Emerging Market Opportunities:Mobile Money in Incipient India

Harold MontgomeryCEO

• 5.6 Billion Cell Phones• 75% in the developing world

It’s Official:Cell Phones are EVERYWHERE

• Cell Phone Recharge + Top Up Station• It’s Everywhere You Want to Be

Interesting….But will it catch on in the U.S.?

Mobile Wallets -

Aggregation of Existing Payment Methods

Too Many Cards

Easy/faster than fast

TBD

D E V E LO P I N G W O R L D

Transaction Tool Replacing Cash

Too Much Cash

Fast, Safe, Easy, Cheap, Certain

Very High

Definition

Issue Solved

User Benefit

Value to User

D E V E LO P E D

W O R L D

Wallet / Wallet =

THINK DIFFERENTLY

M-Pesa in Kenya• First Mobile Money System

• Started to facilitate micro lending

• 5 years old

• Domestic Remittance is majority of volume

• Ubiquitous presence in Kenya

A Success By Any Measure

M-Pesa Metrics

70% of Adults

Transaction Volume

25% of GDP

Net Operating

Revenue (0.5%)

Kenya

15 Million

$18 billion

$90 million/year

Lessons from Kenyan Success

• Act fast, force regulators, banks to play catch up

• Near total telco monopoly – Safaricom 80% market share

• Built in distribution channel, trusted brand name

• High need among population – ban on migration

• Capable local team that will tackle the problem

• Supportive corporate parent

• Lots of Capital An unusual set of circumstances prevailed

Preconditions for Independent Success• Regulatory approval/support

• Lack of entrenched special interests w/ veto power

• Banks

• Telcos

• High need among population

• Easy entry level products to build trust

• Capable local team that will tackle the problem

• Capital

• Lack of TOTAL Alignment is Fatal• Of 140 live deployments, only a handful really scale

Why Telcos Should NOT Be In Charge

Retain Mobile Subscribers

Service area

Not interested

Low

I N D E P E N D E N T

Process as many payments as possible

100% of Population

By Definition

Very High

Goal

Reach

Interoperability

Value to user

T E L C O S

• Telcos are in it to build the Telco• Independents are in it for the user

INDIA• Population 1.2 Billion, growing to 1.6 Billion by

2030

• 45 cities > 1 million

• 30% under age 14

• 30% urbanized/70% rural

• Middle Class = ~300 million people ($500/month)

• Per Capita GDP = $300/month

• 30% below the poverty line

• Literacy =61%

• 6 language groups, 100+ dialects

• Growing 6+% per year

The Next China?

Mukesh Ambani’s $2 billion house

Challenges and Opportunities In India

Challenges:

• All cash economy

• Lack of bank accounts – only ~300M

• No payment mechanisms – credit, debit or check

• Weak transportation – Daily errands take time

• Firm governmental support for payment innovation

The window for a fast, easy, reliable independent payment system is wide open

Addressable market is 650+MILLION unique cell phones

India’s Mobile Market

• 13 Vendors • Highly Competitive• Fractionalized Market

The “Paypal of India”

What Can You Buy?

Allows consumers to use their mobile phone to transact:

Prepaid Cell Phone Prepaid Television

Utility Bill Payment Ticketing

Shopping Domestic Remittance

• Fast, easy, reliable, cheap• HUGE value proposition vs. current methods• Rural to Urban migration feeds Domestic Remittance

Total Market $300 Billion +

How Does Money on Mobile Work?

Consumers (Currently 17,814,000)

Retailers(Currently 110,000)

Money on Mobile

6 Satellite TV 15 Cell ProvidersRelatives

CASH

CASH

CASH

SMS TEXT INSTRUCTIONS

SMS TEXTCONFIRMATION

Money on Mobile – Retailers

• Each retailer adds an average of 160 users• Retailers are commissioned salespeople

May

-11

Jun-

11

Jul-1

1

Aug-1

1

Sep-1

1

Oct-1

1

Nov-1

1

Dec-1

1

Jan-

12

Feb-

12

Mar

-12

Apr-1

2

May

-12

Jun-

12

Jul-1

2

Aug-1

2

Sep-1

2

Oct-1

2

0

20,000

40,000

60,000

80,000

100,000

120,000

Money on MobileRetailers

110,036

Money on Mobile – Unique Users

Apr-12 May-12 Jun-12 Jul-12 Aug-12 Sep-12 Oct-12 -

2,000,000

4,000,000

6,000,000

8,000,000

10,000,000

12,000,000

14,000,000

16,000,000

18,000,000

20,000,000

Cumulative Unique Users 17,814,735

Money on Mobile – Volume Processed

Domestic Remittance will drive volumes higher

Money on Mobile Processed Volume (INR)

-

100,000,000

200,000,000

300,000,000

400,000,000

500,000,000

600,000,000

Apr-12 May-12 Jun-12 Jul-12 Aug-12 Sep-12 Oct-12

Rs 536 M$9.8 M

Apr-12

Apr-12

Apr-12

May

-12

May

-12

May

-12

May

-12

May

-12

Jun-1

2

Jun-1

2

Jun-1

2

Jun-1

2

Jul-1

2

Jul-1

2

Jul-1

2

Jul-1

2

Aug-12

Aug-12

Aug-12

Aug-12

Aug-12

Sep-1

2

Sep-1

2

Sep-1

2

Sep-1

2

Oct-1

2

Oct-1

2$0.00

$0.50

$1.00

$1.50

$2.00

$2.50Money on Mobile Per User Statistics

Total $ volume per unique user per month Average Transaction Size ($)

# transactions per unique user per month

Money on Mobile – Per User Statistics

Lots and Lots of Micro Transactions

Lessons Learned There are HUGE opportunities in the developing world, BUT…

• Everything has to be right or nothing is right

• If you’re going to be successful in the developing world, you have to think from that world

• Indian solutions by Indians for Indians that solve Indian problems the Indian way

• Have patience

• Get ready for surprises

Emerging Market Opportunities:Mobile Money in Incipient India

Harold MontgomeryCEO