Pakistan has a fiercely competitive mobile financial services (MFS) market. Compared to East Africa and Bangladesh, the market is fractured with no single dominant player but at least 4 players that have considerable market presence in terms of the agents’ network.
This was found during a country wide MFS Agent network survey report for Pakistan that is prepared by Karandaaz Pakistan and The Helix Institute of Digital Finance.
Based on over 2,000 mobile money agent interviews carried out in 2014, the survey report highlights findings on the mobile money agent landscape in Pakistan covering agent profitability, transaction volumes, liquidity management and other important strategic considerations.
Report suggests that new players have penetrated the rural market in Pakistan — where often it can take MFS providers time to enter — which can most likely be attributed to the OTC value proposition offered by all providers.
Median transaction levels are low at 8 transactions a day, compared to 15 in Bangladesh, 46 in Kenya, 31 in Tanzania, and 30 in Uganda. However, a non-exclusive agent, on average, serves 3 providers at the same time which increases the level of transactions that an agent conducts.
Nevertheless, an agent is profitable (median of US$58 per month) which can be attributed to their high revenues (median of US$59 per month) and extremely low operating cost of US$3 (median per month).
The report highlights the high levels of satisfaction among agents and the convenient and innovative liquidity management practices, as many agents have their cash and e-money delivered to them at their outlets.
However, the limited product offering at the agent level indicates that the scope for product innovation is tremendous.
The Pakistan report is part of The Helix Institute’s Agent Network Accelerator (ANA) research project. ANA, a collaboration between the Bill & Melinda Gates Foundation and MicroSave, is the largest research project in the world on mobile money agent networks, designed to determine their success and scale.
Here are some of the key findings of the survey report:
- Only 34% MFS agents offer operator exclusive services, while 66% agents work on non-exclusive model and have median of three operators on offering
- Exclusivity is more pervasive in rural areas (39% versus 26% in metro and 32% in urban areas), as well as in Khyber Pakhtunkhwa (61%) compared to other provinces.
- Dedicated MFS agents (who don’t offer any other non-MFS service) in Pakistan are comparatively low at just 23%, as compared to 70% in Tanzania or 44% in Uganda.
- Market presence of Pakistani MFS Players:
- Easypaisa: 31%
- MobiCash: 23%
- Upaisa: 14%
- UBL Omni: 12%
- Timepay: 12%
- Mobile Paisa: 5%
- HBL Express: 3%
- Approximately half of agents are in rural areas, showing the notable reach of the networks.
- 40% of agents were in business for less than a year, while only 17% agents were in business for over three years.
- 88% of agents indicate that they foresee themselves continuing as agents in a year, indicating high levels of satisfaction.
- Of the 25% of agents who can register customers for mobile accounts, about 84% of them are registering customers.
- Agents report opening a median of 7 mobile accounts per month. Hypothetically, if every agent actually registered customers, approximately 1.1. million customers would be registered per month.
- Only 26% agents see mobile accounts as competition to their OTC business which indicates there is the potential to promote registration directly through agents and also that Agents are not fully aware of the model.
- Agents reported a median of 1 transaction on a slow day and 10 transactions on a busy day.
- 80% of agents conduct less than 30 transactions a day – only a handful of high performing agents are driving the market in almost every geography.
- 20 % high performing agents (with more than 30 transactions per day) do a median of 57 transactions per day.
- Agents take a median of 5 minutes to reach the nearest agent serving the same provider to them, indicating there is a high density of agents.
- But with increasing competition, the agent network is expected to grow.
- Half of the agents are inactive, which means that there is a need for more diverse services over a broader geography.
- 56% of agents who experienced robbery reported these incidents to providers and 82% found the provider “not at all helpful.” As a result of robbery, 34% of agents have set limits on the cash they hold.
- 64% agents who experienced fraud reported these incidents to providers and 72% of them found them “not at all helpful.” As a result of fraud, 23% of agents have set limits on the cash they hold.
- On an average, each agent earns USD58 from MFS services, while 69% of agents earn less than $100 per month
- Non-exclusive agents, on average, earns USD 87, while exclusive agents make USD 29 per month
- For those with more than three years in business make USD 82 per month on average, as compared to USD 43 for those with less than one year in business
- operating expenses, on average, for an agent is USD 3, much lower than various other markets
- More than half the agents interviewed reported that providers marketing hasn’t been very effective in educating customers about MFS services.
- 62% of agents have received training with an average duration of two hours. This percentage is the lowest compared to the baselines taken in ANA research countries – Bangladesh (68%), Kenya (92%), Tanzania (79%), and Uganda (94%).
Complete report can be downloaded from here.