Pakistan is the sort of market easily overlooked by global financial institutions, but ripe for fintech players that can bring a relevant offering at scale to a lot of users.
Veon, an Amsterdam-listed telecommunications company, is one of two firms driving mobile money among Pakistan’s 200 million people.
“Ant Financial and Tencent are entering Western markets, and Facebook and PayPal are moving East,” said Sergi Herrero, Veon’s co-CEO based in London and a former payments executive at Facebook. “Veon operates in the unclaimed space.”
Among Veon’s operating units is Jazz, a Pakistani telco. Six months ago, Jazz’s e-wallet, JazzCash, was spun off as a standalone company. JazzCash came to life for topping up airtime and data, but is now being turned into a payments app; it also has a microfinance banking license.
And then there were two
JazzCash is entering a space that has been so far dominated by a single player, Easypaisa, which has been active providing mobile money transfers in the market since 2009. Easypaisa is part of Telenor Microfinance Bank; Telenor, the Norwegian telco, is also a backer of Wave Money in Myanmar.
Herrero’s vision is to replicate what Wave Money has achieved. He even tried to hire Wave Money’s founder and CEO, Brad Jones, who declined—an understandable move, given this week’s announcement that Ant Financial is investing $73.5 million into Wave Money, becoming a substantial minority owner alongside Telenor and Yoma Bank.
Along the way, Wave Money has a network of 57,000 agents – mostly mom-and-pop shops present throughout the country – and a user base of 21 million people (out of a 54 million population) who use its app for bill payments, remittances and other money transfers.
Pakistan in sheer population terms should therefore be an even bigger opportunity. Of its 200 million people, JazzCash now claims nearly 8 million users, a figure that grew by 42% from the end of Q1 last year, and an agent network of 200,000 people.
From e-wallet to regional platform?
The immediate goal is to keep winning new users from Jazz’s telco subscriber base of 62 million people. JazzCash now has 12% of that customer base. “If we get to 30% or 40%, that’s up to 50 million wallets, which will make us a big player in regional terms,” Herrero said.
Veon has also partnered with Mastercard, which it hopes will help it begin to penetrate merchants, by having the capability to process their payments.
Over the next two or three years, assuming Veon and JazzCash reach user targets, the aim would be to use this as a platform to expand into other frontier markets. Veon provides e-wallets in Bangladesh and Algeria, as well as Russia, Ukraine, and former Soviet republics.
The analogy to Myanmar only goes so far. Myanmar, like other East Asian nations, has a population that has quickly adopted QR codes and smartphones. Pakistan still has a lot of people using feature phones, and the majority of people still don’t realize that phones (even old-fashioned ones) can be used to move value.
Easypaisa got its start mimicking M-Pesa, the pioneer from Kenya that invented mobile money (and is owned by a local telco, Safari.com). Pakistan’s userbase, income and habits looked more like Africa than East Asia.
Now the two players are combining M-Pesa feature-phone wallets with QR codes and smartphones, in order to cater to all types of users. Pakistan’s workforce is largely still agricultural, and these people often can’t afford smartphones. But there is a coterie of affluent people in the cities, who may be banked but who will use a JazzCash or Easypaisa app for its convenience.