GSMA Webinar Mobile Money Pricing & Commissions<br />“We are currently waiting for all participants to join and will begin...
Agenda<br />Segments<br />Our Task:<br />1. Pricing a mobile money service<br />9:00-9:45<br />Task: design a tariff sheet...
Valuing the service<br />Value-pricing approach<br />><br />><br />Price<br />Customer’s Perceived Value<br />Cost of Good...
Valuing the service<br />Cost of P2P transfer using existing alternatives <br />P2P transfer alternatives in Mobiland<br /...
Valuing the service<br />Cost of P2P transfer using existing alternatives <br />P2P transfer alternatives in Mobiland<br /...
Valuing the service<br />Cost of P2P transfer using existing alternatives <br />P2P transfer alternatives in Mobiland<br /...
Valuing the service<br />Cost of P2P transfer using existing alternatives <br />P2P transfer alternatives in Mobiland<br /...
Structuring the tariff sheet<br />Flat-Rate<br />Tiered<br />Percentage-Based<br />1<br />3<br />2<br />Model<br />Transac...
Structuring the tariff sheet<br />Flat-Rate<br />Tiered<br />Percentage-Based<br />1<br />3<br />2<br />Model<br />Transac...
Difficult to generate enough revenue from high value transactions to satisfy agents</li></li></ul><li>Structuring the tari...
 Captures more value
 Simpler in some markets</li></ul>Disadvantages<br /><ul><li>Difficult to remain competitive on price for low-value transa...
Difficult to generate enough revenue from high value transactions to satisfy agents
Difficult to generate enough revenue from low value transactions to adequately compensate agents
Difficult to remain competitive on price for high value transactions. </li></li></ul><li>Structuring the tariff sheet<br /...
 Easier to satisfy agents
 Simpler
 Captures more value
 Simpler in some markets</li></ul>Disadvantages<br /><ul><li>Difficult to remain competitive on price for low-value transa...
Difficult to generate enough revenue from high value transactions to satisfy agents
 Less simple
Difficult to generate enough revenue from low value transactions to adequately compensate agents
Difficult to remain competitive on price for high value transactions. </li></li></ul><li>Structuring the tariff sheet<br /...
Structuring the tariff sheet<br />Cash-in<br />P2P Transfer<br />Cash-out<br />Value-creating?<br />Value-creating?<br />V...
Creating a tariff sheet for MMU-PESA<br />Guidelines<br />Structure<br />Value<br />Tiered pricing structure<br />Only cha...
MMU-PESA – Tariff Sheet<br />Fee ($)<br />Value Transferred ($)<br />
MMU-PESA – Tariff Sheet<br />Fee ($)<br />Value Transferred ($)<br />
MMU-PESA – Tariff Sheet<br />Fee ($)<br />Value Transferred ($)<br />
Structuring the tariff sheet<br />Mobiland Mobile Market Share<br />GPRfone<br />X<br />Mobiphone<br />Cellfone<br />24%<b...
MMU-PESA – Tariff Sheet<br />Fee ($)<br />Value Transferred ($)<br />
MMU-PESA – Tariff Sheet<br />Fee ($)<br />Value Transferred ($)<br />
MMU-PESA – Tariff Sheet<br />Fee ($)<br />Value Transferred ($)<br />
Scanning for risks<br />
Scanning for risks<br />Direct Deposit<br />1<br />“Occurs when the customer initiating a P2P transfer hands an agent cash...
Scanning for risks<br />Direct Deposit<br />1<br />“Occurs when the customer initiating a P2P transfer hands an agent cash...
MMU-PESA – Tariff Sheet<br />Fee ($)<br />Value Transferred ($)<br />
MMU-PESA – Tariff Sheet<br />Fee ($)<br />Value Transferred ($)<br />
MMU-PESA – Tariff Sheet<br />Fee ($)<br />All deposits must be made into a customer’s own account.<br />Value Transferred ...
Pricing Summary<br />Attributes<br />MMU-PESA Tariff Sheet<br />Priced according to perceived value<br />1<br />Structured...
Agenda<br />Segments<br />Our Task:<br />1. Pricing a mobile money service<br />9:00-9:45<br />Task: design a tariff sheet...
Commissions 101: do agents even need to be paid? what for?<br />Help me register! And teach me! <br />That takes up my sta...
Commissions 101: how are the economics different from airtime?<br />Airtime<br />Mobile Money<br />“As soon as I sell all ...
Overview of agent profitability drivers<br />What are the variables that drive an agent profitability equation?<br />What ...
The agent incurs no labour costs
Every transaction is the same average value, and the agent depletes her stock of float completely before restocking</li></...
MMU-PESA – Agent Commissions<br />All deposits must be made into a customer’s own account.<br />
MMU-PESA – Agent Commissions<br />MNO Profitability<br />All deposits must be made into a customer’s own account.<br />
MMU-PESA – Agent Commissions<br />Agent Profitability<br />Return on assets<br />Daily profit<br />(11%)<br />(.30)<br />V...
MMU-PESA – Agent Commissions<br />All deposits must be made into a customer’s own account.<br />
MMU-PESA – Agent Commissions<br />All deposits must be made into a customer’s own account.<br />
MMU-PESA – Agent Commissions<br />Agent Profitability<br />Return on assets<br />Daily profit<br />131%<br />$3.60<br />Va...
MMU-PESA – Agent Commissions<br />All deposits must be made into a customer’s own account.<br />
Overview of agent profitability drivers<br />What are the variables that drive an agent profitability equation?<br />MNO I...
Influencing agent profitability drivers<br />What are the variables that drive an agent profitability equation?<br />Tacti...
MMU-PESA – Agent Commissions<br />Agent Profitability<br />Return on assets<br />Daily profit<br />(11%)<br />(.30)<br />V...
MMU-PESA – Agent Commissions<br />Agent Profitability<br />Return on assets<br />Daily profit<br />40%<br />$1.10<br />Var...
Influencing agent profitability drivers<br />What are the variables that drive an agent profitability equation?<br />Tacti...
MMU-PESA – Agent Commissions<br />Agent Profitability<br />Return on assets<br />Daily profit<br />40%<br />$1.10<br />Var...
MMU-PESA – Agent Commissions<br />Agent Profitability<br />Return on assets<br />Daily profit<br />49%<br />$1.10<br />Var...
Influencing agent profitability drivers<br />What are the variables that drive an agent profitability equation?<br />Tacti...
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Pricing and commissions Webinar English

Published on: Mar 4, 2016
Source: www.slideshare.net


Transcripts - Pricing and commissions Webinar English

  • 1. GSMA Webinar Mobile Money Pricing & Commissions<br />“We are currently waiting for all participants to join and will begin the webinar shortly. If you have specific questions you’d like to answer via this webinar, feel free to send us a confidential message now.”<br />
  • 2. Agenda<br />Segments<br />Our Task:<br />1. Pricing a mobile money service<br />9:00-9:45<br />Task: design a tariff sheet and set of agent commissions. <br />A. Valuing the service<br />B. Structuring the tariff sheet<br />C. Proofing against fraud<br />Service: MMU-PESA, a new offering targeted at the unbanked <br />Questions & Answers<br />Features: Domestic P2P transfer<br />Provider: Mobiphone, a GSM operator with 30% market share.<br />9:45-10:30<br />2. Setting mobile money commissions<br />Country: Mobiland, a country with 20% bank penetration, and 4 competing mobile operators. <br />A. Commissions 101<br />B. Overview of agent profitability drivers<br />C. Influencing agent profitability<br />Questions & Answers<br />*If you as a question, you will remain anonymous to the group*<br />
  • 3. Valuing the service<br />Value-pricing approach<br />><br />><br />Price<br />Customer’s Perceived Value<br />Cost of Goods Sold<br />What is the objective willingness to pay?<br />What price must we charge to sustain our channel strategy?<br />1<br />3<br />How cheap or expensive is the next best formal or informal alternative?<br />What price must we charge to cover other variable costs?<br />2<br />4<br />
  • 4. Valuing the service<br />Cost of P2P transfer using existing alternatives <br />P2P transfer alternatives in Mobiland<br />Speed<br /># Outlets<br />Reliability<br />Service<br />Price<br />Pesagram<br />1,000<br />Instant<br />High<br />8%<br />Fee ($)<br />Bus Driver<br />80<br />2-Day<br />Low<br />$1.50<br />Value Transferred ($)<br />
  • 5. Valuing the service<br />Cost of P2P transfer using existing alternatives <br />P2P transfer alternatives in Mobiland<br />Speed<br /># Outlets<br />Reliability<br />Service<br />Price<br />Pesagram<br />1,000<br />Instant<br />High<br />8%<br />Fee ($)<br />Bus Driver<br />80<br />2-Day<br />Low<br />$1.50<br />500 ...<br />...10,000<br />High<br />?<br />MMU-PESA<br />Instant<br />Value Transferred ($)<br />
  • 6. Valuing the service<br />Cost of P2P transfer using existing alternatives <br />P2P transfer alternatives in Mobiland<br />Speed<br /># Outlets<br />Reliability<br />Service<br />Price<br />Pesagram<br />1,000<br />Instant<br />High<br />8%<br />Fee ($)<br />Pricing <br />Window<br />Bus Driver<br />80<br />2-Day<br />Low<br />$1.50<br />500 ...<br />...10,000<br />High<br />?<br />MMU-PESA<br />Instant<br />Value Transferred ($)<br />
  • 7. Valuing the service<br />Cost of P2P transfer using existing alternatives <br />P2P transfer alternatives in Mobiland<br />Speed<br /># Outlets<br />Reliability<br />Service<br />Price<br />Pesagram<br />1,000<br />Instant<br />High<br />8%<br />Fee ($)<br />Pricing <br />Window<br />Bus Driver<br />80<br />2-Day<br />Low<br />$1.50<br />500 ...<br />...10,000<br />High<br />?<br />MMU-PESA<br />Instant<br />Value Transferred ($)<br />
  • 8. Structuring the tariff sheet<br />Flat-Rate<br />Tiered<br />Percentage-Based<br />1<br />3<br />2<br />Model<br />Transaction Fee<br />Transaction Fee<br />Transaction Fee<br />Transaction Value<br />Transaction Value<br />Transaction Value<br />In Mobiland...<br />Bus Driver<br />$1.50<br />Pesagram<br />8%<br />Not in use<br />
  • 9. Structuring the tariff sheet<br />Flat-Rate<br />Tiered<br />Percentage-Based<br />1<br />3<br />2<br />Model<br />Transaction Fee<br />Transaction Fee<br />Transaction Fee<br />Transaction Value<br />Transaction Value<br />Transaction Value<br />Advantages<br /><ul><li> Simpler</li></ul>Disadvantages<br /><ul><li>Difficult to remain competitive on price for low-value transactions
  • 10. Difficult to generate enough revenue from high value transactions to satisfy agents</li></li></ul><li>Structuring the tariff sheet<br />Flat-Rate<br />Tiered<br />Percentage-Based<br />1<br />3<br />2<br />Model<br />Transaction Fee<br />Transaction Fee<br />Transaction Fee<br />Transaction Value<br />Transaction Value<br />Transaction Value<br />Advantages<br /><ul><li> Simpler
  • 11. Captures more value
  • 12. Simpler in some markets</li></ul>Disadvantages<br /><ul><li>Difficult to remain competitive on price for low-value transactions
  • 13. Difficult to generate enough revenue from high value transactions to satisfy agents
  • 14. Difficult to generate enough revenue from low value transactions to adequately compensate agents
  • 15. Difficult to remain competitive on price for high value transactions. </li></li></ul><li>Structuring the tariff sheet<br />Flat-Rate<br />Tiered<br />Percentage-Based<br />1<br />3<br />2<br />Model<br />Transaction Fee<br />Transaction Fee<br />Transaction Fee<br />Transaction Value<br />Transaction Value<br />Transaction Value<br />Advantages<br /><ul><li> Captures more value
  • 16. Easier to satisfy agents
  • 17. Simpler
  • 18. Captures more value
  • 19. Simpler in some markets</li></ul>Disadvantages<br /><ul><li>Difficult to remain competitive on price for low-value transactions
  • 20. Difficult to generate enough revenue from high value transactions to satisfy agents
  • 21. Less simple
  • 22. Difficult to generate enough revenue from low value transactions to adequately compensate agents
  • 23. Difficult to remain competitive on price for high value transactions. </li></li></ul><li>Structuring the tariff sheet<br />Flat-Rate<br />Tiered<br />Percentage-Based<br />1<br />3<br />2<br />Model<br />Transaction Fee<br />Transaction Fee<br />Transaction Fee<br />Transaction Value<br />Transaction Value<br />Transaction Value<br />
  • 24. Structuring the tariff sheet<br />Cash-in<br />P2P Transfer<br />Cash-out<br />Value-creating?<br />Value-creating?<br />Value-creating?<br />Charge Fee?<br />Charge Fee?<br />Charge Fee?<br />Best practice: charge only for ‘value-creating’ transactions<br />
  • 25. Creating a tariff sheet for MMU-PESA<br />Guidelines<br />Structure<br />Value<br />Tiered pricing structure<br />Only charging for value-creating transactions<br />Cheaper than Pesagram<br />More expensive than the bus driver<br />
  • 26. MMU-PESA – Tariff Sheet<br />Fee ($)<br />Value Transferred ($)<br />
  • 27. MMU-PESA – Tariff Sheet<br />Fee ($)<br />Value Transferred ($)<br />
  • 28. MMU-PESA – Tariff Sheet<br />Fee ($)<br />Value Transferred ($)<br />
  • 29. Structuring the tariff sheet<br />Mobiland Mobile Market Share<br />GPRfone<br />X<br />Mobiphone<br />Cellfone<br />24%<br />17%<br />50%<br />9%<br />“When a money transfer is between two registered customers, those are two customers who are less likely to churn. <br />Registered Customer<br />P2P Transfer<br />“When a money transfer is sent to an unregistered customer, we earn a higher margin. <br />P2P Transfer<br />Unregistered Customer<br />
  • 30. MMU-PESA – Tariff Sheet<br />Fee ($)<br />Value Transferred ($)<br />
  • 31. MMU-PESA – Tariff Sheet<br />Fee ($)<br />Value Transferred ($)<br />
  • 32. MMU-PESA – Tariff Sheet<br />Fee ($)<br />Value Transferred ($)<br />
  • 33. Scanning for risks<br />
  • 34. Scanning for risks<br />Direct Deposit<br />1<br />“Occurs when the customer initiating a P2P transfer hands an agent cash, but provides them with the mobile number of the recipient rather than their own in an effort to avoid paying a transfer fee.”<br />
  • 35. Scanning for risks<br />Direct Deposit<br />1<br />“Occurs when the customer initiating a P2P transfer hands an agent cash, but provides them with the mobile number of the recipient rather than their own in an effort to avoid paying a transfer fee.”<br />Split Transaction<br />2<br />“Occurs when a cash-in, cash-out or bill payment is split into multiple smaller ones to minimize fees.”<br />
  • 36. MMU-PESA – Tariff Sheet<br />Fee ($)<br />Value Transferred ($)<br />
  • 37. MMU-PESA – Tariff Sheet<br />Fee ($)<br />Value Transferred ($)<br />
  • 38. MMU-PESA – Tariff Sheet<br />Fee ($)<br />All deposits must be made into a customer’s own account.<br />Value Transferred ($)<br />
  • 39. Pricing Summary<br />Attributes<br />MMU-PESA Tariff Sheet<br />Priced according to perceived value<br />1<br />Structured using tiers<br />2<br />Option to send to unregistered recipients<br />3<br />Fees only applied to ‘value creating’ transactions<br />4<br />Minimal risk of direct deposits<br />5<br />Minimal risk of transaction splitting<br />All deposits must be made into a customer’s own account.<br />6<br />
  • 40. Agenda<br />Segments<br />Our Task:<br />1. Pricing a mobile money service<br />9:00-9:45<br />Task: design a tariff sheet and set of agent commissions. <br />A. Valuing the service<br />B. Structuring the tariff sheet<br />C. Proofing against fraud<br />Service: MMU-PESA, a new offering targeted at the unbanked <br />Questions & Answers<br />Features: Domestic P2P transfer<br />Provider: Mobiphone, a GSM operator with 30% market share.<br />9:45-10:30<br />2. Setting mobile money commissions<br />Country: Mobiland, a country with 20% bank penetration, and 4 competing mobile operators. <br />A. Commissions 101<br />B. Overview of agent profitability drivers<br />C. Influencing agent profitability<br />Questions & Answers<br />*If you as a question, you will remain anonymous to the group*<br />
  • 41. Commissions 101: do agents even need to be paid? what for?<br />Help me register! And teach me! <br />That takes up my staff’s time.<br />Sell me e-money!<br />That’s working capital I need to tie up in e-float.<br />Buy my e-money!<br />Holding cash is costly and risky.<br />Show me a tariff poster!<br />My wall space is very sought after.<br />Principal: pay agents for every activity they perform, even if the MNO does not charge the customer a fee. <br />
  • 42. Commissions 101: how are the economics different from airtime?<br />Airtime<br />Mobile Money<br />“As soon as I sell all my scratch cards, I’ve earned back my principal and also my profit margin.”<br />“When I sell my e-money, I’ve made my principal back, but don’t get paid commissions until end of month.”<br />Cash Flows<br />“Once my airtime is sold, it’s gone. I can’t make money by accepting someone else’s and reselling it.”<br />“For every cash-in transaction I perform, I can do a cash-out in turn; this means restocking less often.”<br />Restocking <br />Frequency<br />“Everyone on my street sells airtime – I get no major lift in sales from selling this product.”<br />“Selling mobile money differentiates my business – it generates additional foot traffic.”<br />Foot Traffic<br />
  • 43. Overview of agent profitability drivers<br />What are the variables that drive an agent profitability equation?<br />What is the formula that determines agent profitability?<br />Float<br />1<br />x<br />the amount of e-money and/or physical cash an agent must have on hand to transact.<br />Profit Margin<br />Asset Turnover<br />Restocking cost<br />2<br />or<br />the cost an agent incurs to restock his cash or e-money float balance.<br />-<br />Commissions<br />Restocking Costs<br />Volume of transactions<br />3<br />Float<br />the volume of cash-in/cash-out transactions performed each day by an agent.<br />*<br />or<br />Average commission value<br />4<br />)<br />(<br />)<br />(<br />the average commission earned for performing cash-in/cash-out transactions.<br />-<br />avg. trans value x # of transactions<br />-<br />avg. commission value<br />restocking cost<br />x<br />float<br />avg. trans value<br />float<br />Average transaction value<br />5<br />the average value of cash-in/cash-out transactions performed by customers.<br />*<br />Assumptions:<br /><ul><li>The agent performs only one type of transaction (cash in or cash out), not a mix
  • 44. The agent incurs no labour costs
  • 45. Every transaction is the same average value, and the agent depletes her stock of float completely before restocking</li></li></ul><li>Creating agent commissions for MMU-PESA<br />Guidelines<br />Structure<br />Value<br />Agents need to be paid for every activity<br />Low enough such that MNO earns acceptable margin<br />High enough such that agent earns acceptable profit/ROA<br />
  • 46. MMU-PESA – Agent Commissions<br />All deposits must be made into a customer’s own account.<br />
  • 47. MMU-PESA – Agent Commissions<br />MNO Profitability<br />All deposits must be made into a customer’s own account.<br />
  • 48. MMU-PESA – Agent Commissions<br />Agent Profitability<br />Return on assets<br />Daily profit<br />(11%)<br />(.30)<br />Variables<br />Float<br />Restocking cost<br />Volume of transactions per day<br />Average commission value<br />Average transaction value<br />$1,000<br />$15<br />2<br />$60<br />$50<br />All deposits must be made into a customer’s own account.<br />
  • 49. MMU-PESA – Agent Commissions<br />All deposits must be made into a customer’s own account.<br />
  • 50. MMU-PESA – Agent Commissions<br />All deposits must be made into a customer’s own account.<br />
  • 51. MMU-PESA – Agent Commissions<br />Agent Profitability<br />Return on assets<br />Daily profit<br />131%<br />$3.60<br />Variables<br />Float<br />Restocking cost<br />Volume of transactions per day<br />Average commission value<br />Average transaction value<br />$1,000<br />$15<br />2<br />$0.60<br />$50<br />All deposits must be made into a customer’s own account.<br />
  • 52. MMU-PESA – Agent Commissions<br />All deposits must be made into a customer’s own account.<br />
  • 53. Overview of agent profitability drivers<br />What are the variables that drive an agent profitability equation?<br />MNO Influence<br />Agent Perspective<br />Float<br />“the less float I need to hold, the less amount I have tied up in working capital”<br />1<br />the amount of e-money and/or physical cash an agent must have on hand to transact.<br />Restocking cost<br />“the less time and money I spent balancing float, the better”<br />2<br />the cost an agent incurs to restock his cash or e-money float balance.<br />Volume of transactions<br />“the more transactions I process, the more I earn”<br />3<br />the volume of cash-in/cash-out transactions performed each day by an agent.<br />Average commission value<br />“the higher commissions I earn for each transaction, the better”<br />4<br />the average commission earned for performing cash-in/cash-out transactions.<br />Average transaction value<br />“the more transactions of a profitable value, the better”<br />5<br />the average value of cash-in/cash-out transactions performed by customers.<br />
  • 54. Influencing agent profitability drivers<br />What are the variables that drive an agent profitability equation?<br />Tactic #1: Leverage airtime distribution network to rebalance liquidity for agents on a regular basis. <br />Float<br />1<br />the amount of e-money and/or physical cash an agent must have on hand to transact.<br />VISIT SCHEDULE<br />Restocking cost<br />2<br />the cost an agent incurs to restock his cash or e-money float balance.<br />Volume of transactions<br />3<br />the volume of cash-in/cash-out transactions performed each day by an agent.<br />Average commission value<br />4<br />the average commission earned for performing cash-in/cash-out transactions.<br />Average transaction value<br />5<br />the average value of cash-in/cash-out transactions performed by customers.<br />
  • 55. MMU-PESA – Agent Commissions<br />Agent Profitability<br />Return on assets<br />Daily profit<br />(11%)<br />(.30)<br />Variables<br />Float<br />Restocking cost<br />Volume of transactions per day<br />Average commission value<br />Average transaction value<br />$1,000<br />$15<br />2<br />$0.60<br />$50<br />All deposits must be made into a customer’s own account.<br />
  • 56. MMU-PESA – Agent Commissions<br />Agent Profitability<br />Return on assets<br />Daily profit<br />40%<br />$1.10<br />Variables<br />Float<br />Restocking cost<br />Volume of transactions per day<br />Average commission value<br />Average transaction value<br />$1,000<br />$1<br />2<br />$0.60<br />$50<br />All deposits must be made into a customer’s own account.<br />
  • 57. Influencing agent profitability drivers<br />What are the variables that drive an agent profitability equation?<br />Tactic #4: Create different sets of liquidity requirements according to likely volume. <br />Float<br />1<br />the amount of e-money and/or physical cash an agent must have on hand to transact.<br />Restocking cost<br />2<br />the cost an agent incurs to restock his cash or e-money float balance.<br />Volume of transactions<br />3<br />the volume of cash-in/cash-out transactions performed each day by an agent.<br />Capital City<br />Countryside<br />Region<br />Average commission value<br />4<br />the average commission earned for performing cash-in/cash-out transactions.<br />Liquidity <br />Requirement<br />$1,500<br />$500<br />Average transaction value<br />5<br />the average value of cash-in/cash-out transactions performed by customers.<br />
  • 58. MMU-PESA – Agent Commissions<br />Agent Profitability<br />Return on assets<br />Daily profit<br />40%<br />$1.10<br />Variables<br />Float<br />Restocking cost<br />Volume of transactions per day<br />Average commission value<br />Average transaction value<br />$1,000<br />$1<br />2<br />$0.60<br />$50<br />All deposits must be made into a customer’s own account.<br />
  • 59. MMU-PESA – Agent Commissions<br />Agent Profitability<br />Return on assets<br />Daily profit<br />49%<br />$1.10<br />Variables<br />Float<br />Restocking cost<br />Volume of transactions per day<br />Average commission value<br />Average transaction value<br />$800<br />$1<br />2<br />$0.60<br />$50<br />All deposits must be made into a customer’s own account.<br />
  • 60. Influencing agent profitability drivers<br />What are the variables that drive an agent profitability equation?<br />Tactic #6: Market the service to drive up transaction volumes.<br />Float<br />1<br />the amount of e-money and/or physical cash an agent must have on hand to transact.<br />Restocking cost<br />2<br />the cost an agent incurs to restock his cash or e-money float balance.<br />Volume of transactions<br />3<br />the volume of cash-in/cash-out transactions performed each day by an agent.<br />Average commission value<br />4<br />the average commission earned for performing cash-in/cash-out transactions.<br />Average transaction value<br />5<br />the average value of cash-in/cash-out transactions performed by customers.<br />
  • 61. MMU-PESA – Agent Commissions<br />Agent Profitability<br />Return on assets<br />Daily profit<br />49%<br />$1.10<br />Variables<br />Float<br />Restocking cost<br />Volume of transactions per day<br />Average commission value<br />Average transaction value<br />$800<br />$1<br />2<br />$0.60<br />$50<br />All deposits must be made into a customer’s own account.<br />
  • 62. MMU-PESA – Agent Commissions<br />Agent Profitability<br />Return on assets<br />Daily profit<br />736%<br />$16.13<br />Variables<br />Float<br />Restocking cost<br />Volume of transactions per day<br />Average commission value<br />Average transaction value<br />$800<br />$1<br />30<br />$0.60<br />$50<br />All deposits must be made into a customer’s own account.<br />
  • 63. Agenda<br />Segments<br />Our Task:<br />1. Pricing a mobile money service<br />9:00-9:45<br />Task: design a tariff sheet and set of agent commissions. <br />A. Valuing the service<br />B. Structuring the tariff sheet<br />C. Proofing against fraud<br />Service: MMU-PESA, a new offering targeted at the unbanked <br />Questions & Answers<br />Features: Domestic P2P transfer<br />Provider: Mobiphone, a GSM operator with 30% market share.<br />9:45-10:30<br />2. Setting mobile money commissions<br />Country: Mobiland, a country with 20% bank penetration, and 4 competing mobile operators. <br />A. Commissions 101<br />B. Overview of agent profitability drivers<br />C. Influencing agent profitability<br />Questions & Answers<br />*If you as a question, you will remain anonymous to the group*<br />
  • 64. Appendices<br />
  • 65. Influencing agent profitability drivers<br />What are the variables that drive an agent profitability equation?<br />Tactic #5: Help agents anticipate and prepare for events that will be strains on liquidity.<br />Float<br />1<br />the amount of e-money and/or physical cash an agent must have on hand to transact.<br />Restocking cost<br />2<br />SALARY PAYMENTS<br />the cost an agent incurs to restock his cash or e-money float balance.<br />Volume of transactions<br />3<br />the volume of cash-in/cash-out transactions performed each day by an agent.<br />Average commission value<br />4<br />the average commission earned for performing cash-in/cash-out transactions.<br />Average transaction value<br />5<br />the average value of cash-in/cash-out transactions performed by customers.<br />
  • 66. Influencing agent profitability drivers<br />What are the variables that drive an agent profitability equation?<br />Tactic #2: Create a layer in the distribution system above frontline agents, whose responsibility it is to manage liquidity in exchange for a fee... <br />Float<br />1<br />the amount of e-money and/or physical cash an agent must have on hand to transact.<br />Share of <br />commission<br />Cost of liquidity management<br />Restocking cost<br />2<br />80%<br />the cost an agent incurs to restock his cash or e-money float balance.<br />Masteragent<br />Volume of transactions<br />3<br />the volume of cash-in/cash-out transactions performed each day by an agent.<br />Average commission value<br />4<br />Agent<br />Agent<br />100%<br />High<br />the average commission earned for performing cash-in/cash-out transactions.<br />Average transaction value<br />Agent<br />Agent<br />5<br />the average value of cash-in/cash-out transactions performed by customers.<br />
  • 67. Influencing agent profitability drivers<br />What are the variables that drive an agent profitability equation?<br />Tactic #3: Link agent e-wallet accounts with business bank accounts to create rapid, low-cost mechanism for loading e-money. <br />Float<br />1<br />the amount of e-money and/or physical cash an agent must have on hand to transact.<br />“Transfer $100 from my bank account to my True Money e-wallet”<br />Option-1<br />Option-2<br />Restocking cost<br />2<br />the cost an agent incurs to restock his cash or e-money float balance.<br />Volume of transactions<br />3<br />the volume of cash-in/cash-out transactions performed each day by an agent.<br />+<br />Average commission value<br />4<br />the average commission earned for performing cash-in/cash-out transactions.<br />Average transaction value<br />5<br />the average value of cash-in/cash-out transactions performed by customers.<br />
  • 68. Benchmarks: fee as a percent of value transferred<br />Fee as a % of Value Transferred<br />Value Transferred<br />Sample includes deployments from East Africa, West Africa, and Asia<br />
  • 69. Benchmarks: premium to send money to unregistered customers<br />Premium<br />Value Transferred<br />Sample includes deployments from East Africa, West Africa, and Asia<br />
  • 70. Benchmarks: transfer fee as a % of end-to-end cost for P2P money transfer<br />Transfer Fee as a % of Total<br />Value Transferred<br />Africa: Ghana, Kenya, Tanzania, Uganda<br />Asia: Fiji, Afghanistan<br />
  • 71. Benchmarks: MNO gross margin on P2P transfer to registered customer (sum of fees minus commissions)<br />MNO gross margin<br />Value Transferred<br />Africa: Ghana, Kenya, Tanzania, Uganda<br />Asia: Fiji, Afghanistan<br />
  • 72. Benchmarks: Cash-out commission as a % of total commission<br />Cash-out commission as % of total<br />Value Transferred<br />Africa: Ghana, Kenya, Tanzania, Uganda<br />Asia: Fiji, Afghanistan<br />

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