Papua New Guinea (PNG) is a country so complex it defies easy description. A place of such diversity it hosts 850 distinct languages for a population of about 7 million. The population figure, mind you, is only a guess as nobody really knows. The landscape is so rugged that the capital, Port Moresby has no road link to any other city. To get anywhere in PNG, you walk, fly or take a boat. As such, it was only in the 1930’s that the first Western gold miners started to penetrate the interior and “discovered” the densely populated highlands where the bulk of the population lives. The miners were a sign of things to come as PNG rides the crest of a gargantuan resource boom. Over the last few years, PNG has become notorious for its high levels of crime which is a major preoccupation of all who live and work there.
State of play in PNG
Against the backdrop of PNG’s security issues and difficult geography, a means to save, store and send money is desperately needed. Mobile money looks to be the answer and typically for PNG, things have developed in their own unique way. In the last half year three providers have launched very distinct offerings, all on the same Telepin platform. Interestingly, it is not a line-up of the usual suspects as both the postal service and an MFI have entered the fray. PNG now plays host to Post’s Mobile SMK, Nationwide Microbank’s MiCash and Digicel’s (of Haiti fame) Cellmoni, with more rumoured to be waiting in the wings.
Both Post and Digicel have opted for a virtual wallet product while Nationwide has developed a real-time linkage into their core banking system. To make matters even more interesting, both Post PNG and Nationwide Microbank have partnered with Oceanic Communications Limited (OCL) to manage their agent network. Confused yet? It gets better; OCL does most of Digicel’s airtime distribution yet does not provide agency services for Cellmoni. That is, at least, where it all stands now.
As we all know, mobile money is hard, especially in places like PNG. A successful mobile money operation has to be excellent at everything, all the time. Building and maintaining an excellent agent network may be hardest part of all. It takes tremendous investment in time, resources and energy for it to work. Unfortunately there is no quick fix or technological silver bullet that ensures success. It is a long, inglorious slog. Who wouldn’t want to farm it out?
That is where OCL comes in. As an airtime distributor they seem ideally placed to play a role. They make money by getting airtime (electronic and scratch) out to the furthest reaches of this challenging country and take cash in return. Airtime distributors are operationally minded businesses where solid processes are the cornerstone of profitability. In OCL’s case, they have established relationships with 12,000 resellers. From their interactions with these resellers, they have years of data that can help predict liquidity needs and identify resellers who are prime candidates for becoming successful agents. Admittedly, airtime distribution is a far cry from mobile money agent management, yet many of the same capabilities come into play.
OCL is now doing much of the hard stuff on behalf of its two partners. They manage agent recruitment and training, agent monitoring and liquidity management. This frees up the mobile money operators to concentrate on their offerings. There is also the compelling possibility that OCL could drive agent interoperability and standardization of the agent experience across partners. It would make their management of the network simpler, drive down their costs and make it easier to recruit agents. This seems especially likely, as all the current products are on the same platform. Both agents and customers stand to benefit. Agents won’t have to maintain separate balances. Customers will benefit from a broader agent network, unified customer experience and an even playing field for all competitors, ensuring competitive offerings.
Will we see OCL shape mobile money in PNG due to their central role? More generally, will third-party providers become a force for standardization and interoperability in other markets?
It seems to be working. OCL’s two partners have been able to quickly expand far beyond their brick & mortar footprint. Nine months in, customer growth is strong and accelerating. If developments so far are anything to go by, there will be a lot more to write about over the coming months.
hanks for the thought-provoking piece. Interoperability is surely something that third-party players would benefit from, but it’s interesting to think that the third party player might actually be the distribution channel/ agent network manager (ANM). If is is the ANM who has the strongest part of the value chain for mobile money, there are many possibilities for mobile money providers to differentiate on product bases, yet still be accessible through many channels.
This may end up looking a little bit like India, where the separation of banking product “Manufacturers” and Business Correspondent networks (Agents) is leading some companies to build businesses focussed on the distribution channel, aiming to provide products from a wide variety of financial and other service providers.
Joep, thanks for this thought provoking article. Having worked in the mobile money space since late 2004, I also see the important role of agent networks and the key role that a third party agent network manager can play in supporting mobile money. I do believe this will be the answer in a lot of markets and I agree with Michael that there are many possibilities for mobile money providers to differentiate their products while utilizing the same agent networks that others may use. The best and most productive airtime resellers here in the Philippines provide airtime loading services for both MNOs and we are now seeing the same with mobile money as well.
Again, I agree that it is easier for mobile money issuers to build on their strengths and let others do the heavy lifting when it comes to managing the agent network. The key will be to make sure that everyone in the value chain benefits without increasing the cost too much for the consumer.
Great article Joep.
We were one of the first vendors to provide mobile payment services in PNG. We currently provide a number of services for Digicel and several Superannuation funds.
We also built the first full-service mobile wallet in PNG known under the name mPowa. See http://www.mhitslimited.com/august-2010-mhits-powers-payments-for-the-u…
Way ahead it its time, it incorporated fully integrated retail Point-Of-Sale capability within the core mobile wallet platform. It was more powerful and more comprehensive that the current Digicel Cellmoni and PNG Posts Mobile SMK offerings. Unfortunately mPowa did not proceed beyond the pilot phase, mainly because our PNG partner was 100% acquired by Digicel PNG who presumably did not want to operate two mobile wallets.
Ironically, airtime still represents the most ubiquitous form of “currency” when it comes to mobile payment. While long term, m-wallets are the ultimate objective, their often poor execution and poor implementation means (as you have pointed out) mean that take-up is low.
We built the original Digicel Easipawa platform which allows Digicel PNG subscribers to purchase EasyPay prepaid electricity directly using airtime. Unsurprisingly this platform completely blitz all usage forecasts beyond anyone’s expectations. It highlights that ubiquity of airtime makes mobile payment applications viable when carriers and service providers co-operate. We call the prepaid electricity payment platform BuyPower. For more info see http://www.mhitslimited.com/easipawa-papua-new-guinea or http://www.digicelpng.com/en/services/valued-added-services/easipawa-ea….
The challenges of the mobile wallet ecosystem at great and the more information on this subject that is shared the better for all industry stakeholders.