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Emerging Market Opportunities: Mobile Money in Incipient India

Emerging Market Opportunities: Mobile Money in Incipient India . Harold Montgomery CEO. 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….

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Emerging Market Opportunities: Mobile Money in Incipient India

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  1. Emerging Market Opportunities: Mobile Money in Incipient India Harold Montgomery CEO

  2. 5.6 Billion Cell Phones • 75% in the developing world

  3. It’s Official: Cell Phones are EVERYWHERE

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

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

  6. THINK DIFFERENTLY Mobile Wallets - Developed World Developing World Transaction Tool Replacing Cash Too Much Cash Fast, Safe, Easy, Cheap, Certain Very High • Aggregation of Existing Payment Methods • Too Many Cards • Easy/faster than fast • TBD Definition Issue Solved User Benefit Value to User Wallet / Wallet =

  7. 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

  8. 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

  9. 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

  10. Why Telcos Should NOT Be In Charge Telcos Independent Process as many payments as possible 100% of Population By Definition Very High • Retain Mobile Subscribers • Service area • Not interested • Low Goal Reach Interoperability Value to user • Telcos are in it to build the Telco • Independents are in it for the user

  11. 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?

  12. MukeshAmbani’s $2 billion house

  13. 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 Addressable market is 650+MILLION unique cell phones The window for a fast, easy, reliable independent payment system is wide open

  14. India’s Mobile Market • 13 Vendors • Highly Competitive • Fractionalized Market

  15. The “Paypal of India”

  16. 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 Total Market $300 Billion + • Fast, easy, reliable, cheap • HUGE value proposition vs. current methods • Rural to Urban migration feeds Domestic Remittance

  17. How Does Money on Mobile Work? Consumers (Currently 17,814,000) CASH Retailers (Currently 110,000) SMS TEXT INSTRUCTIONS SMS TEXT CONFIRMATION CASH Money on Mobile CASH 6 Satellite TV 15 Cell Providers Relatives

  18. Money on Mobile – Retailers 110,036 • Each retailer adds an average of 160 users • Retailers are commissioned salespeople

  19. Money on Mobile – Unique Users 17,814,735

  20. Money on Mobile – Volume Processed Rs 536 M $9.8 M Domestic Remittance will drive volumes higher

  21. Money on Mobile – Per User Statistics Lots and Lots of Micro Transactions

  22. 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

  23. Emerging Market Opportunities: Mobile Money in Incipient India Harold Montgomery CEO

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