Making Mobile Money Accessible in Pakistan

Mobile wallets could have a revolutionary impact on financial inclusion in Pakistan. While 8.7% of adult Pakistanis reported having an account registered at a financial institution, approximately 48% of financially excluded adults reported owning a mobile phone. This means that the mobile channel holds great potential when it comes to financial outreach. Today there are over 118 million registered mobile phone subscribers and 7.5 million registered mobile money accounts in Pakistan.

While mobile wallets undoubtedly trump traditional banking channels in terms of availability and ease of account opening, this does not mean that they are easier to use. As with traditional banking channels, successful mobile wallet use depends on the ability of the end user.

A mobile account transaction involves a set of actions on the mobile phone that demand a basic level of literacy, numeracy (basic ability to use numbers), and technical proficiency. Most phones used in Pakistan leverage USSD for making financial transactions, which is not especially user-friendly. Completing basic actions via USSD-powered mobile wallets require the ability to read numbers, switch between menus, and enter values/phone numbers in the correct sequence. Even a small mistake could result in a financial loss, a risk which is magnified for poor users.

This scenario raises two questions: 1) do the majority of adult mobile users (i.e. the target audience for mobile wallet adoption) in Pakistan possess the basic literacy and technical proficiency needed to conduct mobile wallet transactions, and 2) if the majority of the population cannot operate a mobile wallet, how can this be overcome?

Barriers to mobile wallet adoption 

Numbers from the 2014 Financial Inclusion Insights survey help us understand the skill levels of unbanked mobile owners in comparison with banked (i.e. have a registered mobile money account and/or bank account) mobile owners.

As the 2014 figures above show, a similar percentage of unbanked mobile phone owners and banked mobile phone owners were numerate. In this case basic numeracy was determined through a simple test on division and multiplication. However, differences between the two groups become starker when it comes to Urdu literacy. To determine literacy, reading ability with both traditional Urdu and roman Urdu script was tested. 92% percent of banked mobile phone owners were literate, compared to only 72% of unbanked users.

Given the literacy mismatch between unbanked and banked users, it is unsurprising that large discrepancies also existed between the two groups when it came to sending and receiving text messages - a simpler task than operating a mobile money account. Approximately 80% of banked mobile phone owners could send text messages either independently or with some assistance, while only 56% of unbanked users had comparable abilities.

Overcoming deficits in a low-skill environment

Helping unbanked phone owners improve their literacy rates and their mobile phone proficiency to drive mobile wallet uptake aren’t really viable solutions in the short run. In contrast, from the supply side, mobile wallet providers can and should change their products so that they better meet the needs of their target market. Providers need to adopt a more “human-centered” approach when designing items for their customers. This ethos puts customers at the center of the design process and takes their wants and abilities into account. An experiment by one of Pakistan’s largest national banks with low-income government beneficiaries in 2014 revealed some critical insights about how a human-centered approach can significantly improve user understanding. The experiment showed that illiterate women generally found it much easier to follow image-based instructions and prompts as opposed to written ones. It also showed that making some basic adjustments to everyday items, such as making the payment amount more prominent on a receipt, improved their comprehension of these items.

Applying these insights to mobile wallets suggests that there is a definite need to redesign the alphanumeric-heavy and cumbersome USSD menu. While there is limited capacity to change this menu on basic phones, the move towards smartphones opens up new opportunities. In 2014 only 3% of all phones in Pakistan were smartphones but this number is expected to rise with the introduction of cheap smartphones which now sell in the market for less than $35. Improving the user interface by introducing graphics, increasing convenience by moving away from complicated tiered menus, and introducing social media and gamification elements to drive engagement, all with the end customer in mind could help circumvent the barriers that illiteracy poses to mobile wallet uptake.

For more information, please refer to "Using Mobile Money to Promote Financial Inclusion in Pakistan," by Karandaaz Pakistan.