to pay commissions to retail distributors of mobile top-up vouchers, resulting in enhanced convenience for customers who can manage their payments anytime, similar to a 24/7 shop Research projections indicate that this shift could lead to potential savings of up to 4% in sales costs.
Figure 1.4 Value drivers of mobile money to MNOs 1.2.2 To Customers
The extending mobile money to other emerging countries, especially in Africa and Asia, would have a huge impact to customers
Firstly, it’s clear that mobile money provides a starting point to formal financial services for the billions of people lacking access to savings accounts, credit and insurance
Secondly, mobile money provides a faster, cheaper and safer way to transfer money than other alternatives like slow, costly transfers via banks and post offices, or bus driver
Mobile money significantly lowers money transfer costs by leveraging a network of local agents instead of costly bank branches By eliminating the necessity for physical locations, mobile technology facilitates timely and secure transactions, making remittances more affordable This innovative financial solution is particularly appealing to low-income users in emerging economies.
According to World Bank estimates, reducing remittance commission charges by 2-5% can lead to a 50-70% increase in formal remittance flows, significantly boosting local economies This cost reduction would allow for lower-value remittances, which currently average around US$200 Vietnam ranks among the top 20 countries for remittance receipts, with an average transfer fee of approximately 10% The growth of mobile money services holds promise for further decreasing these costs in the near future.
Mobile money services have significantly transformed the financial landscape in rural areas, allowing recipients to focus on more productive activities instead of spending time traveling to banks In Kenya, the implementation of M-PESA has led to income increases of 5-30% for households, with four out of five users believing that lacking access to M-PESA would greatly impact their lives Users find M-PESA to be faster (98%), more convenient (97%), and more secure (98%) compared to informal money transfer methods Similarly, in the Philippines, around 90% of mobile money users feel their funds are safe and would recommend these services to others As mobile money services evolve, consumers will benefit from enhanced speed, convenience, and security across a wider range of financial products, including savings and credit.
Figure 1.5 Example MPESA Cost of non-bank domestic transactions
Thirdly, mobile money also provides many other functions such as payment, savings in a secured way instead of keeping and carrying money with many risks around
Financial institutions have the opportunity to use the development of mobile-financial convergence to achieve their aims such as:
■ New services offered to consumers, i.e mobile money transfer services (innovation) and new revenue flow there comes
By leveraging efficient mobile infrastructure, banks can significantly reduce costs associated with delivering financial services The automation of mobile networks leads to lower transaction costs for operators, allowing banks to bypass the expensive installation and maintenance of physical ATM networks This cost efficiency is crucial for banks aiming to maintain high performance in the competitive financial landscape over the next decade and beyond.
■ Across all consumer groups (banked, under-banked, unbanked) Mobile capabilities can increase banking penetration of untapped markets at a relatively low acquisition cost
In developing countries, enhanced access to mobile telephony significantly boosts economic growth by facilitating bill collection and payment processes, thereby reducing costs and saving time for consumers and merchants alike Additionally, mobile money systems contribute to the formalization of remittances, offering greater visibility into money flows and improving financial management and regulatory oversight.
Figure 1.6 Compelling reasons for key stakeholders to invest in Mobile money
In conclusion, the introduction of mobile money transfer services presents a significant opportunity for all stakeholders, enabling countries to reap socio-economic benefits Consumers, particularly those with limited or no access to financial services, stand to gain the most from these innovations Financial regulators can enhance financial access for diverse consumer groups while fostering competition and innovation, which can lead to a reduction in informal remittance channels Ultimately, the mobile and financial industries are poised to deliver innovative services and generate new revenue streams.
Models for Mobile money business
Mobile money applications are primarily categorized into two prevalent models: operator-centric and bank-driven, both of which leverage their extensive customer bases However, the market is increasingly seeing the emergence of new players, including handset manufacturers, payment companies, and card issuers, diversifying the landscape of mobile financial services.
As technology evolves, various mobile money applications are emerging with distinct business models tailored to individual countries and mobile network operators The mobile money ecosystem's development is influenced by diverse factors such as market composition, regulatory openness, the maturity of related industries, the dominance of market participants, and potential collaboration within the value chain Consequently, no single model can effectively serve all markets.
Operators are ideally positioned to provide mobile money services as a valuable addition to their offerings, particularly as they adopt 3G technology This transition necessitates the introduction of new data services to enhance revenue generation.
As their own service offering, MNOs have been independently deploying mobile money applications, providing prepaid top-up services, mobile money transfer and mobile payment services through its billing platform
Operator-centric models are commonly adopted in developing markets such as Africa for mobile banking serving the unbanked segments
The M-PESA money transfer service, created by Vodafone in Kenya, exemplifies innovative financial solutions Operated by Safaricom, it positions itself as a financial service provider while partnering with a local bank to handle the financial aspects and liabilities of M-PESA accounts.
In the Philippines, G-Cash exemplifies an operator-led approach to mobile money, managed independently by Globe without direct ties to traditional bank accounts Unlike banks, G-Cash serves as a payment solution provider, handling various financial aspects Globe's success is significantly influenced by e-money regulations that empower mobile operators to function as financial entities This model thrives in the Philippines, driven by a large unbanked population, affordable SMS services, and a high demand for remittances.
In Vietnam market now, there still no operator begins with this business
Strength of MNOs Challenges to MNOs
They own the Mobile subscribers
They own large distribution channel
They are experts in mass marketing
Their systems are designed to perform millions of transactions per second while keeping costs to a minimum
Figure 1.8 Strength and challenges to MNOs in Mobile money 1.3.2 Bank – Centric
Banks are typically cautious when introducing new mobile money products, weighing the potential for customer growth against the associated risks While they recognize the opportunity to expand their customer base through mobile banking systems, they carefully assess the balance between increased credit and the heightened risk involved.
In the early stages, individual transactions in mobile banking tend to be lower than those in traditional banking Consequently, only banks with the right strategy, brand, and ability to connect with unbanked customers are likely to thrive in transformative mobile banking models Additionally, banks are not aggressively broadening their core banking products through mobile channels.
The majority of developments of mobile money services of banks thus have been around simple mobile banking facilities that permit account enquiries or transfer of funds
Banks deploy these solutions as an extension of their traditional banking services
In Africa, bank-led models dominate as major banks recognize mobile banking as essential for enhancing service reach and competitiveness A prime example is First National Bank in South Africa, which has implemented mobile banking since 2002, positioning it as a crucial differentiator in its retail banking strategy The bank has developed its applications internally while also collaborating with third-party partners.
The Bank Centric Model has evolved into a vital transaction channel, with the SMS messaging gateway now accessible across all mobile networks This service, initially a "first to market" product, has seen millions of transactions valued at hundreds of millions of rand each month, highlighting its significant impact on banking operations.
In the Vietnamese market, numerous banks have introduced mobile banking services that integrate web tools and mobile SMS, allowing users to link their bank accounts to their mobile accounts for convenient transactions such as topping up mobile credits and paying bills Despite these advancements, mobile banking remains a value-added service primarily benefiting existing bank customers, leaving millions of unbanked individuals without access Recently, Dong A Bank has sought collaboration with mobile network operators to offer special SIM cards equipped with mobile money service functions, although this initiative is currently limited to Dong A's customer base.
Strength of Banks Challenges to Banks
They have been dealing with money since there was money – they are experts in cash management
They are compliant to financial regulations
They are trusted when provides financial related services
Limited Reach (to unbanked millions)
Figure 1.10 Strength and challenges to banks in Mobile money 1.3.3 Payment Company centric
The rise of mobile payment opportunities has led to a growing number of payment networks entering the market These independent service providers are actively enhancing the online payment landscape by facilitating secure transactions between customers and merchants.
Figure 1.11 Payment network Centric Model
Payment networks are increasingly transitioning from traditional internet payments to the mobile market Recently, PayPal has launched a mobile checkout feature for browser-enabled phones, enabling users to check their balances, transfer funds, and locate shopping venues By capitalizing on its extensive online auction user base, PayPal aims to broaden its payment services and reach a wider audience.
In China, leading mobile payment service providers such as UnionPay, YeePay, and Taobao have established extensive networks of partnerships with banks, merchants, and mobile operators However, these partnerships are often negotiated at the provincial or city level, resulting in a limited geographical reach for the service providers.
Several payment solution companies are actively enhancing financial accessibility in Africa by offering mobile transfer and cross-border remittance services Notably, WIZZIT and Crandy are independently developed platforms aimed at addressing the region's significant banking infrastructure gaps.
In any of this model, in order to get a successful business, it requires a very good partnership among members.
Key success factors for mobile money business
The success of mobile money transfers rests on their fulfillment of customers’ needs and the offer of a better solution than was previously available
Implementing a mobile money business involves navigating several key challenges, including regulatory compliance, developing an effective product strategy, executing successful promotional campaigns, managing distribution channels, and ensuring a robust technical system.
Many business professionals instinctively react negatively to the term "regulation." However, regulations play a crucial role in fostering and sustaining a conducive environment for business operations, and mobile money is no exception when it comes to financial regulations.
Mobile money deployments worldwide have successfully provided financial services to the poor and unbanked In response, the World Bank (WB) and International Finance Corporation (IFC) have initiated efforts to assist Mobile Network Operators (MNOs), banks, and payment institutions in various countries, including Vietnam, in navigating regulatory approvals for mobile money businesses.
Regulation is essential for anyone looking to launch a mobile money business, as it influences their chosen strategies, from partnership models to product offerings Implementers must prioritize enhancing regulations to facilitate access to financial services via mobile platforms Additionally, all mobile financial services should adhere to a nationally recognized set of standards that have been mutually agreed upon and approved.
Mobile money plays a crucial role in maintaining public confidence in financial services, as emphasized by UK regulator Dominic Peachey Regulators are also focused on fostering national financial development, which supports socio-economic growth by providing diverse payment options Additionally, mobile money helps address anti-money laundering (AML) and counter-financing of terrorism (CFT) concerns by shifting cash transactions into more transparent and formal channels.
To address regulatory challenges, businesses must implement effective solutions for fraud prevention, money laundering concerns, and compliance with Know Your Customer (KYC) regulations Additionally, fostering strong relationships with government and regulatory bodies is essential to proactively resolve any issues that may arise over time.
To ensure a successful launch in the mobile money business, it is crucial to prioritize product strategy development This initial phase should highlight key product aspects that can significantly contribute to the overall success of the business, rather than detailing the entire product strategy development process.
For individuals with limited education and financial experience, grasping the concept of mobile money can be extremely challenging Many may only be familiar with using their mobile phones for basic communication, making the transition to digital banking feel daunting.
To deposit money into her new account, she must visit a local corner shop, now featuring a new bank logo There, she provides her phone number and cash to the clerk, then waits for a text message For withdrawals, she returns to the shop, uses her mobile phone to enter a secret code for verification, and the clerk will hand her the cash.
When positioning a mobile money service, providers encounter four main challenges: clearly explaining its functionality, demonstrating its advantages over alternatives, outlining the operational process, and instilling trust in its reliability.
Research indicates that ease of use and reliability are essential for the success of mobile money services Despite this, mobile operators, banks, and payment providers face challenges in persuading consumers that these new services offer superior benefits compared to existing options Additionally, some customers do not perceive a necessity for the development of enhanced payment functionalities Consequently, significant efforts are required to foster customer acceptance of mobile money solutions.
To attract consumers, particularly those with low incomes, mobile money services must offer lower prices than traditional methods Additionally, mobile money platforms that rely on WAP or mobile internet can lead to high data costs, which may hinder user adoption.
As such, an SMS-based service appears to be a more economical solution
As it reaches scale in the longer term, NFC may prove to be the next- generation platform for mobile money services
Besides those important points above, many recent benchmarks confirm that successful launches of mobile money have taken into consideration the following key success factors:
Addressing the basic unmet market needs in terms of money transfer and payment services
Addressing the weaknesses of alternative existing solutions
Developing a relevant pricing model that makes the service affordable to targeted customers
Free deposits, with no minimum balance requirements
An ability to send money to non-customers
While mobile money services present benefits like higher transaction volumes and improved customer retention, a robust business case is essential for their launch Rapidly declining payment revenues due to increasing regulation pose challenges, making it difficult for mobile operators to achieve profitability, as small transaction fees are only viable at high volumes To drive this high volume, effective campaigns are necessary to educate consumers and build trust in mobile money services.
Many experiences from successful deployment show that strong branding and simple messaging is a good promotion strategy They market and advertise all services under one brand
An effective mobile money entry strategy requires selecting the right promotional channels, such as billboards, TV ads, events, posters, leaflets, and word of mouth, tailored to the target market during each phase of the product launch Additionally, Mobile Network Operators (MNOs) should leverage agents as a key marketing channel to promote their services.
Mobile money is a complex business for mobile network operators globally, presenting challenges that surpass those of traditional mobile value-added services Operators must navigate numerous strategic issues and operational hurdles, with one of the most significant challenges being the establishment of a robust agent network.
International MNOs
Entry mobile money strategy for MNOs
In this study, the author researched on numbers of mobile money deployment practices around the world to find out successful and appropriate models for MNO mobile money entry strategy
To successfully launch a mobile money project, Mobile Network Operators (MNOs) must clearly understand the challenges associated with entering this market Insights from project analyses and interviews with industry leaders highlight essential strategies to unlock the full potential of mobile money Key components of these strategies include a robust market strategy, effective partnership models, comprehensive technical and information systems analysis, and efficient distribution channel management.
The first important part in a mobile money entry strategy is defining the market strategy The market strategy is defined via two steps: preliminary assessment and marketing strategy
The preliminary assessment's key tasks involve conducting a comprehensive market study focusing on socio-economic factors, the mobile market, and the financial sector, including banks, microfinance, and money transfer services This qualitative and quantitative analysis aims to identify potential opportunities and challenges for mobile money services Ultimately, it seeks to answer critical questions such as whether to deploy mobile money in the market, assess its competitiveness, and outline an effective implementation plan.
In regions where banking penetration is below 30% but mobile penetration is thriving, mobile money operators have a significant opportunity to serve the unbanked population, particularly those at the bottom of the economic pyramid who are often overlooked by traditional banks To maximize impact, mobile money services should focus on providing accessible financial solutions to all customer segments lacking comprehensive banking access.
Limited banking services often arise in countries facing several challenges, including the high costs of maintaining bank accounts, inadequate infrastructure, and stringent minimum income requirements for account opening Additionally, the premium image promoted by banks can deter low-income individuals, compounded by a prevalent belief that banking costs are high and overly complex.
To enhance the value proposition and drive usage, it's essential to implement services that cater to distinct market needs Operators should conduct thorough market surveys, including qualitative customer studies and customer journey analyses, to identify the specific requirements of each business and consumer segment.
Mobile money services could unlock greater opportunities by offering branchless banking at lower fees than traditional banking Establishing a competitive pricing policy based on research into alternative mobile money fees can enhance accessibility and attract more users.
Launching a mobile money business begins with product development, which involves creating a range of services that encompass both mobile banking and mobile money To ensure a successful launch, it is essential to integrate foundational services, such as airtime top-ups, with mobile payment solutions.
Figure 2.1 Relative value of MNO in mobile money services
The complexity of services varies greatly and does not necessarily relate to their potential in the mass market Each service demands different levels of involvement from banks or mobile network operators For example, while mobile payments and banking require intricate integration with banking systems, their widespread adoption cannot be guaranteed.
Operators should prioritize launching features with high usage potential to effectively educate the market In countries where cash dominates, the complexity of sending money presents significant challenges Consequently, mobile money transfer emerges as a crucial functionality to consider at launch, given its extensive penetration, usage potential, and the absence of convenient and accessible alternatives.
To capitalize on market demands, various mobile money transfer models can be explored One effective approach is Peer-to-Peer money transfer, which facilitates transactions between registered users with mobile phones who are customers of the operator Additionally, mobile users have the option to send money to recipients who are not customers of the operator, broadening the scope of mobile money services.
Cash in and cash out processes are crucial components that should be integrated at launch, while account management features are essential for low-income end-users, allowing them to check their balance anytime.
Typically, additional services to be included in the roadmap will cover utility bill payment, airtime top up, micro loan disbursement and university or school tuition fees payment
As service awareness increases, it becomes essential to explore the launch of advanced features in international remittance, which presents substantial business potential Early integration of international remittance into the roadmap is crucial, as it relies on establishing multiple corridors to facilitate service access for diverse populations Local operators must navigate various international corridors and forge partnerships with distribution and banking entities in migrant countries However, the expansion of these corridors adds complexity, necessitating a greater number of partnerships to ensure effective service delivery.
Hence, most operators will need to partner with Remittance Service Providers (RSP) which can propose global hubs with multiple corridors
Western Union’s recent Digital Vendor Program initiative enables operators to be part of the international remittance program and to benefit from existing infrastructures in all senders’ countries
Besides, business to business (B2B) applications such as salary payments and payments collection are developing as the next generation of mobile money features
After the successful launch and adoption of the service, marketing managers will encounter a more competitive landscape, as both major mobile and non-mobile companies are likely to introduce their own mobile money services.
Operators should explore the creation of credit and savings services within the mobile money framework to provide a comprehensive range of financial services, setting themselves apart from other mobile money initiatives This strategy will enhance service accessibility in regions where peer-to-peer transfers face limited adoption In this next phase, stronger collaborations with microfinance institutions are likely to emerge.
Figure 2.2 Potential Service Roadmap for Mobile Money and Payment
Which products should be key for mobile money business?
Research on mobile money in emerging markets like the Philippines and Kenya reveals that cashless payments represent a small fraction of total transactions, with only 2% in Kenya and 10% in the Philippines The primary focus of branchless banking services is facilitating money transfers, such as sending funds to family members in rural areas, paying utility bills, and receiving government benefits This highlights the demand for products that extend beyond basic payments, with cash in/cash out capabilities being essential for the development of these services.
Mobile money case study – M PESA (Kenya)
Kenya is 582.646 km2 area countries of 38.6 million populations in 2008 with 75% of them are in rural and agriculture GDP of Kenya is
$890/capital (2008) Figure 2.13 Kenya economic situation b Access to finance
The significant rural-urban migration in Kenya has led to the fragmentation of families, reflecting a common trend in many developing countries Despite this shift, there remains a strong cultural pressure to maintain ties with one's ancestral village.
Before M-PESA's launch in Kenya, 38% of the population was financially excluded, lacking access to any financial services (FinAccess 2006) The country faced limited financial options, particularly for domestic remittances, with the bus system being the most common method for sending money Additionally, the Post Office offered an expensive and inconvenient service that was not well-received by users In this concentrated mobile operator market, Safaricom stands out as the dominant player, holding approximately 80% market share.
It enjoys a relatively low prepay airtime commissions: Safaricom gives 6% of sales to the channel, of which 5% typically goes to the retail outlet
Despite its relatively low income of $890 per capita, Kenya boasts a significant mobile phone penetration rate of approximately 42 connections per 100 people, comparable to that of more affluent nations like Mauritius, Tunisia, and Morocco.
Why choose Kenya’s M-PESA case study?
M-PESA is a very beginning successful case in developing mobile money services in developing countries which is a good model to get lesson for many following implements in other countries
Compare to Vietnam, we can see Kenya has some common situation conditions when starting M-PESA services such as:
In terms of social economics, Kenya's GDP per capita closely resembles that of Vietnam, with both countries ranking similarly in 2010, as reported by the IMF—Vietnam at 138 and Kenya at 147 Additionally, approximately 75% of Kenya's population resides in rural areas, and the agricultural sector plays a crucial role, reflecting a parallel to Vietnam's economic landscape.
About financial access, banking account access of Kenya before the launching of M-PESA is 11%, the same with the rate around more than 10% in Vietnam now
Mobile money services have been successfully implemented by Safaricom, the leading operator in Kenya Similarly, in Vietnam, targeting the implementation of mobile money with Mobifone, one of the three major operators in the market, presents a significant opportunity for growth.
2.2.2 M-PESA Mobile money business a Launching M-PESA : March 2007 b Partnership Model: MNO launched alone by Safaricom – the dominant operator that is part owned by the Kenyan government and Vodafone c Result:
Change the way people send/receive money
Figure 2.16 How people in Kenya sent money before M-PESA
Figure 2.17 How people in Kenya sent money after the introduction of
- 8.3 million registered customers - majority active This corresponds to a penetration of 57% in Safaricom’s customer base and 21% of the entire population or 40% of adults
- 11,000 retail stores at which M-PESA users can cash in and cash out
Kenya experiences approximately $300 million in person-to-person (P2P) transfers each month, which accounts for about 10% of the country's gross domestic product (GDP) on an annual basis While the number of transactions per customer is increasing, it still averages only 1 to 2 transactions monthly.
M-PESA stores handle approximately $650 million in cash deposits and withdrawals each month, with the average transaction size being around $33 Notably, Vodafone reports that half of these transactions involve amounts less than $10.
In the 2009 FinAccess survey, 25% of M-PESA users utilized their mobile phones for money storage A subsequent government audit in August 2009 indicated that the average balance in M-PESA accounts was merely $3.
- $ 7 million in monthly revenue (based on the six months to September
In 2009, M-PESA contributed 8% to Safaricom's revenues, generating US$94.4 million in the last fiscal year This mobile money service has emerged as the primary catalyst for new profits for the company.
- 19% of Safaricom airtime purchases are conducted through M-PESA
- There are 27 companies using M-PESA for bulk payments distribution Safaricom itself used it to distribute stock dividends to 180,000 shareholders into their M-PESA accounts, out of a total of 700,000 shareholders
Since its introduction in March 2009, M-PESA has enabled 75 companies to facilitate bill payments, with the largest being an electric utility company Currently, approximately 20% of this utility's one million customers utilize M-PESA for their payments.
In Kenya, M-PESA utilizes Sim Toolkit (STK) technology, allowing users to access a secure application directly from their phone's menu This method ensures high security for transactions Additionally, the cost of transferring money via M-PESA is generally comparable to, and significantly lower than, other available alternatives.
Figure 2.18 Posted customer tariffs for M-PESA
In Kenya, sending money to a registered user incurs a fixed fee, applicable for amounts up to USD 460 The most common transaction, approximately USD 20, attracts a charge of 3.6% from Safaricom These fees encompass the deposit (which is free), the transfer fee, and the withdrawal fee, all facilitated through an extensive agent network.
M-PESA uses a branchless banking model to enable the service to reach previously unserved communities Besides making cash withdrawals and deposits possible, the agents also play an important role in registering users, handling the ‘know your customer’ (KYC) rules and educating users When Safaricom launched M-PESA, they built the agent network from their existing airtime distribution channel At the start of M-PESA Safaricom had about 1,000 airtime retailers, many of these had multiple outlets Of these 1,000 airtime retailers 300 joined as M-PESA agents at the launch
Safaricom has effectively leveraged large and medium-sized airtime retailers as master agents for M-PESA by signing a single agency agreement with these aggregators, who manage multiple outlets as M-PESA agents This strategy enabled Safaricom to rapidly expand the number of M-PESA agents while simplifying management by reducing direct interactions with thousands of individual outlets nationwide Additionally, the use of aggregators enhances cash management by addressing cash float challenges stemming from regional disparities in deposits and withdrawals.
Stores can effectively manage their liquidity through four primary methods, as illustrated in figure 2.19 Among these, two approaches are non-bank based and depend on the physical presence of master agents, which involves the store or master agent clerk transporting cash between two locations.
The third liquidity management mechanism is through the respective bank accounts of the master agent and the store instead of above clerk
The final liquidity management mechanism was introduced in early
The case of Vietnam mobile service company
Introduction of Vietnam Mobile Service Company
The Vietnam mobile market has become increasingly competitive, with total subscribers reaching nearly 147.3 million by November 2010, resulting in a penetration rate of approximately 160% With no major regulatory changes anticipated, it is projected that the number of mobile subscribers will exceed 240 million by the end of 2014, according to BMI.
Figure 3.1 Mobile market development Sources: MIC 2010
Industry experts warn that recent growth in the mobile sector is largely driven by price wars among the three largest operators, which are likely to further decrease Average Revenue Per User (ARPU) Additionally, the significant number of inactive prepaid customers is believed to be contributing to lower ARPU levels, as the prepaid market remains heavily dominant.
In 2009, Vietnam's mobile Average Revenue Per User (ARPU) experienced an 8.3% decline, reaching US$5.5, mirroring a similar drop from US$6.5 in 2007 to US$6 in 2008.
BMI envisage that Vietnam’s average blended ARPU will fall by 13.7% in
2010 and by 7.4% in 2011 By the end of 2014, it is predict that Vietnam’s average blended ARPU will have fallen to around US$3.6
The anticipated decline in the country's mobile Average Revenue Per User (ARPU) over the next five years could be less severe if the sector were not heavily reliant on prepaid customers and if there were more evident indicators of robust demand for mobile data services.
Viettel MobiFone Vinaphone Sfone, Emobile, HT Mobile, Vipelcom
The entry of the seventh operator, GTel, and the rebranding of HT Mobile to Vietnamobile have intensified competition in Vietnam's telecommunications sector However, by the end of 2009, the primary market rivalry continued to be dominated by the three largest operators—Viettel, MobiFone, and Vinaphone—who collectively held 92% of the market share.
As APRU continues to decline and competition among mobile operators intensifies, the revenue and profit outlook for mobile operators, especially MobiFone, is becoming increasingly concerning In response, MobiFone and its competitors are actively working to enhance their APRU by offering a range of value-added services and expanding into related business areas such as distribution services and payment solutions through their networks.
3.1.2 About Vietnam Mobile Service Company (VMS)
3.1.2.1 Foundation and Development of VMS
Founded on April 16, 1993, the Vietnam Mobile Telecom Services Company (VMS), a state-owned entity under the Vietnam Posts and Telecommunications Corporation, is recognized as the first provider of GMS 900/1800 mobile telephony services in Vietnam under the brand name MobiFone MobiFone plays a pivotal role in developing and enhancing mobile telecommunications in the country.
The company's headquarter is now located at Yen Hoa, Cau Giay, Hanoi MobiFone also has 6 regional center in central city and in 63 provinces and cities across the country
On May 10, 1994, the company officially launched its GSM telecommunication network, marking a significant milestone after a year of establishment This network, known as the Global System for Mobile Communications, began operations in the Ho Chi Minh City, Bien Hoa, and Vung Tau areas, featuring an initial exchange capacity that laid the groundwork for future expansion.
MobiFone, which started with 6,400 subscribers and six base transceiver stations (BTS), launched its services in Hanoi on July 1, 1994, with a capacity for 2,000 subscribers and seven additional BTS By 1995, the network expanded to the Central region, reaching 3,500 subscribers and adding 10 more BTS After 17 years of operation, MobiFone now boasts over 38,000 subscribers and more than 18,000 BTS, with projected revenue for 2010 expected to exceed USD 1.5 trillion, making it the leading contributor to the national budget.
VMS aims to maintain its status as Vietnam's premier mobile service operator by providing exceptional services to customers while fostering a dynamic and professional work environment that encourages employees to harness their skills and creativity.
MISSION: To sastify the customers with best services quality and the advanced mobile technology
• Corporate prestige is the important asset of the Company
• Work ettitude is the most important value of the staff
• Prudent conduction of business activities in correspondence with market demand and technology trend
• Provision of the best customer services for sustained development
Sources: www.mobifone.com.vn
Between 1999 and 2009, MobiFone experienced significant growth, achieving 30 million subscribers and generating a total revenue of VND 27,000 billion By the end of 2010, the company is projected to increase its subscriber base to 38 million and revenue to VND 36,000 billion.
MobiFone is experiencing a decline in average revenue per user (ARPU) due to a rapid increase in subscribers and a significant number of inactive SIM cards This trend poses a challenge for the company's Board of Directors as they seek to balance revenue growth and profitability In response, MobiFone is exploring various strategies, including the introduction of new value-added services and innovative distribution payment methods, such as scratch card transactions and game top-ups through their system.
Mobile money – Opportunities for VMS?
One of the initial factors contribute to the success of mobile money in a market is the need of market itself including both mobile market and financial services condition
3.2.1.1 Opportunities of mobile money services to bank the unbanked
Vietnam's mobile penetration rate has reached an impressive 160%, while financial services penetration stands at only 29%, presenting a significant opportunity for mobile operators to develop profitable services for the unbanked and underbanked populations The underbanked are individuals or businesses with limited access to mainstream financial services, often relying on cheque cashers, loan sharks, and pawnbrokers, in contrast to the unbanked, who lack any banking facilities.
Seventy percent of Vietnam's population resides in rural areas with limited infrastructure and financial services, leading to significant mobility as individuals seek employment in cities This dynamic has fostered the emergence of essential domestic remittance corridors, akin to the dual-corridor phenomenon seen in countries like Kenya and the Philippines, where mobile money has thrived A common scenario involves a man working in Hanoi or another urban center who regularly sends money back to his family in a different province.
Vietnam's limited transportation and infrastructure hinder access to both formal and informal financial services for the unbanked population However, the country's mobile network coverage has significantly improved, allowing people to make calls from almost anywhere This strong mobile network confidence correlates positively with the adoption of mobile money services, presenting a valuable opportunity for mobile operators considering the launch of such financial solutions.
SMS literacy is a significant advantage in Vietnam, as it helps mobile operators encourage customers to engage in financial transactions via mobile phones According to market research by Nelson, 90% of MobiFone subscribers utilize SMS services, highlighting a trend similar to that in the Philippine market This high level of SMS usage mitigates challenges associated with adopting mobile money services.
The significant prevalence of international remittances presents a promising opportunity for mobile money services to expand their international remittance offerings post-launch In fact, Vietnam ranks among the top 20 countries globally in receiving remittances, with over US$7 billion received, accounting for nearly 8% of its GDP.
The banking system comprises 100 active banks, including 43 domestic commercial banks, 47 foreign bank branches, 5 foreign-owned banks, and 5 joint ventures, collectively operating over 10,000 branches and transaction shops Additionally, there are approximately 3,000 ATMs, primarily located in urban areas, which is a modest figure compared to the more than 140,000 mobile agents operated by VMS.
About some figure of the domestic financial flow, Vietnam has
In 2009, cash payments reached $78,592 million, highlighting a significant market for money transfers While there are no formal figures for total money transfer through both formal and informal channels, ATM transfer volumes stood at VND 69,000 billion, and VNPT's postal money transfer market was valued at VND 27,500 billion in 2008 The State Bank of Vietnam reports approximately 9 million ATM cards in circulation, representing only 10% of the population, indicating that the actual number of individuals with bank accounts is even lower due to multiple cards owned by single users This data underscores the vast potential of the money transfer and payment market, making it an attractive opportunity for mobile wallet services.
3.2.1.2 How should Mobile money in Vietnam be?
The rise of e-wallets such as Payoo and Mobivi, along with mobile money services from companies like MService, Vietpay, and VNPT ePay, marks a significant shift in digital payment solutions These platforms offer personal e-wallets through web tools and mobile applications, enabling users to top up, pay bills, and engage in gaming transactions This evolution signifies the beginning of mobile money services, catering to the growing demand for convenient financial transactions.
Viettel, in collaboration with Vietcombank and Smartlink, has launched Pay-plus, a mobile wallet service that allows users to transfer money, pay bills, and make online purchases Following this, Vinaphone introduced a similar service called Momo, developed in partnership with M-Service Payment Company and Vietcombank While these services represent a new approach to mobile commerce, they are not true mobile money solutions, as users still need a bank account for cash withdrawals, limiting their reach to only 10% of the banking market and leaving the unbanked population underserved Additionally, there is a limited availability of SIM cards that integrate these services from Viettel and Vinaphone.
Research indicates that cashless payments currently represent a small fraction of total transactions in mobile money businesses, with only 2% in Kenya and 10% in the Philippines The primary function of these services is money transfer, encompassing both sending and receiving funds Therefore, VMS should prioritize mobile money deployment strategies that emphasize this aspect rather than solely focusing on e-payment solutions, as seen with many recent e-wallet introductions Mobile wallets can effectively serve their purpose by targeting the unbanked population, especially when they operate independently from traditional bank accounts.
3.2.1.3 How to pricing the unbanked?
Mobile money services provide significant benefits to consumers, primarily through extensive outreach and cost-effectiveness According to CGAP research, mobile money is on average 19% cheaper than traditional bank services and 38% cheaper for smaller transactions often used by low-income individuals Additionally, mobile money options are half the cost of informal financial services This cost advantage arises because traditional banks require substantial investments in infrastructure and personnel, whereas branchless banking utilizes existing agent networks and mobile technology to reduce expenses.
While banks charge fixed fees whether a person transacts with $1 or
Branchless banking providers offer tiered or percentage-based fees for transactions, making them more cost-effective for lower transaction values compared to traditional banks This pricing structure means that mobile money services are significantly cheaper for low-income, previously unbanked clients who typically engage in smaller transactions.
In May 2010, CGAP conducted a research study analyzing the pricing of 16 prominent branchless banking services in comparison to 10 formal banks targeting the mass market, alongside informal money transfer options The pricing was adjusted for purchasing power parity (PPP) to ensure comparability for customers across diverse markets.
Average branchless banking price is $3.9 per month when banking price is $4.8 per month
With the different values for customer, the pricing get different levels:
% Branchless banking cheaper than banks 38% 19% 45%
Sources: CGAP – branchless banking price research 2010
Figure 3.7 Price of banking services vs branchless banking
For the money transferring between branchless banking and informal options, the price is as follow:
Average Value $62 ($160 PPP) As percentage
Other options (post office, bus, money changer ) $10.7 6.7%
% Branchless banking cheaper than other informal options
Sources: CGAP – branchless banking price research 2010
Figure 3.8 Price of mobile money transfer via informal options vs branchless banking
In the total transferring money fee, in average, sender takes 49% and receiver take 51% of price
The Method of charging for main services is as figure 3.9
Figure 3.9 Number of Providers that charge specified method of pricing
Figure 3.10 Transaction pricing of main mobile money services
Having a look at banking price and post office fee for money transfer in Vietnam now, we have figure 3.11 below:
Vietcombank Vietinbank Vnpost Transportation bus
To in network Acc Free Free 1.92% min $1 0.1% min $1
To in network Acc Free Free Free Free
Cash out (in 2 days) 0.03% min $1 0.02% min $0.5 N/A N/A
Sources: official public price of institutions
Figure 3.11 Vietnam money transfer pricing
The pricing rate for money transfers, ranging from 0.02% to 0.1%, may seem minimal; however, this rate only applies to transfers exceeding $2,500 For smaller amounts, there is a minimum fee of $0.50 to $1 Additionally, using post office or informal channels incurs even higher rates It is important to note that this discussion excludes the additional costs associated with traveling to bank branches, bus stops, or post offices, which can be significantly far from rural customers due to limited network access.
The unbanked market exhibits a high frequency of money transfer needs, particularly for amounts ranging from $15 to $50 Analysis reveals that the transaction fees for bank transfers in this range are between 1% to 6.67% for both senders and receivers, while fees for transfers via post offices or buses range from 2% to 6.7%.
Average amount of money transfer $15 $30 $50
Figure 3.12 Vietnam money transfer pricing for unbanked
Moreover, the bank services need maintaining account with minimum of $2.5-$5 while mobile money associate with benefit (commission) when top up to mobile account
After those above market analysis, we have some conclusion:
Service provides recommend should be: deposit, withdrawal, buy top up, bill payment, send money, receive money, and balance inquiry
Services fee structure should be:
9 Bill payment, send money, receive money: Flat ($0.1- 0.3/transaction)
Research Findings
A survey conducted among 280 MobiFone customers, with an average age of 39, revealed that 45% of respondents are male and 55% are female Notably, only 4% of participants exclusively use voice services, while the majority engage in a variety of other mobile services, including SMS, ringtone downloads, image downloads, and SMS banking.
Download ringtunes, images SMS banking Others Voice only
Figure 3.20 Research samples by gender and habits
The research utilized a dual methodology, comprising 25% face-to-face or telephone interviews, 35% questionnaires, and 40% online surveys, ensuring a comprehensive cross-section of consumers The collected data from the questionnaires was then analyzed to generate the survey results, with detailed information available in Appendix 1.
The primary objectives of the survey were to review and understand:
• The customer’s need and interest on mobile money
• Customer’s behaviors and accepted price
In a survey of 280 respondents, 48% identified as rural residents while 52% were from urban areas, with 29% living in big cities and 23% in small cities The income distribution reveals a focus on low and middle-income classes, with 44% earning less than $3 per day and 39% earning between $3 and $5 per day.
With these target survey market, the survey results is expected to reflect unbanked demand for this services – the target market of mobile money
Big city Small city Rural/remote area
Figure 3.21 Research samples by regions and income
Recent research indicates that 60% of market segment consumers utilize money transfer services at least once a month The majority of these transactions occur through relatives (63%), followed by microfinance institutions (47%) and transportation companies (46%) In contrast, banks and post offices are used less frequently, at 22% and 20% respectively.
When asking more in details, we found out that due to difficulties like inconvenience, high fee when sending some small amount of money ($10-
Many individuals find traditional methods of sending and receiving money, such as banks and post offices, to be complicated and inconvenient, often due to high fees and lengthy processes As a result, they prefer using simpler and more accessible channels, like relatives, transportation companies, or microfinance institutions However, challenges remain, particularly when bus stops are located far from homes and transfer agencies are scarce in their vicinity.
Q: How often do you send/receive money?
34% Often (1‐2 times/week) Sometimes (1‐2 times/month)
Rarely (< once/month) Hardly ever
Figure 3.22 Consumer habit of send/receive money
A survey conducted with 280 respondents revealed insights into consumer attitudes towards bank account services, showing that 22% actively use these services, while 78% do not The primary reasons for non-usage include 46% citing inconvenience and high costs, 20% reflecting unmet demand, and 13% influenced by their social circle This indicates a significant opportunity for mobile money accounts, as enhancing convenience and affordability could encourage more consumers to adopt these services Furthermore, as more customers engage with improved services, a viral effect may occur, drawing in their friends and relatives.
Q: How often do you use bank account services
Sometimes (1‐2 times/month) Rarely (< once/month)
Q: Why don’t you use bank account services
Inconvinience (banks are to far from home)
My realatives don’t use banks account
Expensive price (open cost, retain balance)
Figure 3.23 Customers behavior and attitude to bank account services
A significant 86% of customers express a desire for more convenient money transfer services, with 63% strongly agreeing on the need for improved location and process options Additionally, 74% of respondents indicate that they would utilize bank account services more often if these services were more accessible, allowing them to check their balances anytime and anywhere.
Have strong demand for bank account service if it is convinient and ability to check balace any time, anywhere
Strongly disagree Disagree Normal Agree Strongly agree
Figure 3.24 Consumers demand on bank account services
A significant 66% of consumers express interest in sending and receiving amounts between $15 and $25; however, they often refrain from doing so due to the inconvenience and complexity of the process Additionally, 51% of respondents prefer using their mobile accounts to pay bills, such as electricity, water, and school fees, rather than visiting physical locations to make cash payments.
Have strong demand to send/receive $15‐$25 but don’t exercise because money transfer services is complicate and inconvinient
Strongly disagree Disagree Normal Agree Strongly agree
Hope to pay bill (electrics, water, school fee ) by mobifone account instead of go to point of collection to pay cash
Strongly disagree Disagree Normal Agree Strongly agree
Figure 3.25 Consumers interests in mobile money services
MobiFone's M-wallet services show varying levels of interest among potential users, with 8% indicating they will definitely use the service, 19% expressing a possibility of usage, and 18% willing to try it initially Additionally, 27% of respondents stated they would consider using the service if their friends and relatives do, while 17% remain uncertain about their decision.
If m‐wallet service to be provided, willl you use?
I will use if my relatives & friends use
Figure 3.26 Consumers interests in M wallet services by MobiFone
A recent survey reveals a growing consumer interest in mobile money services, particularly in mobile money transfers and mobile payments Researchers also explored additional services that MobiFone plans to offer, seeking consumer feedback on these options Notably, domestic remittance emerged as the most appealing service, attracting 65% of respondents, alongside features for deposit and withdrawal.
Domestic remittance Bill payment Deposit/withdrawal from mobile account
Airtime top up International remittance
Figure 3.27 Mobile money services interested rate
When choosing m-wallet services, consumers prioritize safety (4.9), convenient access to agents (4.3), and simplicity (4), while factors like affordability (3.8), widespread usage (3.8), and quality customer support (3.5) are also important The variety of services offered and the number of POS accepted are less significant, likely due to limited familiarity with mobile commerce Additionally, a transaction duration exceeding 2 minutes is generally considered acceptable.
Many POS (accepted payments) Cheap price
Ability to use many services
High process speed ( Proceedings of Helsinki Mobility Roundtable Sprouts: Working Papers on Information Systems, 6(48)
17 Data Innovation, Inc (2010), ‘Mobile Money Study: A Baseline View January 2010’
18 Edgar, Dunn & Company and GSMA (2008), ‘Outlook for Mobile Wallets and Mobile Financial Services’
19 Ernst & Young (2009), report on ‘Mobile money - An overview for global telecommunications operators’
20 Frederik Eijkman, Jake Kendall, and Ignacio Mas (2009), ‘Bridges to Cash: the retail end of M-PESA’
21 Fiserv, Inc (2009), ‘New Research Reveals Untapped Market for Mobile Banking Among Offline Consumers’, Research Paper
22 GSMA report (2007), ‘MMT- Catalysing the mobile money market’, GSMWorld
23 GSMA mobile banking vendor analysis overview document (2007)
24 GSMA (2008), Report on regulatory framework for mobile money transfers
25 GSMA report on introduction to MMT, (2008)
26 GSMA report (2008), Smart money research ‘Findings from Consumer Market
27 GSMA report (2009), ‘Mobile Money in the Philippines – The Market, the Models and Regulation’
28 GSMA (2009), ‘Mobile Money annual report’
29 GSMA (2010), ‘Mobile Money annual report’
30 Gunnar Camner, Caroline Pulver, and Emil Sjửblom (2009), ‘What makes a successful mobile money implementation? M-Pesa in Kenya and Tanzania’, FSD Kenya
31 Gunnar Camner & Emil Sjửblom (2009), ‘Can the success of M-PESA be repeated? – A review of the implementations in Kenya and Tanzania’
32 Hannah Bowen and Peter Goldstein (2010), ‘The Mobile Money Revolution?’, Media Survey Institute Research
33 Ignacio Mas and Dan Radcliffe, Bill & Melinda Gates Foundation (2010),
‘Mobile Payments go viral: M-PESA in Kenya’
34 Jan Ondrus and Yves Pigneur, ‘A Disruption Analysis in the Mobile Payment Market’, Information Systems Institute, HEC School of Business
35 Jashim Khan and Margaret Craig-Lees (2009), ‘Mobile Payments: their effect on purchase behaviour’, AUT University, New Zealand
36 Jean-Marie Letort, Vincent Douin, and Julien Traisnel (2009), ‘Achieving the potential of Mobile Money in emerging markets’, Greenwich Consulting White paper
37 Jean-Marie Letort (2010), ‘How to define an entry strategy for Mobile Money in a new market?’
38 Jonathan Adongo (11/2007), ’Financial Access Matters – an investigate publication on financial issues in Zambia’, FinMark Trust research no 3, Zambia
39 Jonathan Dolan (2009), ‘Accelerating the Development of Mobile Money Ecosystems’, Mobile money Summit 2009, © 2009 IFC and the Harvard Kennedy School
40 Mahil Carr (2007), ‘Mobile Payment Systems and Services: An Introduction’
41 Mark Pickens, David Porteous, and Sarah Rotman (2009), ‘Scenarios for Branchless Banking in 2020’, Focus note, Department for international development – CGAP
42 Mark Pickens, Sarah Rotman,IgnacioMas, and Olga Morawczynski (2009), report on Agent Economics: M-PESA’, CGAP
43 Microsoft and M-Com White paper (2005), ‘Mobile Payments Delivering Compelling Customer and Shareholder Value through a Complete, Coherent Approach
44 Michael Eagleton (2010), ‘Mobile money management and high performance’
45 Mobile money transfer conference documents, 2010, IAMTN, Singapore
46 Nick Hughes and Susie Lonie (2007), ‘M-PESA:Mobile Money for the
“Unbanked” Turning Cellphones into 24-Hour Tellers in Kenya’, Innovations
47 Nokia presentation on opportunities for mobile money in India, (2010, Feb), Mobile World Congress, Barcelona Feb 2010
48 Paul Leishman (2009), ‘What Makes a Successful Mobile Money Implementation? Learnings from M-PESA in Kenya and Tanzania’, GSMA
49 Paul Leishman (2009), ‘GSMA Deployment Framework Key Learnings on Successfully Deploying Mobile Money’, GSMA
50 Samuel Ivarsson (2008), ‘Mobile payment with customer controlled connection - Can it be constructed to be safe enough?’, Master thesis, School of Engineering, Blekinge Institute of Technology
51 Stephen F Rasmussen (2010), ‘Mobile banking in 2020’, CGAP report
52 Stjepan Udovicic (2006), ‘An analysis on consumers ‘needs and attitudes towards mobile commerce services’, master thesis, University in Ljubljana
53 Supriya Singh and Ms Marita Shelly (2010), ‘Review of Mobile Money Transfers in the Asia-Pacific’, New Financial Services project, RMIT University
54 Till Bruett (2009), ‘Prospects for Mobile MoneProspects Money in the Pacific’, Pacific Financial Inclusion Programe
56 Vodafone (2007), ‘economic empowerment through mobile’, The Vodafone CR dialogues 3rd edition
57 William Jack and Tavneet Suri (2010), ‘The Economics of M-PESA’, 3rd version
58 Zhao Hanbo (2008), ‘Emerging business models of the mobile internet market’, Master thesis, Helsinki university of technology
59 www.economist.com (Sep 24th 2009), ‘The power of mobile money’
4 http://www.greenwich-consulting.com
5 http://www.safaricom.co.ke
7 http://site.globe.com.ph
8 http://www.telecom-it.vn
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