1. Mobile Banking and Mobile Payment the Haiti Mobile Money Initiative Stéphane Bruno, Vice-President, AHTIC Senior ICT Advisor (USAID/HIFIVE) Consultant for IDB on m-government February 28, 2011

2. AHTIC Association Haïtienne pour le développement des TIC Created in June 2005 Regroups ISPs, Telecom operators, IT resellers, software development firms, students as associate members Discuss and participate in policy and regulation issues, promotes harmonious development of the sector in a competitive market, lobby group Established and manages the Haitian Internet Exchange Point in the Caribbean Conducted various missions in the DR in order to find a more efficient collaboration between the two markets

3. Why? Points of financial services in the country

4. Source: USAID/HIFIVE, February 2010

5. Mobile penetration in Haiti 95-98% of population coverage 4 million subscribers 4 operators 4 WIMAX operators 3G in preparation

6. Some definition of concepts “Mobile payment” : describes a payment that is made using a mobile unit –The user does not necessarily need a banking account –Relates more to a transfer service –The mobile unit plays the role of the physical wallet “Mobile banking” : banking services realized through a mobile unit –Transactions are made from a bank account –The mobile unit is an interface to the bank account –The mobile unit plays the role of a checkbook

7. Examples Mobile banking –A bank that provides a website optimized for mobiles that gives online access to bank accounts and the bank services –A bank that provides a mobile app that gives access to its bank services –A bank that provides a service where payments can be made from phone to phone, but the phone is linked to an actual bank account Mobile payment –A virtual wallet is associated to a phone and allows transfer of funds from wallet to wallet

8. Token transactions Token transactions describe a payment that is made outside of the mobile world, but the recipient is notified of the transfer by a special SMS message with a “token” to redeem the cash The payment never reaches the phone really, and the concept of a balance on the phone is not applicable These are often called “mobile payment”, but is not technically: usually the payment is made using traditional channels (money transfer houses, payroll services by a bank) and a special notification system is sent on recipients’ mobiles

9. Mobile Money MOBILE MONEY Mobile bankingMobile payment

10. Implementation of mobile money services Led by a bank (mobile banking) –Ex: Bank of America Android app Led by electronic fund transfer businesses –Ex: VISA, Mastercard Led by the MNO (mobile payment) –Ex: M-PESA Led by a third-party (usually a technology company that establishes agreements with banks and/or MNOs and/or merchants) –Ex: Obopay, Square, FaceCash

11. ECOSYSTEM OF MOBILE MONEY

12. Success factors Required infrastructure: –A technological platform allowing loading cash on the mobile, moving cash from mobile to mobile –A network of “agents” where clients can cash-in and cash- out Success factors –Reliability of the technological solution –Rapid mass adoption –Ubiquity of the service (national coverage) –Acceptance by the general public and by merchants (formal and informal) –Adapted regulation

13. The Haiti Mobile Money Initiative: two-pronged approach On the supply side: –Incentivize the launch of mobile money services –Incentivize to reach critical mass and to scale rapidly –Local capacity building to help the IT sector develop innovative applications that can leverage the mobile payment platforms On the demand side: –Help institutions to leverage the mobile payment platforms for all kind of innovative services (e-government services, micro-finance related, m-commerce in general, cash-for- work, etc.) –Help modernize backend systems that can leverage the mobile payment platforms to initiate and receive mobile payments electronically

14. The Haiti Mobile Money Initiative A partnership between Bill and Melinda Gates Foundation (BMGF) and USAID Implemented by the HIFIVE project under AED/ARTS Participation of Mobile Network Operators Participation of the banking industry Participation of regulators (Central Bank, CONATEL) Participation of NGOs and other payroll-intensive clients Participation of Microfinance Institutions Participation of the IT industry in general (software, networking, etc.)

15. The BMGF incentive fund The incentive fund addresses the supply side Objective : accelerate the deployment of mobile money services –To reach critical mass rapidly –National coverage –Extensive agent networks beyond the boundaries of existing bank and money transfer houses networks –To reach the unbanked

16. Qualified mobile money services Must be a full mobile wallet: deposits, transfers, withdrawals, with possibility to leave a balance Cash can be converted into and out of e-value (cash- in, cash-out) Non subsidized, commercially sustainable Non objection or authorization from the Central Bank

17. Structure of the incentive fund (1/2) A. First-to-market Award –USD 2.5M for the first to enter the market within 6 months of the announcement (Deadline: December 10, 2010) –USD 1.5M for the second. –If no operators reach this target within 6 months, USD 1.5M for the first and the second to reach it within 12 months –Note : A service is considered launched if there has been a public launch and at least 100 “qualified transactions” realized in each of at least 100 “qualifed agents”

18. Structure of the incentive fund (2/2) B. Scaling Award: –We measure the combined transactions realized on the market and we award providers proportionately to their contribution to the total –Each must have registered at least 10.000 “qualified transactions” during the preceding month of reporting

19. Scaling Awards Total TransactionsAwardMaximum award by provider > 100.000USD 10.00 / transaction 100.000 transactions > 1MUSD 2.00 / transaction1M transactions > 5MUSD 0.80 / transaction5M transactions Note 1: No award will be awarded after 24 months

20. HIFIVE Catalyst Fund (HCF) Operates on the demand side Grants can be given to institutions, NGOs, microfinance institutions, cooperatives that want to leverage the mobile payment platforms Grants may be given to help providers build their agent networks (training, for example) The HCF will be used to address the pain points of mobile money Usually, HCF covers 75% of the cost of the project, and the grantee provides 25% in cash or in kind; for for-profit businesses, 50%-50%

21. Central Bank guidelines Issued in September 2011 Defines the role and responsibility of the banks versus mobile operators Decides that the service has to be branded as a banking service Sets limits on transactions to prevent money laundering Sets KYC standards (Know Your Customer) A gradual approach to foster innovation while protecting the stability of the financial system

22. Perspectives Mobile payment platforms can lower the barrier of entry in e-commerce for small business owners Efficiency, job creation E-government services

23. Two solutions launched on the market T-Cash from Voila (November 2010) Tcho Tcho Mobile from Digicel (November 2010) More than 20.000 transactions realized Target of more than 100.000 transactions before April 2011 More than 200 mobile money agents (1.000 target before the end of 2011)

24. Competition between two mobile money platforms T-CASHTCHO TCHO Mobile TechnologyUSSD commandsInteractive USSD menu TypeMini-walletFull wallet RegistrationNo IDNeeds ID Transaction limitsLowerHigher

25. Innovation is already appearing Development of a KYC smartphone application on Android by Transversal, a local IT firm Yellow Pepper, mobile money platform provider, incorporated as Yellow Pepper Haiti (knowledge transfer) Payroll services are already being offered to NGOs, cash-for-work programs improving drastically the payment processes and their speed Various value-added services in the pipeline that will leverage the mobile money platforms

27. Mobile will be key to the development of Haiti in the future

28. Questions Stéphane Bruno, sbruno@hifive.org.htsbruno@hifive.org.ht www.microlinks.org/HIFIVE/HMMI