Without cash, company aims to put money in your pocket

KARACHI:
Chairman optimistic all-in-one bill payment platform will aid financial inclusion, help chain of consumers, retailers and businesses. CREATIVE COMMONS
While recharging an internet device, Muhammad Farooq of Rauf Communications – a retail agent from Bhittai Colony, Korangi Creek – was interrupted by another customer wanting to transfer Rs30,000 to a mobile account. The customer was turned down.
Curious, I asked as to why he refused the person wanting to conduct a rather sizeable transaction. “It isn’t worth my time,” the retailer said.
A part of the country’s 250,000-strong network of retailers involved in the trade of local remittances, Farooq doesn’t entertain customers requesting money transfers to a mobile account (m-wallet transactions). He, however, welcomes those willing to send money to customers without a mobile account (over-the-counter or OTC transactions).
Pakistan leads South Asia in ‘mobile money’
“Why should I handle Rs30,000 cash for a small commission,” the retailer said as he cleaned the dust off the counter – courtesy passing vehicles on the dilapidated road in front of his shop located in a low-income settlement that largely remains unbanked or financially excluded.
A great tool for poverty alleviation, financial inclusion refers to the provision of affordable financial services to the less- and under-privileged segments of the society – little wonder why the World Bank aims to achieve global financial inclusion by 2020 as one of its goals.
However, Farooq’s refusal to entertain money transfers to a mobile account – and he is not the only retailer who does this – reflects one of the main impediments to the growth of financial inclusion.
According to the State Bank of Pakistan, m-wallet transactions grew by a meager 1% in the July-September quarter of 2015 to read at 31% of the total customer-oriented transactions, as opposed to OTC transactions, which accounted for 69% of the total.
Customer-oriented transactions accounted for more than 95% of the total branchless banking transactions in the review period.
“It is not safe to keep cash at the shop or risk theft on my way to the bank,” Farooq said from behind an iron grill meant to fend off robbery attempts.
The agent said the commission he gets for an m-wallet transaction of Rs30,000 is Rs62 while for an OTC transaction of similar value amounts to Rs270.
However, there are other reasons why Farooq avoids m-wallet transactions. He can’t make transfers among customers of different platforms, such as Easypaisa and Mobicash. In fact, he often faces complaints from customers even when dealing with a single platform and, therefore, prefers OTC over m-wallet.
The retailers’ very inclination towards cash-based transactions is hurting the central bank’s goal of achieving financial inclusion – about 80% of the country’s population currently remains without basic financial services.
Company comes up with a solution
However, the equation may change over the next few years as one company has come up with a solution tailor-made to address this problem.
Mobile accounts: State Bank increases Easypaisa transfer limit
“The current OTC services offered by banks and telecom companies are all closed loop and deal with cash at both ends of the transfer transaction,” said Aezaz Hussain, chairman and founder of Systems Limited, which aims to address the limitations and inefficiencies of the current financial inclusion ecosystem through its subsidiary Electronic Processing Systems (EPS).
In an emailed statement to The Express Tribune, Hussain said their analysis of the current mobile financial services ecosystem showed the lack of interoperability was the key restraint to its adoption by the unbanked. These OTC services continued to handle cash at both ends of the transaction, thus not impacting financial inclusion, he said.
Moreover, retailers have to maintain inventory of cards and load for each of the five cellular operators and at times separate phones or SIMs to transfer the load to the consumers, Hussain said. This affects their ability to serve the users and also increases the cost of doing business.
The concept of OneLoad
To address this problem, EPS introduced the concept of OneLoad, which basically makes airtime of all cellular mobile operators (CMOs) mutually interchangeable.
Founded in mid-2014, the product will be integrated with all the existing MFS players and banks (in April) to provide interoperability through its open loop nature.
Only 15% Pakistanis avail Digital Financial Services
Explaining, Hussain said a retailer can buy OneLoad from an ATM or OTC outlet and resell it in the form a voucher or load to the users of any cellular operator, which will reduce the burden of maintaining five different inventories.
“If a product can provide an all-in-one facility to retailers, it will definitely storm the market,” Farooq, the retailer said of interoperability that OneLoad promises – it can also be used to pay for utility bills, and other services like Skype, NetFlix, bus and cinema tickets.
The product has already made notable progress. Starting from 50 retailers, the product now has over 2,500 active users. In March 2016, it was managing an average 6,000 transactions per week with an average weekly turnover of Rs2.5 million.
It will take a while to see if OneLoad can make a deeper impact on financial inclusion, but the management certainly looks optimistic.
The company is aiming for a 5% share in the Rs400 billion ($4 billion) airtime market by the end of the first year of full operation.

Published in The Express Tribune, March 28 th ,  2016.