Would M-Pesa’s model work in Myanmar?

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M-Pesa is the poster child for mobile money success  which mobile operators around the world aspire to, given its staggering success in Kenya. Over 15 million Kenyans use the M-Pesa mobile money service, amounting to 80 transactions per second, and 31% of Kenya's GDP. To date, M-Pesa has also been launched in Tanzania, Afghanistan, South Africa, and most recently in India. As Myanmar has recently invited global telecommunications companies to bid for two mobile licences in the country, Vodafone is now eyeing Myanmar's largely untapped mobile market to launch its M-Pesa mobile payment system in Southeast Asia for the first time, in partnership with China Mobile.

Despite its entry into other markets, M-Pesa has not been able to replicate the same level of success in Kenya in any other market. So what conditions were present in Kenya that were not present anywhere else?

1. According to this article,  it's all about distribution and scale—something which takes more than just good technology, or a good management team, but rather time, money and relationship building.

2. Strong market positioning also helped M-Pesa's growth as it discovered a large demand for P2P services driven by a desire to send money home. Thus, a good distribution network combined with low transaction fees, a trusted brand, and traction from urban workers who wanted to send money home to their families allowed M-Pesa's user base to grow exponentially.

3. Other reasons cited include a favorable regulatory environment—however, other competing players in Kenya have failed to achieve the same level of success.

So will Vodafone be able to take its learnings from Kenya into Myanmar? Like Kenya, Myanmar has a large unbanked population and Myanmar's banking sector is still under-developed. Myanmar's government has also stipulated an ambitious timetable on ICT development, aiming for national networks within two years. On the other hand, less than 10 % of Myanmar's population use mobile phones although efforts are being made to change that. For example, state-owned Myanmar Post and Telecommunications (MPT) offered 350,000 SIM cards through a public lottery which will cost $2 each (compared to their normal $200 cost). When M-Pesa was launched in 2007, mobile penetration was around 39% (versus over 70% in 2013).

Scott Bales from Moven is of the opinion that mobile money companies should stop trying to copy the M-Pesa model in other countries since different models work in different markets. The P2P market is not as strong in some Asian countries like Vietnam, for example, unlike in Kenya. Given Myanmar's low mobile penetration rates and strong cash culture, Vodafone would do well not to try and replicate their model in Kenya and to customize their approach in Myanmar's market. Perhaps Vodafone should take a note from Wing Money's success in Cambodia instead?

Have expertise in payments in Southeast Asia? Get in touch with alyssa.reinoso@terrapinn.com for speaking opportunities for Total Payments Asia, an event to be held this October 8-9 in Bangkok.

Image source: Flickr

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