When in 2009, Telenor Pakistan acquired a majority stake in Tameer Microfinance Bank people actually wondered why. Some could not see what role this acquisition could play in creating an impact for the two organizations and for Pakistanis consumers in general.
Looking at the landscape in Pakistan, however, it is easy to see the rationale for the introduction of Easy Paisa into the marketplace. Over 60% of Pakistan is rural, approximately 90% of the population of 180 million is unbanked with no access to the formal banking and financial sector of the country. The poverty rate is high so microfinance makes a lot of sense.
On the flip side the mobile density is about 60% and hence what better channel for the delivery of microfinance services than the cell phone? So now the branchless banking solution that Tameer came up with begins to make sense to even the most skeptical of analysts.
The service is now available from more than 12,000 agents across Pakistan. With more than 500,000 unique users in the last month alone conducting more than 1 million transactions with a value of Rs2 billion in throughput, Easypaisa appears to be filling a void that existed and is providing people across Pakistan with an alternative to the conservative banking network.
According to a recent study conducted by Telenor Group and Boston Consulting Group, “wider access to mobile financial services in Pakistan could lead to the creation of 1 million new jobs by 2020. An estimated US$2 billion could be added annually to government revenues, helping raise Pakistan’s GDP growth by 3% by creating increased access to credit, hence prompting new business creation, and by formal remittances and increased savings. Mobile financial services can facilitate public services by providing e-government options and help reduce costs of financial transactions.”
According to the study, the percentage of Pakistan’s adult population using mobile financial services could go up from the current 2% to 35% by 2020. Talk about potential impact!
So what are people using the Easy Paisa service for? Transfering small amounts of money to family based in different parts of Pakistan; settling their bills conveniently; and some are even using the service as a Mobile Bank Account to transfer funds, check balances, withdraw cash, etc. With thousands of retail outlets providing the service almost 24 x 7 it has created a new concept of banking for those whose trust in the large banking structure has always been very low.
The socio-economic impact of such a service can be huge because it empowers people with low incomes access to financial services in a way that is easier for them to understand and use. In the most simplistic of terms, it makes life easier for someone like a low income worker who has moved to the city but worries about how to send his monthly salary to his loved ones back home in the village. He can now do that very easily using his mobile phone without having to resort to the services of a relative or friend.
