OTC FACTS, FIGURES AND IMPLICATIONS ACROSS MARKETS ANALYSIS OF REGISTERED AND UNREGISTERED MOBILE MONEY USERS IN FINANCIAL INCLUSION INSIGHTS COUNTRIES OTC FIVE THINGS TO KNOW ABOUT OTC 1. Over-the-counter (OTC) transactions are a larger portion of mobile money use in newer mobile money markets, and a lesser portion in the more mature markets. 2. OTC can be a gateway for registered use; it is common for users to first have unregistered transactions before formalizing the account. 3. A customer uses OTC out of a desire for assistance and lack of perceived need for a registered account. 4. Unregistered and registered account holders make similar types of transactions, but frequency varies. Mobile money usage is lower for OTC users vs. registered account holders. 5. There’s greater OTC usage among younger and less educated consumers. Gender differences are more pronounced in rural areas and by income. Note: This report reflects 2014 research conducted as part of the Financial Inclusion Insights program in the following countries: Bangladesh, India, Indonesia, Kenya, Nigeria, Pakistan, Tanzania and Uganda. 2 OTC MARKET IMPLICATIONS OTC may not be a long-term component in the marketplace. If markets with lower mobile money penetration follow the direction of more mature markets, OTC use may give way to registered use. Therefore: 1. Can we make mobile money use easier: – 2. 3. Usage of OTC in the emerging markets suggests a need for assistance with utilizing a mobile money service, and, therefore, can be interpreted as an access channel to the mobile money experience. Can we better explain the registered use value proposition: – With a lack of perceived need, combined with the desire for assistance, the challenge becomes converting a “do it for me” OTC behavior into a “do it yourself” registered account. – Here, the market may have to convey that registered use is for everybody, despite frequency and reason for usage. Can there be a higher touch option for registered use? – Some groups will be harder to register. Younger, less educated groups, and poor/rural women might require more of a perceived need to get a registered account, as well as assistance, as they are the most likely to utilize OTC. – For those higher barriers, such as social or educational factors, a middle path might be found with actions like agent-assisted registered transactions. 3 OTC Kenya leads mobile money usage, with other African countries a distant second; Nigeria and parts of Asia trail behind Mobile money (MM) users (Have you ever used this [country specific] mobile money service for any financial activity?) 73% 44% Despite early entrance, MM use in Indonesia lags due to government policies. 43% 23% 8% 1% Date of market entrance Number of active providers .3% 0% Kenya Tanzania Uganda Bangladesh Pakistan Nigeria India* Indonesia* 2007 2010** 2009 2010 2009 2011 2011 2007 4 4 4 2 8 12 14 6 * Provisional Data The number of mobile money users in Nigeria, India and Indonesia is too small to analyze by OTC usage. ** Initial entrance in 2008 was unsuccessful. Source: InterMedia FII Tracker surveys Wave 2, 2014. 4 OTC As markets mature, OTC transactions drop as a percentage of mobile money use Kenya Mobile money (MM) usage (Have you ever used this [country specific] mobile money service for any financial activity?) 27% 73% Tanzania 56% 44% Uganda 57% 43% Bangladesh Pakistan 77% 92% 23% 8% MM User Not an MM User Registered vs. unregistered users (Do you have a registered account?) 13% 14% 22% 77% 87% Registered Unregistered (OTC) 86% 78% 23% 96% 4% Due to the low number of MM users with registered accounts in Pakistan, further analysis is not possible. Source: InterMedia FII Tracker surveys Wave 2, 2014. 5 OTC Transacting via OTC could be a gateway to registered use, as it often predicates a user opening an account In Kenya…. 24% In Tanzania…. of those with registered Airtel Money accounts conducted mobile money activities over the counter prior to signing up. In Uganda…. 62% 19% of mobile money account holders (19% Airtel Money, 21% M-Pesa, 22% Tigo Pesa) used OTC prior to registering. In Bangladesh…. registered for an Airtel Money account only after conducting mobile money activities over the counter. Source: InterMedia FII Tracker surveys Wave 2, 2014. 56% of bKash users made a transaction through an agent at the same time or prior to registering for an account. 6 OTC Even in Bangladesh, a top OTC market, there are signs of a transition to wallets Bangladesh mobile money (MM) use (Shown: Total population, N=6,000) 22% 23% 19% 18% 5% 3% Ever used MM OTC MM use Registered MM use 2013 2014 Source: InterMedia Bangladesh FII Tracker survey (N=6,000, 15+) Wave 2 June-August 2014. 3% 4% Active registered MM account use OTC Barriers to registration include lack of perceived need, desire for assistance, and in Uganda, access to a point of service What is the main reason you have not signed up for a mobile money account even though you are using the services? Bangladesh Uganda (Shown: Percentage of unregistered mobile money users, n=1,012) (Shown: Percentage of unregistered mobile money users, n=295) I can have all the services through an agent, I do not need an account I do not need to, I do not make any transactions 27% 19% 16% Using such account is difficult I prefer that agents perform transactions for me, they will fix problems that arise I do not see any additional advantages to registration I do not have a state ID or other required documents Agent can help me use the service/I do not know how to use it on my own I never have money to make a transaction with such account Fees for using such account are too high I do not understand the purpose of this account, I don’t know what I can use it for I prefer to keep money in cash and use mmoney only to send/receive money No one among my friends or family has such account 11% 10% 10% 8% 6% Registration fees are too high 3% I do not have a state ID or other required documents I can have all the services through an agent, I do not need an account 4% 3% Fees for using such account are too high 4% 9% 3% 2% 2% 1% 1% Registration fees are too high 0% I have heard of fraud on mobile money 0% There is no point-of-service/agent close to where I live I do not trust my money is safe on an mmoney account I never have money to make a transaction with such account There is no point-of-service/agent close to where I live I do not see any additional advantages to registration 0% 0% 5% Agent can help me use the service/I do not know how to use it on my own I prefer that agents perform transactions for me, they will fix the problems if anyting… 3% 3% 3% Using such account is difficult I do not need to, I do not make any transactions I prefer to keep money in cash and use mmoney only to send/receive money I do not understand the purpose of this account, I don’t know what I can use it for 1% I have heard of fraud on mobile money 1% I do not trust my money is safe on an m-money account No one among my friends or family has such account 2% 2% 0% 0% OTC In Tanzania and Kenya, the lack of proper identification is, by far, the main reason individuals have not signed up for an account What is the main reason you have not signed up for a mobile money account even though you are using the services? Tanzania (Shown: Percentage of unregistered mobile money users, n=191) I do not have a state ID or other required documents I do not see any additional advantages to registration There is no point-of-service/agent close to where I live I can have all the services through an agent, I do not need an account I do not trust my money is safe on an mmoney account 2% Fees for using such account are too high 2% I never have money to make a transaction with such account I do not need to, I do not make any transactions Agent can help me use the service/I do not know how to use it on my own 34% 5% 5% 4% 2% 2% 2% Using such account is difficult 1% I prefer that agents perform transactions for me, they will fix problems that arise 1% Registration fees are too high 1% I do not understand the purpose of this account, I don’t know what I can use it for 1% I have heard of fraud on mobile money 1% Kenya (Shown: Percentage of unregistered mobile money users, n=291) I do not have a state ID or other required documents I never have money to make a transaction with such account I do not see any additional advantages to registration 2% Using such account is difficult 2% I do not understand the purpose of this account, I don’t know what I can use it for There is no point-of-service/agent close to where I live I do not need to, I do not make any transactions I can have all the services through an agent, I do not need an account Agent can help me use the service/I do not know how to use it on my own 43% 4% 1% 1% 1% 1% 1% Registration fees are too high 1% Fees for using such account are too high 1% I have heard of fraud on mobile money 1% I do not trust my money is safe on an m-money account I prefer to keep money in cash and use m-money only to send/receive money 0% 0% OTC Younger and less educated are more likely to make OTC transactions OTC usage by demographic group (Shown: Percentage of mobile money users who do NOT have a registered account) 85% 88% 80% 74% 73% 92% 87% Education 75% 55% 27% 11% 7% 6% 8% Kenya 19% 14% 14%13% 11% 28% 28% 23% 19% 17% 19%18% 12% 3% Tanzania Uganda Bangladesh (n = 1,303) (n = 1,245) (n = 1,282) (n = 2,300) 15-24 25-34 35-44 45-54 55+ Kenya (n = 2,300) 25% 30% 18% 16%12% 22% 8% 4% Tanzania (n = 1,303) No formal education Uganda (n = 1,245) Primary Bangladesh (n = 1,282) Secondary Higher 10 OTC Income and gender differences are not as pronounced on the national level OTC usage by demographic group (Shown: Percentage of mobile money users who do NOT have a registered account) Gender Poverty Line 86% 74% 82% 68% Rural women and poor women are even more likely to use OTC vs. men. 10% 16% Kenya 12% 17% Tanzania Men 23%22% Uganda Women Bangladesh 21% 8% 16%14% 22% 17% Kenya Tanzania Uganda Above Below Bangladesh OTC Registered and unregistered users’ activities are similar, including withdrawals, deposits, transfers and top-ups Number of mobile money (MM) activities (Have you ever used a mobile money account to do the following…?) Tanzania Kenya 86% 70% Withdraw money Deposit money 56% Receive/send money P2P 47% Buy airtime top-ups Pay bills 44% 19% 8% Saving money 16% 7% MM transfers 16% 7% Receive wages 8% 1% Receive G2P payments 2% 1% Loans 4% 0% Insurance Uganda 1% 0% (n = 2,300) 73% 88% 66% 46% 66% 24% 19% 9% 9% 3% 92% 72% 71% 35% Bangladesh 94% 59% 76% 34% 33% 54% 13% 50% 1% 11% 2% 1% 1% 13% 0% 0% 0% 15% 1% 0% 7% 1% 2% 0% 3% 0% 6% 2% 0% 0% 2% 1% 3% 2% 2% 0% 1% 0% 1% 0% 1% 1% 1% 1% 0% 0% 1% 0% (n = 1,245) (n = 1,282) (n = 1,303) 60% 40% 43% 72% 73% 63% 79% Registered Unregistered (OTC) 12 OTC Registered users try more types of mobile money activities vs. unregistered Usage by number of activities (Have you ever used a mobile money account to do the following…?) Tanzania Kenya Uganda 80% 3+ Activities 3 2 1 2 2 74% 41% 4 4 5 Average number of activities 93% 69% 65% 5 3 11% 89% 71% 31% 40% 45% 91% Median number of activities 76% 71% 54% 2+ Activities Bangladesh 2 5 4 2 3 2 Registered Unregistered (OTC) (n = 2,300) (n = 1,303) (n = 1,245) (n = 1,282) 13 OTC The number of recent transactions is also greater for registered users; OTC transactions are limited Registered/unregistered monthly median mobile-money usage (In the past 30 days, how many times did you use a mobile money account for such financial activities?) 6 Registered users conduct financial activities five to six times a month while OTC users conduct up to two transactions monthly. 6 5 2 2 1 1 0 Kenya Tanzania Registered Source: InterMedia FII Tracker surveys Wave 2, 2014. Uganda Bangladesh Unregistered (OTC) 14 For more information, contact: Colleen Learch, Director of Research [email protected] Nathaniel Kretchun, Associate Director [email protected] Ron Cohn, FII Program Lead [email protected]
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