My final project in my university was a study of the Brazilian m-payment scenario.
When I discussed this with people from France, the first problem was that some enterprises thought that as a developed country, the case from M-Pesa in Kenia could be used.
Let’s take a look first at M-Pesa, from Safaricom (vodafone):
7 millions users, 80% of market share for Safaricom and 50% of mobile penetration.
The M-pesa system started in 2007, but beginning 2008 Kenya had a civil war scenario, where the M-Pesa appeared as a real and useful way of transferring money over the country, also the population doesn’t trust in Banks (Europeans).
We have then 3 strong points in favor to M-Pesa:
1-Safaricom market share
2-Low bancarisation (and no trust/confidence in the bank system)
3-System boosted by a civil was scenario
Now let’s look at the Brazilian case:
100% of mobile penetration (80% pre-paid) and bancarization of 50%, population of 190millions.
Oi Paggo is a system from mobile operator OI. Since 2006 we have it, but it has less then 1million subscribers.
Why? Marketing failure? People don’t need it?
Well, I think the problem is the business model they adopted. Different from Kenya, the Banks in Brazil are really strong. As it happened in India, if a mobile operator tries to confront a bank in the m-payment business, the banks would do a lobby with the Brazilian Central Bank to make it illegal. Actually, they the banks tried.
Another point is the clients of the system. It’s based on a credit bill, just for post-paid mobiles. You buy something with the Oi Paggo system and will be credited in your mobile bill. And finally, to subscribe to the system you need to prove your earnings.
Let’s summarize:
1. Wrong business model
2. Wrong clients (post-paid)
3. Wrong clients again (need to prove earnings)
In my study, the correct model for a M-Payment in Brazil would need to:
1. Make a partnership with the Banks.
2. Focus on pre-paid mobiles (80% of all mobiles in Brazil!)
3. Aim in the correct clients -> with less or leak access to the financial system.
It seams that other people thinks like me. In the past couple months we have seem partnerships from the Banks and Mobile Operators: Vivo + Itau-Unibanco and Banco do Brazil with Oi.
