M-PESA DEVELOPMENT, OPERATIONAL RISK MANAGEMENT AND CONSUMER - - PowerPoint PPT Presentation
M-PESA DEVELOPMENT, OPERATIONAL RISK MANAGEMENT AND CONSUMER PROTECTION By Mrs. Anne Mariga Head National Payments System, Central Bank of Kenya Innovation on Retail Payment System: Issues, Policies & Challenges Sheraton Mustika Resort
M-PESA DEVELOPMENT, OPERATIONAL RISK MANAGEMENT AND CONSUMER PROTECTION
By
Head National Payments System, Central Bank of Kenya
Innovation on Retail Payment System: Issues, Policies & Challenges Sheraton Mustika Resort & Spa, Yogyakarta November 13-17, 2017
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Outline
1. Payments System Structure 2. M-Pesa Evolution to a Complex and Dynamic Ecosystem 3. Mobile Payments Landscape – 10 years of Transformation 4. M-Pesa Key Critical Success Factors, Risks & Mitigation Measures and Consumer Protection 5. Key Outcomes & Lessons Learnt
Payment Systems Structure in Kenya
Infrastructure In Kenya, the payment system architecture is subdivided into 2 broad areas:
– RTGS- KEPSS (Kenya Electronic Payment and Settlement System).
– ACH (Automated Clearing House). – Payment Card Infrastructure. – Mobile Payment Platform. Regulatory Environment » Central Bank of Kenya Act under Section 4A(1)(d) » National Payments System Act, 2011 » National Payments System Regulations 2014
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Payment systems Structure
Mobile Money moves the highest number of transactions with an average of 4.8 Million per day KEPSS moves highest value of transactions average of Ksh. 105 Billion (USD 1.01 Billion) daily with a volume of 15, 000 transactions
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MOBILE MONEY TRANSFER SERVICE
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M-Pesa Evolution
2004-2006 2007 2008
2012 2013-2014 2015 2016-2017
Piloted as a Microfinance Service funded by Vodacom Obtained a letter of no
to offer Mobile Financial Services Officially launched M-Pesa to the market as a Money Transfer Service Expansion Of Functionality involving partnerships
withdrawals
bound transactions from UK then later from 45 countries
scheme Mshwari is launched in partnership with Commercia l Bank of Africa Short Term Paybill Allowing for fundraising purposes. Weddings, Funerals etc. Lipa Na M- Pesa allowing consumers to pay for goods and services from merchants through M- Pesa Moneygram Partnership enabling consumers in over 90 countries to send money directly to M-PESA customers. M-Pesa and Vodacom Tanzania partner allowing customers to send and receive money from Tanzania KCB M- Pesa launched. A loan product E-Citizen for all government payments M-AKIBA Allows customers to buy government securities through M- Pesa
MFS
Credit – Mshwari, KCB Mpesa Savings and Investments – M- Akiba, equities trading Consumer Information – credit terms, prices Insurance & Pension – Micro- Insurance and Mbao Pension
A complex and Dynamic Ecosystem
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Mobile Payments Landscape – 10 years of Transformation
Source: June 2017 CAK Report and CCK Report December 2007-June 2017
these services at June 2017 – Safaricom (Mpesa), Airtel (Airtel Money), Telkom (T- Kash), Finserve Africa Ltd (Equitel), Mobikash Africa Ltd (Mobikash) and Mobile Pay Ltd (Tangaza).
Area December 2007 June 2017 Mobile Phone Subscribers
Mobile Money Subscriptions
Number of Transactions
Value of Transactions
Active agents
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M-Pesa Critical Success Factors
1. Efficiency/ Convenience 2. Safety, 3. Dominant Market Positioning 4. Enabling regulatory environment 5. Effective partnerships – with regulator, other service providers 6. Private sector players have also invested substantially – Mshwari, KCB Mpesa etc
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Risk And Mitigation Measures
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No. Risk Mitigating Measure 1. Blurred regulatory lines and borders
supervisory staff to understand new emergent risks and players 2. Data Privacy breaches
frameworks are in place. 3. Threat to customer loyalty and trust
Consumer Protection 4. Increasing cybercrime and cyber-attack threats
5. Emerging ICT Risks due to new/emerging technologies
by PSPs (third party providers) 6. Money Laundering and Financing of Terrorism threats
(IPRS)
Consumer Protection
Mobile Money Transfer Platforms/Operators are required to; Resolve all complaints within thirty days of being filed within laid out procedures in the NPS Regulations 2014. Disclose of all fees to the sender and to the recipient. Information on any system upgrades and accompanying downtime Enable refund and cancellation of transactions in case of error. (Refunds only possible if money not cashed out.)
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Overall access to financial services: 75.3% of Kenyans formally included in 2016 from 26.7% in 2006. Working towards bringing the 25% on board!
Source: 2016 FinAccess Household Survey
KEY OUTCOME 1: More Financial Services Access
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KEY OUTCOME 2: low cost to access to Financial Services
Source: Insight to Impact Analysis of FinAccess Geospatial Mapping Survey 2015
More people spending less to access financial services in 2015 due to Mobile Phones Usage compared to 2013
3km 5km 10km Mobile Phone Financial Services Touch Points in Kenya
Distance to the nearest mobile financial services provider – proxy for cost
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Low cost of financial services access
Cost to Population to the nearest Financial Service Access Point: 2013 Vs. 2016 (%)
82,1 11,1 6.2 0,6 89,9 4,3 5.1 0,7
10 20 30 40 50 60 70 80 90 100
Less than KSh 50 KSh 51-100 Between KSh 101 and KSh 500 Above KSh 500
PERCENTAGE
2013 2016
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Reducing Gender Gap
10 20 30 40 50 60 70 80
Male Female Male Female Male Female Male Female 2006 2009 2013 2016
33,2 20,5 48,1 33,7 71,2 62,8 79,7 71,2
% FORMAL INCLUSION
Kenya surpassed the set 70% target of inclusion in the formal financial services by 2018 in for both men and women as envisaged in the country’s medium term development blue print – Vision 2030
Source: 2016 FinAccess Household Survey
Formal Financial Inclusion Rate by 2016: 75.3%>70% target 15
Benefits to less Educated population The MFS have greatly enabled the Usage of Formal Financial Services Across all Education Levels…benefiting most those with No Formal Education
12,0 30,0 59,7 89,8 27,0 63,7 83,1 97,4 37,3 73,1 88,6 97,9 2009 2009 2009 2009 2013 2013 2013 2013 2016 2016 2016 2016
Secondary Education Tertiary Education Primary Education No Formal Education USAGE OF FORMAL FINANCIAL SERVICES BY EDUCATION 2009 -2016 (%)
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The Role of CBK in Policy Development & Oversight of MFS
Efficiency AML-CFT Promote Innovation Compliance Competition Access Legal, Regulatory and Policy Enabling environment: MOBILE PAYMENTS Stability
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Lessons Learnt
and safeguard stability of the financial system. However, we must balance stability and inclusion goals to support innovation.
understand and facilitate these innovations
across time and space, to support the provision of sustainable digital financial services to users and to guarantee the stability of the overall financial system.
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Lessons Learnt Cont….
with the rapidly changing environment to ensure: – Establishment of resilient and viable business models and ecosystems – Enhanced corporate governance practices – Improved transparency – Management of emerging technology and emerging inherent risks.
attention deservedly
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