1. migration to cash-less mode of payments
1st East African Finance Conference
Addis Ababa
migration to cash-less
mode of payments
Munir Duri, CEO Kifiya
December 2016

2. Learning of what it might take
agenda
Why Migrate
Challenges & Factors
Learning of what it might take
Context: Ethiopia

3. why migrate
burden of cash usage on economies represent as much as 1.5% of the GDP
Convenience
Secure for the
customer
modern economies increasingly use and are dependent on effective large networks: telecom, energy, road, water ….. payment networks
Transparency
Traceable
into the economy
aids the journey to financial inclusion for both Urban and Rural segments
cost saving for customer and businesses if at scale and if usability addressed
improve market linkages
and creates an efficient
market place

4. Over the counter transactions Electronic Transactions
journey to cashless
REPLACE CASH WITH DIGITAL INSTRUMENTS
CASH-LESS
SCALED USE OF DIGITAL INSTRUMENTS
CASHLITE
BITS & BITES
BECOME STATE UTILITY
CASHLESS
Optimized Cash
Creating ACCESS
digital accounts
Over the counter transactions
Electronic Transactions
Utility
Usability
Regulator
issues
settles
in bits and bites
Scale
Access
Usage
Cash Heavy
Bulk Payer Transition
Government & Large Buyers
Differentiating and addressing utility and usability: introducing many to few payments, increasing adoption and usage

5. framing the challenge to migration to cash-less mode of payment
Buyer pays to merchant using payment instruments and merchant and customer bears charges and commissions
Card | Mobile carries cost to customer
Payment instruments are issued and merchants acquired by enterprises and cost usually transferred
Central Banks issue FIAT currency:
issued as state utility for free
Cash has no cost to customer
Buyer pays to merchant in cash and receive face value equivalent worth of good and services

6. still cash transactions dominates
development to date: we have come a long way
From ATMs, POSs, Online e-Commerce, Mobile Phones (Wallets), Smart Phones (m-Commerce) to BITCOIN
still cash transactions dominates
Kenya
In spite of having successful mobile money deployments [MPESA]: 85% of the transaction is still over the counter
Europe
82% of transaction in Germany are made in cash [only 53% in value terms] showing small value transactions carry volume.
India
India has been leading the way in payment technologies and services, currently introducing new business models. Still over 80% of transaction is cash
There is general consensus that we need to figure out on how to multiple transaction in all verticals, channels and instruments: HOW?

7. migrating to cash-less: basic factors affecting migration
Access to Financial Services
Marco Economic, Cultural Factors & Context
Merchant | Agent @ Scale
Technology & Infrastructure

8. migrating to cash-less: understanding and differentiating utility and usability
Banks, MFIs, Cooperatives, Telcos
Incumbents must take the lead
USABILITY
PSP, MMSP, FINTECH, mCom
Disruptors must take the lead
Ensure SCALE
Drives ADOPTION
Customer Support
Account Management
Business Model to return to C
Simplify Experience
Innovate on Products + Services
Access
Local Context & Factors

9. context: Ethiopia Macro Economic Conditions Demographic
Population of 90m + evenly spread over an area of 1.1 m sq. km
Telecom network infrastructure covering close to 80% of the country, with over 40 million mobile subscribers [32m active]. Target is by 2017 to reach 50 m active subscriber base
Road network of 25,000 km, Rail network of 5,000: linking people and trade
Active drive for rural electrification
Macro Economic Conditions
Demographic
Potential: Urban + Rural
Does not have simple and affordable means to effect payment for goods and services digital [electronically]
close to 32% of the urban population does not have an active bank account
MSME drive but need access to finance and linkages to markets
Utility
Access
Usability
82% of the rural population doesn’t have access to formal financial service: a safe place to save, access to credit
SHFs do not have access to non-traditional risk coping mechanisms
SHFs don’t have easy access to markets
MSME drive but need access to face and markets
Access to Rural Clean Energy
Utility
Access
Usability

10. Utility increasingly present Usability largely not present
context: digital payment landscape
NBE Credit Reference Bureau
Very capable system
referenced data
Does not do scoring or rating
National Bank of Ethiopia
National Payment System
[RTGS & ACH]
RTGS Function
Inter-bank HV-LT
Tax Payments
ACH Function
Check
Challenges
Banks connected only at HQ Level
Banks have yet to interconnect branches
No MFIs connected
ET Switch
Function
Interoperability
Routing
Challenges
Confusion on role
Dashen
CBE
Wegagen
PSS
Abyssinia
Banks
OMO
OCSCO
ACSI
DECSI
MFIs
TELCO
Retail Payments
Bulk Payments
Digital Payments
e-Commerce
Mobile Payments
Agent Services
Merchant Services
Innovative Payments
Card Payments
m-Commerce
Utility increasingly present
Usability largely not present

11. jointly we have to figure out …..
Governments must take lead: creating incentives and drive
Regulators must create an enabling environment
Banking Industry must play the incumbent provide the utility to scale
Innovative Industry must bring in usability for scale adoption
Developing the Business Model
How to transfer savings on cost to customer
Build business model that bring value proposition to customers and providers
Create a complimentary ecosystem with many stakeholders that is sustainable and viable
Building appropriate technologies
and Infrastructure
that enables development and distribution of innovative products and service
that will create the plumbing for issuance and settlement
that can drive the cost of distribution and access to become affordable
Governments Lead and Regulators Enable
Drive for a Digital Economy Strategy
Set of enabling regulations
New models within policy frame works:
Incentives for drive and adoption

12. Thank You