Mojaloop was one of three big cybercurrency stories from SIBOS 2017

unbanked person

The biggest cybercurrency story from SIBOS 2017, mostly because of the deliberate guerrilla marketing by Ripple, was Ripple vs SWIFT (which we covered here).

The second big cybercurrency story from SIBOS 2017 was a partnership between IBM and Stellar to go after that same cross border payments market. This was interesting in crypto land because Ripple and Stellar have a common gene pool (both were started by Jed McCaleb) and there is nothing more bitter than fights within a family. Until this week, the positioning was clear – Ripple was an enterprise play and Stellar was consumer oriented. This was the week when that changed. Stellar is going after Ripple’s enterprise space with this partnership; you don’t get more enterprise than IBM. As we will see in the next story, Ripple is also trying to position in Stellar’s consumer space with Mojaloop. Both Ripple and Stellar are moving tanks onto their respective lawns.

This fighting on two fronts by Ripple has left some crypto fans confused as this comment on Reddit shows:

“If Ripple tries to position themselves in the retail and personal markets to compete with Stellar that will be very bad for Ripple investors since they will clearly change the company fundamentals and not inspire trust, after all Jed left Ripple because they were getting too much “closed” and not targeting the retail and personal markets.”

Mojaloop for the Unbanked

Mojaloop, an initiative for the unbanked,  was announced at the world’s biggest tech conference for banker. SIBOS gets about 8,000 bankers from around the world. Historically the subjects were rather “dry” – announcements about back office and SWIFT messaging protocol level changes predominated. Then Innotribe rejuvenated the content and we had more Fintech and it became a bit more like Money 2020. which is happening this week, one week after SIBOS; yes they are rivals and the organisers know that few attendees will travel to both if they are back to back.

Blockchain will benefit the Unbanked, but how will it get to market?

An immutable ledger that will enable the unbanked to record title to property could dramatically improve the lives of billions. In the West we take legal title to property for granted. No dictator can unilaterally change the deeds that show that I own my home.  I will be describing this and other financial inclusion use cases for blockchain at this seminar in Switzerland on 11 November.

Crypto enthusiasts have had this vision for a while. I share it. The problem is how do we get from here to there? How does this actually benefit the lives of millions today? Today, millions are using M-Pesa in their daily life, while Blockchain is a passion for a few thousand technologists. Crypto enthusiasts will tell you that M-Pesa is a closed system controlled by a telecom company (Vodafone) and that is a real issue. That is why I was so excited to find MoneyOnMobile which is a telecom operator agnostic alternative to M-Pesa (disclosure: MoneyOnMobile is a client of Daily Fintech Advisers).

Mojaloop posits a world with micropayment transaction through a blockchain. unbanked need micropayments; the transactions they do are far too low for traditional bank payment rails. So the need is clear. However,  Blockchain as a technology platform for micropayment is still a future dream.

There are three competing visions for blockchain based micropayments:

  • As above but via Ethereal and Raiden.
  • Some new currency that serves as an interim store of value. Both Ripple and Stellar seem to be positioning for this. However, an interim store of value coin needs to be non-volatile. That rules out Bitcoin today but also rules out Altcoins that are primarily driven by trading speculation (which is true for both Ripple and Stellar).

Mojaloop is backed by the Bill & Melinda Gates Foundation, which has done so much to improve the lives of the poor. We hope that entrepreneurs use the open source code to drive financial inclusion and solve the problems of cybercurrency volatility outlined above so that it can be used for micropayments.

What will be the conversation at Money2020?

I assume that cybercurrency, the unbanked and cross border payments will feature strongly. It is possible that the same initiatives launched at SIBOS get more promotion at Money2020. We will probably also see new initiatives launched in these areas. Going from SIBOS to Money2020 on the digit express is easy; I am looking forward to surfing that tweet stream and joining in conversations remotely.

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Bernard Lunn is a Fintech deal-maker, author, adviser and thought-leader.

Get fresh daily insights from an amazing team of Fintech thought leaders around the world. Ride the Fintech wave by reading us daily in your email.

An Interview with the Chief Payments Officer at BankServAfrica on SA’s National Payment System

With the Fintech world immersed in events at Sibos, we at Daily Fintech had the opportunity to speak to Martin Grunewald, Chief Payments Officer at BankServAfrica. We discussed the future of National Payments System (NPS) with Martin, and he provided key insights on the approach, challenges and the work that remains to be done across Africa, not just South Africa.


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BankServAfrica is the largest automated payments clearing house in Africa. They process payments across 40 banks, about 34000 ATMs, with peak volumes in 2016 reaching R10.5 Trillion (includes electronic, POS and ATMs). The National Payment System is the infrastructure that BankServAfrica have been working on to facilitate interoperability between banks, ensure regulatory compliance and reduce complexity in the industry.

Martin has been at the forefront of the NPS redesign initiative and is hosting a community session with McKinsey at Sibos. The interview we did with him touched upon the following areas,

  • Drivers and Approach to modernising NPS
  • M-Pesa in South Africa
  • Impact on the unbanked
  • Fintech, Blockchain and NPS
  • Interoperability across Africa

What do you see as your role at Sibos this year?

Sibos is the gathering of about 8000 Financial Services and Fintech stakeholders across the globe. I will not only be representing BankServAfrica and South Africa, but also the whole African continent. I am keen to engage with the global community, share ideas and also learn from the rest of the world on how they are solving problems with the digital economy.

I would also be discussing and sharing ideas around addressing the unbanked and improving financial inclusion across the world. We will be flying the African flag and engaging with the globe.

Why do you need NPS to be modernised and what are the drivers?

NPS modernisation is a very interesting space and we are working closely with the Payments association of South Africa to make it happen. SA is a two-economy country where payments infrastructure has mostly served the middle class and the corporates.

Statistics are distorted when they claim that 70% are banked in SA, as they include 12 Million government grant earners who have bank accounts but are mostly unbanked. Without this population, the banked percentage falls to 57%.

We are redesigning the NPS so that it can be used by a wider audience. A redesigned NPS alone will not automatically provide financial inclusion for the unbanked. But we can definitely ensure that the design doesnt inhibit the process. 

For example, SA has had a real time payments system from 2008, for higher value transactions, that are priced that way. Even fraud detection is designed around high value transactions. A motorbike can be bought using real time payments, but not a 2 Rand transaction. NPS redesign problems such as this.

What was the approach to the NPS redesign?

We have taken a three staged approach to the NPS redesign.

First step involved looking at international markets. Countries like US, Canada, EU, UK and Australia act as comparable ecosystems economically, where there have been different approaches taken to address different functionalities. For example, RTGS has been addressed differently across these countries.

We also performed a comparison across developing economies such as Brazil, Mexico, Nigeria and India on how they are achieving modernisation of their payments infrastructure. For example, India is moving towards a pay by proxy style mobile payments infrastructure.

Second Step was to interview about 50 key stakeholders across these economies that included, banks, retailers, regulators, mobile operators and getting their views around the key problems we were trying to solve in SA.

Third Step was to arrive at actionable insights from the data gathering and execution of the actions. We have now kicked off modernisation of the NPS based on the results of the analysis.

What are your thoughts on M-PESA and its role in SA?

M-PESA has done well in West Africa, particularly in Kenya and Tanzania. However it has failed to penetrate SA, twice. From a SA perspective we need to open up the NPS system to other players. SA has an entrenched banking system. Kenya can’t be easily replicated in SA.

West Africa (Tanzania/Kenya) has closed loop systems running their course. Economies cant scale on closed loops systems. Payments for SA and for rest of Africa should be open and cater for other players that scale. 

How will the Fintech, Blockchain and Telecoms revolution influence NPS?

New Fintechs can create leap frog moments using new technologies, but when it comes to NPS the challenge is that there are legacy software and processes involved. They have to be open ecosystems that can interoperate, and not siloed. I see many tech solutions going into environments, without taking a top down approach.

Next generation of payments infrastructure cant ignore mobile. 10 years ago we couldnt have imagined a life without mobile. Its a key channel for transactions going forward. Informal set ups would depend on mobile for connections. Payment systems that do not make mobile friendly customer journeys will fail.

There is a lot of activity happening in the Blockchain space. While across other industries, applications are starting to emerge, within Financial Services it is still a great piece of technology looking for a problem to solve. 

How do you see your role across Africa?

I think Africa needs interoperability with the payments infrastructure. Financial inclusion has vastly improved in some countries, thanks to Fintech. However, they are currently quite closed ecosystems. We are working with the Gates Foundation and the World bank on our vision for Africa. We are working towards an open ecosystem that provides seamless interactions across Africa.

It was a very insightful conversation with Martin, who gave us time at short notice. An open payments ecosystem across Africa would be nirvana state, and if achieved would act as a template for other developing regions of the world to follow.

Arunkumar Krishnakumar is a Fintech thought leader and an investor. 

Get fresh daily insights from an amazing team of Fintech thought leaders around the world. Ride the Fintech wave by reading us daily in your email.




The financial inclusion on ramp for the next billion 



The emergence of billions from subsistence farming into a global middle class is both a) the biggest investment opportunity of the 21st century b) the cause of so much of the trauma (political, social, geopolitical) roiling the world today.

In short, there is a lot at stake in those two words – financial inclusion – and in the technology that is driving financial inclusion today.

Financial inclusion used to mean a) philanthropy b) governments telling banks to serve more poor people. That was analog financial inclusion and it was and still is very helpful. What we are focussed on is digital financial inclusion, which is more to do with mobile and blockchain. Digital financial inclusion is accelerating the way billions move up the ladder of opportunity.

7 billion in 6 tiers playing snakes and ladders

There are about 7 billion people in the world today. We can look at this with a glass half full point of view as a ladder of opportunity. Or we can look at this as a glass half full point of view as snakes that the unfortunate slither down into poverty.

Being an entrepreneur, I tend to have a glass half full point of view. If you are in one of those middle tiers and see how your earning ability is being hurt by billions around the world competing for labor, you can rail against foreigners taking your old job or find a way of trading with those foreigners or working for a firm that trades with those foreigners (or find work that is immune from automation and has to be done locally).

The economy needs growth. That growth will come from billions entering the global middle class as long as global trade remains open. The problem is that the climate needs us to stop driving that growth with C02 emitting fossil fuels. Again we can have a glass half full or empty point of view. Glass half empty = we must stop those billions entering the global middle class because that growth will kill the planet for all of us.  Glass half full = we must find profitable ways for billions entering the global middle class to use clean, renewable energy and that is a huge business opportunity.

Note: many of the examples that follow come from India, mainly because I happen to have lived and worked there so I can speak from experience, but the challenges and opportunities apply to all the Velocity 12 countries (more on them later).

The 6 tiers, starting from the bottom are

Tier 1 = Subsistence. This is the world of philanthropy, such as the amazing Bill & Melinda Gates Foundation. It is ensuring that people are healthier and better fed, with a focus on things like malaria and sanitation. The success of these initiatives puts more people onto the next ladder.

Tier 2 = Unbanked. Bill Gates famously said that “banking is necessary banks are not”. In this tier, banks as they exist today are irrelevant. The classic customer is a day labourer working in a metropolitan area and remitting money back to their home village and buying mobile pre paid services and other low cost services. Those remittances are not always the cross border remittances that Fintech fans like to talk about. These cross border remittances have regulatory hurdles.  In big markets such as India, the domestic remittances market is also big and being within a national border the regulations are easier.  The unbanked use “feature phones” (aka “dumbphones”) and transaction unit sizes are typically too low for bank payments rails (you need to make money on a $1 transaction or less). Visiting a bank branch or ATM is not something this customer tier considers and if they did banks would find them to be unprofitable customers. These customers want basic payment services at very, very low cost. This is the world of services such as M-Pesa and, in India, MoneyOnMobile (Disclosure MoneyOnMobile is a client of Daily Fintech Advisers, our earlier coverage here). The people in this tier who work hard and save diligently may move up to the next tier.

Tier 3 = Underbanked. They need the same ultra low cost basic payment transactions as the Unbanked. They do more volume and slightly higher per unit transactional value, but their needs are fundamentally the same. They are formally in a different tier because they are classified as having a bank account. Although now formally in the tier marked as “banked”, they almost never use an ATM or credit card or other bank service and as far as banks are concerned they are unprofitable customers. In countries such as India that have an active government policy of encouraging financial inclusion, many will be paid via pre-paid debit cards or mobile wallets. They need to use this digital cash to a) pay for for basic goods and services via pre-paid mobile wallets and b) remit money home and c) get physical cash back from retailers (so they can buy the goods that you can only pay for with physical cash (more than 90% of the economy in a country like India). This is the tier where world of services such as M-Pesa and MoneyOnMobile intersects with services based on smartphones and credit cards that come from the West. This tier also applies to the West. There are people in countries such as UK and USA that might have a bank account but almost never use it because they mostly live “hand to mouth” and banks don’t want their business. This is the world of pre-paid services such as Ffrees in UK and GreenDot in USA.

Tier 4 = Banked Middle Class. This is the world of traditional Retail Banking and the more recent Neobank entrants. The supply is obvious. The demand is less obvious. Who woke up this morning in the West and put “change my banking provider” into their top Must Do priority list? In comparison millions of people in tiers 2 and 3 wake up each morning and things like “top up my mobile phone minutes” or “send cash home to my family” are on their top Must Do priority list. Look at the data in India. Tiers 2 and 3 are about 850 million vs about 300 million in tier 4. As people climb the ladder of opportunity, that 300 million Middle Class will grow. However it is unlikely that, having used the services designed for Tiers 2 & 3, they will desert them for traditional banking services.

Tier 5 = Overbanked Wealthy. Not relevant to this analysis,  other than as Impact Investors.

Tier 6 =The Super Rich. Not relevant to this analysis, other than as Impact Investors.

Velocity 12 – the countries formerly known as emerging

The names have changed from third world to developing world to emerging markets to BRICs to high growth markets to The Rest (of the World). The latest is the Velocity 12 designation by Ogilvy.  I like it because a) “the countries formerly known as emerging” is too long and b) it denotes rapid growth opportunity as the most fundamental characteristic. If I had to choose one simple word it would be the Rest (of the World).

These markets are now the driver of change. This is the mega trend that we call “First the Rest then the West”. One simple but powerful innovation that has gone from Rest to West is the dual SIM phone, which started in India.

Quoting from the Ogilvy report:

“The 12 velocity markets identified herald a shift to South Asia as the epicenter of future middle-class growth.  Centered principally in India, but inclusive of Pakistan, Bangladesh, Myanmar, Indonesia, and the Philippines – and extending up to China, and to Egypt, Nigeria, Mexico, and Brazil in the other direction, the Velocity 12 markets represent a vast arc of future growth.   Over the next decade, these 12 markets will be the source of the next billion middle-class consumers, which will create a critical tipping point as the middle-class move from a minority to the majority of the local population in many of these markets.

Miles Young, Ogilvy & Mather Worldwide Chairman said, “The Velocity 12 research shows the world as it will be in the not too distant future. A billion new middle class members will literally change its shape. It will become, for instance, much more orientated to South Asia, especially India. Most Western businesses simply are not used to thinking this way.  This means finding a new lexicon of growth, as the phrase ‘emerging market’ doesn’t now describe the new realities. ‘Velocity’ better describes the real transformation in these markets.”

Tipping point theory

When economies move up this ladder of opportunity it happens very fast and there are behavioural economics feedback loops. For example in Tier 1, all the incentive is to have lots of children who will look after you in old age. Somewhere between Tiers 2 and 4, the motivation changes to having a smaller number of children who are well educated and cost a lot of money to raise. As these well educated grown up with high expectations start producing and spending, it lifts those economies and all who trade with or invest in those economies.

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Bernard Lunn is a Fintech deal-maker, author, adviser and thought-leader.

Get fresh daily insights from an amazing team of Fintech thought leaders around the world. Ride the Fintech wave by reading us daily in your email.

Battle for customer data heats up – Banks and Tech Giants lobby against each other

Data is the new Oil. The European regulators brought PSD2 into force with a mandate for all banks to get compliant with the regulation by next year. I also discussed in one of my previous articles that GDPR could be an excuse that banks would use to not stick to the spirit of PSD2 and open banking standards.


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The UK has gone one step further to create the Open banking framework that helps create data sharing capabilities within banking and an engaged developer community. However, in the US, banks have been notoriously lobbying against data sharing since Consumer Financial Protection Bureau (CFPB) released a set of questions on this topic for the public to answer.

Based on the responses to this public survey, it is pretty clear that customers wanted to own their data, and also would like to decide who the banks can share their data with. And they want the data to be shared safely and securely. It is widely believed that most banks (not all of them) in the US, would create enough bureaucratic barriers for small innovative companies to get access to their customer data.

The other technique they might follow is opening up data access to Fintechs just a few times a day. This might hurt the business models of many Fintechs that depend on real time availability of customer’s banking data.

On the other coast of the country, tech giants (Amazon, Facebook, Google and Apple) are gearing up to fight the banks to get access to their customers’ data. In the recent past a group called Financial Innovation Now has been setup by the tech giants, with a view to lobby for customers’ data.

These tech firms realise the opportunity they have in consumer finance, especially lending and loan intermediation. With a wealth of data around customers’ spending pattern, and on ecommerce peaks and troughs, Amazon for instance, should be able to recommend a financial product to the customer, and make an easy introducer fees.

Amazon and Paypal lobbyists have met with the  Office of the Comptroller of the Currency (OCC) to discuss “issues related to mobile payments and payment processing, financial innovation, and technology”.

Large technology firms are really interested in the intermediation piece, where you have access to all that data.

– – Paul Nash, the former senior deputy comptroller 

If firms like Amazon could get their hands on customers’ financial data through an API, they could be a serious threat in the consumer finance space. They just need to follow the path that Alibaba and Tencent took in China.

With the initial years of Fintech we saw many banks embracing (or pretending to do so) innovative technologies. However, with open banking, we may see reverse osmosis where the tech giants move closer to banking.

So banks now not only have to worry about Fintechs squeezing their top line, and regulators hitting their bottom line, but also have to worry about Tech Giants eating up their market share pretty quickly. Long Live Data.

Arunkumar Krishnakumar is a Fintech thought leader and an investor. 

Get fresh daily insights from an amazing team of Fintech thought leaders around the world. Ride the Fintech wave by reading us daily in your email.


An Interview with CEO of collectAI – for working capital management

Fintech for too long has been focusing on UX, and with the advent of AI, there have been many firms focusing on customer journeys, that would lead to closure of a transaction. However, in recent times, the focus has shifted to back office operations, and adding efficiencies to these processes.


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Germany based collectAI ​​automates ​and digitizes ​invoices, ​dunning ​and ​debt ​collection ​processes ​and ​is ​the ​first ​digital ​end-to-end provider ​in ​receivables ​management. They have achieved significant traction in Europe by processing €25 Million since launch in 2016.

We had a chance to talk to Mirko Krauel, CEO of the firm on their progress and plans, and here are the key points he mentioned about his journey with collectAI.

What led you to collectAI?

After a Diploma in Business Administration, I was working as a management consultant within digital innovation of Banking and Payments industry. During my corporate experience, I noticed inefficiencies in various back office processes. I also noticed that the Fintech startups at that time were mostly focusing on customer experience. I chose the problem to solve and I felt AI would have to be my go-to technology for the problem.

What was the best part of the journey and what were the challenges?

The best part of the journey was getting the team together, the initial days of getting the product design and getting to the MVP. We had quite a few challenges with the Go-To-Market strategy and our sales cycle was also too long. So we had to sit down and work out a way of going after mid-sized clients to have a few closures and build credibility. We also employed a few project managers who were able to bring deployments to closure on a plan.

The other challenge we had was getting access to quality data to build the software, but with time, we are getting better at that too. 

Tell us about the AI software you have developed

The AI software has got better over time as we have learnt and the software has done so too. It now evaluates

  • The best timing to send a message for the payment collection
  • Payment methods to include
  • The tone to be included (friendly, neutral, strict tone)
  • If SMS, Post, Email is better for a customer
  • If a payment plan should be offered

And as a result we end up with a customized communication strategy for every customer.

How do you measure performance of your AI program?

I think it would have to be based on the efficiencies achieved. We have introduced an intelligent​ email ​functionality that led ​to ​an ​increase ​of ​the ​collection ​rate ​of ​33%, ​while ​processing ​costs have ​been ​reduced ​by ​up ​to ​41%. 

It is a big market in Europe alone where about 23% of debts are not paid on time. We have managed £25 Million processed through collectAI in the last 12 months.

Those are big milestones that we have achieved within 12-18 months, and they wouldn’t have happened without the hard work of the team in building a capable software.

Where do you go from here, what is in pipeline?

We need to scale the team across various functions. We need a bigger IT team, enrich our operations team and also get a few PMs. I have also plans for developing some self service features within the product, which will help customer experience and conversion. 

There are a number of AI startups coming up across Europe focusing on back office operations. However collectAI are well funded by their parent company Otto Group, Germany’s largest online retailer, and they have also demonstrated execution in the last 12 months. There is serious competition across the Atlantic, however, they seem to have the advantage in the European markets.

Arunkumar Krishnakumar is a Fintech thought leader and an investor. 

Get fresh daily insights from an amazing team of Fintech thought leaders around the world. Ride the Fintech wave by reading us daily in your email.


MoneyOnMobile is a mobile operator agnostic alternative to M-Pesa for the Unbanked and Underbanked

single shampoo

MoneyOnMobile is very low profile given how much traction they have. With a retail outlet distribution channel in India of 335,000 shops, 200 million unique phone numbers and more than 1 million domestic money transfer transactions processed in August 2017 alone, MoneyOnMobil should be top of mind for anybody tracking mobile money innovation.

Yet, although I keep a close eye on this space, I only heard about them a couple of weeks ago. Maybe we all instinctively gravitate towards something that resonates with our Western lifestyle. We can personally relate to the emerging middle class of India and so we can relate to ventures such as Paytm or the recently launched Tez from Google that serve that market.

It is harder to relate to the needs of the Unbanked and Underbanked and that is the market served by MoneyOnMobile and M-Pesa

As soon as I came across MoneyOnMobile,  I wrote about them here.

MoneyOnMobile has got the tag “Square of India”, partly because Jim McKelvey, a cofounder at Square is on the board of MoneyOnMobile. That positioning works well because of the connection through Jim and because Jim tells the story so well in this short video:

However this is a Western centric view and the analogy makes one think of credit card processing for small retailers. The analogy for MoneyOnMobile is closer to M-Pesa than Square and that is the analogy described in this post.

Disclosure: MoneyOnMobile is a client of Daily Fintech Advisers. I am not a financial adviser, please do your own diligence before investing.

The journey of discovery about MoneyOnMobile

When I tell people who know about mobile money in India about MoneyOnMobile, the journey of discovery goes like this:

“That sounds like Paytm.”

“Not really, Paytm and Mobikwik and Tez and many other ventures go after the emerging middle class of India. It is a great market of about 300 million people and Western models and bank/credit card rails translate reasonably well to that market. MoneyOnMobile in contrast is serving the Unbanked and Underbanked of India, a market closer to 850 million people. What is remarkable is that MoneyOnMobile have found a way to profitably serve that population which you could never do with Western bank/credit card payment rails”.

“OK, so it is more like M-Pesa”.

“Exactly. With one crucial difference. MoneyOnMobile is an open platform that is mobile operator agnostic”.

In this post I will elaborate on that thesis for those who need some more background explanation.

Although I did not know about MoneyOnMobile, I did write a post nearly 3 years ago in November 2014 basically saying that the world needs something like an open alternative to M-Pesa. When I wrote that I did not know about MoneyOnMobile, I just thought that something like that should exist. So when I came across MoneyOnMobile a few weeks ago I immediately saw how game-changing it was.

Why M-Pesa is so game-changing 

M-Pesa started in Kenya because people were trading their mobile phone minutes; in a world without bank accounts or landlines, these mobile minutes were vital to life and were a form of currency. The roadside stands (a kind of decentralized Walmart) became the bank where you could convert mobile minutes into Kenyan fiat currency and/or pay bills. Bankers lobbied the Kenyan government to kill it, but a study found it to be secure. Anecdotally, the Kenyan President wanted to pay his gardener and when he saw how easy it was to do this with M-Pesa he was sold.

The traction data from M-Pesa in Kenya is stunning. Read this article from SC College of Business at Cornell with this data:

“Today, Kenya is a leading actor in the mobile money sector: approximately more than 26 million subscribe to the network with over 127.000 agents. Between 31% and 50% of Kenya’s GDP is estimated to flow through this network, as over 50% of the population continue to be without a bank account and to rely on platforms such as M-Pesa.”

But there is one big problem with M-Pesa

M-Pesa is controlled by Vodafone. There is nothing wrong with Vodafone. They are a good mobile phone operator. However an open, mobile phone operator agnostic version of M-Pesa would be better. This is particularly true in India where there is tough competition from many mobile phone operators driving down prices (which is critical to the Digital India agenda of the Indian Government).

The other analogy that people reach for when they first come across MoneyOnMobile is Bitcoin. This is where it is useful to compare M-Pesa and Bitcoin. They are like mirror images of each other:

M-pesa bitcoin

If you replace M-Pesa with MoneyOnMobile in that comparison, the power of their model emerges because it is like M-Pesa, except that it is mobile phone operator agnostic.

Why fight over the Overbanked when the Underbanked are so hungry for service?

Disruption happens through outsiders who are not being served by the current financial system. Bankers, fighting over the overbanked in the West, are eying the 70% of the world that is unbanked. One of the simplest trends to ride in the 21st century is the rise of billions from subsistence farming into the consumer society. Each of those billions spends very little but in aggregate the market is big and when a country reaches the tipping point when a real middle class emerges, it becomes a very big market – witness China and more recently India and many countries in Africa today.

The reason why – price

Going after the blue ocean Underbanked market is so obvious. Why is not everybody laser focussed on this? The reason is simple. It is hard to serve the Underbanked profitably.

It is hard, but not impossible.

CK Prahalad popularised the idea of this demographic as a profitable consumer base in his 2004 book The Fortune at the Bottom of the Pyramid.

The iconic Bottom Of Pyramid success story was the single serving of shampoo sold by Hindustan Unilever Limited (HUL) in India, described well in this HBR article:

“Years ago, HUL pioneered the use of low-cost, single-use packets to make its products affordable for lower-income consumers who often shop daily for necessities (think of a ketchup packet, but filled with soap). Now these packets are ubiquitous in developing countries around the world. HUL itself sells 27 billion sachets a year.”

It should be easy to do this digitally where the marginal cost is zero; but it is impossible using bank/credit card payment rails. MoneyOnMobile has figured out how to make payments profitable even if the transaction is 1 Rupee (about US$0.015) – just like M-Pesa. Unlike M-Pesa, they are mobile phone operator agnostic.

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Bernard Lunn is a Fintech deal-maker, author, investor and thought-leader.

Get fresh daily insights from an amazing team of Fintech thought leaders around the world. Ride the Fintech wave by reading us daily in your email.

The Battle for the Billion – Payments in India heats up with Google Tez

A week ago Google launched “Tez” (meaning “fast” in Hindi), as yet another player in the payments segment in India. Indian payments industry has seen major growth over the last few years, thanks to the e-commerce boom. And e-payments is projected to be $500 Billion by 2025 – a market that can definitely accommodate multiple winners.


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A few questions I have been trying to find answers to since the launch are,

  • How does Google Tez stack up against the first movers, and the major players in this segment?
  • Is it too little too late for Google?
  • Will it help/hurt Google?
  • Will Google be satisfied with just the conquering the payments on smart phone market?

Before getting into these questions lets discuss the two key payment services in play here.

Unified Payments Interface (UPI) and UPI based apps: UPI is a feature that allows consumers to perform funds transfer, where the sender doesn’t need the bank details of the receiver. The funds transfer happens between two virtual payment address. Key differences between UPI and the other key methods of payments (NEFT/RTGS) are described here. UPI is currently used by 50 Indian Banks.

Apps that are predominantly UPI based, just act as a pass through layer for payments to happen. Examples are Google Tez, BHIM, PhonePe

e-Wallets: These are apps that store money and act as digital wallets, and will need to be topped-up from time to time with cash from either bank accounts or credit cards. When a money transfer is made, it moves from the sender’s e-Wallet to the receiver’s e-Wallet. PayTM is an Example.


BHIM was launched by the Government of India, and had quite a lot of success due to its simplistic design and interface. It is an app that supports only UPI transactions.

PhonePe, since its launch has been giving BHIM tough competition. It has richer functionalities for consumers from sending money to paying bills.

PayTM, ofcourse, is the one to beat in the Payments sector in India. PayTM is an e-Wallet, and has a different use case, as explained above. It has the first movers advantage and big money via investors such as Alibaba, and the might to take on Google at this stage.

Google Tez Features:

Tez takes a different approach to the Payments customer journey, perhaps to steer clear of the competition with PayTM. Tez is built on top of UPI, so users transfer money from one bank account (connected to their Tez app) to another, without storing money within Tez.

Tez supports a “Cash” mode that allows money to be transferred from one Tez user to another using Audio QR technology (AQR), which is supposedly more user friendly and secure. This is what one would need to pay the shop keepers in the local market.

Apart from this Tez supports several Indian Regional languages, has a fraud prevention feature called Tez Shield, and also provides a chat like interface.

Are they late?

Why would Sundar Pichai, someone who understands the Indian market come to the party so late? And is there hope?PaymentsTrend

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I believe, Google has the following advantages,

  • They have positioned themselves cleverly in the UPI space which is not the strategy that PayTM are currently taking.
  • As a feature within Google Tez, they support “Cash Mode“- which allows users to transfer money to nearby Tez users through a QR Code. India loves cash and this approach differentiates Google from the rest of the UPI lot.
  • As a further advantage, google has better data about every smart phone user than the Government of India or PayTM. If they put that to good use, they would be able to provide more contextual customer journeys.
  • Sundar Pichai’s understanding of the market, and Google’s might is a definite advantage on top of these.

It remains to be seen if they can accelerate from here, to conquer the UPI segment first, and eventually the smart phone payments segment in India.

The Next Billion

There are ONLY 300 million smart phone users in India. There are close to 650 Million mobile users (including smart phone users) and about a Billion who don’t have a smart-phone in India.

That is one mammoth market that Google would not want to miss out on.  But the advantages Google have with smart phone users (consumer data), is not something they can extend into the next Billion. So, one way to do it is through acquiring a key player in that market.

There are a few trying to conquer this space that shouts out for M-Pesa like innovation, and MoneyOnMobile is one key player. When I met the CEO of MoneyonMobile earlier this week, I was surprised to learn (inspite of knowing the Indian market) about the amount of efforts and capital it took to get the Next Billion on board. However, as Bernard describes in his article on MoneyOnMobile, the winner will make it big. And to me, Google might have to conquer that market through acquisition.

Google are not the first movers, so they are always going to play catch up. But they could do it right first time. Watch this space.

Arunkumar Krishnakumar is a Fintech thought leader and an investor. 

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