I recently had a conversation with Ben Farren, Director of Splash Mobile Money Ltd., to learn how Sierra Leone’s first mobile money deployment has been progressing since it launched 10 weeks ago. Splash is privately held and their model isn’t ‘led’ by a bank or a mobile operator. In launching the service Ben has developed a new brand, independent distribution network and partnerships with mobile operators.
Splash has agreements with the three largest MNOs in Sierra Leone which enable customers from these networks – representing about 90% of the market – to use the service. Currently focused on domestic money transfer, Splash enables customers to send money to anyone – regardless of which mobile network they use. Registration takes place at Splash agents or during one of the company’s planned registration campaigns.
By way of pricing, Splash have applied many of the successful principals espoused by M-PESA. It’s free to register for the service, customers don’t pay a fee to perform cash in, and it’s more expensive to send money to an unregistered user (compared to a registered one). There is one slight deviation from the M-PESA approach when it comes to the actual fee for sending money. Whereas M-PESA users pay a flat fee to send to another registered user, in the case of Splash the fee varies with the value of the remittance.
6,000 customers, 30 agents
Splash have registered more than 6,000 customers in the past 10 weeks, served by a cash in/out network of 30 agents and six branches of Guaranty Trust Bank – Splash’s local banking partner. Their approach to driving customer adoption has been to use both above and below the line marketing activities – ‘we use radio because in Sierra Leone that’s the broadcast medium with the greatest reach. We also use road shows with loud music, flyers and a lot of ‘freelance workers’ tasked with stopping people in the streets to explain how the thing works. We have a growing army of ‘freelancers’ who are fully trained on how to use the product and we can activate them whenever we’re in town. This is usually a part time job, but people can basically earn $5 to $8 for a day’s work which is a good wage here in Sierra Leone.’
Focus on active users and driving transactions
Consistent with challenges we’ve described before, the management team at Splash are intently focused on managing the active user rate, and not just on registrations: ‘It’s obviously not inevitable that a registration leads to a transaction, where registration is free. A lot of people in Sierra Leone are under-employed and they’re very happy to give up 5 minutes of their day, sign a piece of paper and enjoy the thrill of receiving their registration text message – if that process is entirely free – and then do nothing about it. We focus on getting money into their Splash wallet immediately, so if they want to get the money out, they need to go find an agent, learn how the process works, and become X times more likely to use the service again in the future. We don’t force customers to cash in when registering, but we often incentivise them with promotions – e.g. a free t-shirt when you cash in more than $10.’
Placing their model relative to mobile operators in the mobile money ecosystem
Ben’s perspective is that Splash – or generally, third party models – are a strong fit for any country with a highly fragmented mobile market, where achieving true interoperability across networks may require some facilitation. That is, in markets where no single MNO has a dominant share (in contrast to, say, Kenya, where Safaricom owns 75%+ market share), he sees an opportunity for independent third party companies to deploy mobile money: ‘As we expand to other countries, my first step is to look at the market structure. If the market looks like Kenya, the dominant incumbent may be better placed to take the lead. – but there are a lot of markets that don’t look like that.’ Beyond fragmentation, Ben also sees a space for Splash as the service provider of choice to smaller MNOs: ‘smaller mobile network operators need a mobile payment solution to compete, and rarely have the resources to develop and deploy in-house. Of course there are many technology vendors out there offering great tech solutions – but you need so much more than technology. Over half battle lies in deployment. We have a great technology solution and the hard won experience and know-how to bring m-payments to market. We are uniquely positioned to deliver on this. That’s our appeal to the small MNOs of the world.’
For Sierra Leone in particular, Ben is confident in his value proposition to MNOs: ‘they benefit from incremental subscribers, reduced churn and increasing ARPU. Most of the MNOs in Sierra Leone are some distance from launching their own mobile money offerings – and we offer a great value alternative. SMS penetration in Sierra Leone is very low, so what better way to get people using it than to link it to their money. And of course, there’s a halo effect – once they use SMS for mobile money, then there’s a hope that they’ll use it for other things.
The 3 leading mobile network operators on board, but waiting on access to USSD gateways
Ben: ‘Inevitably the first pitch was much harder than the last. People are much more prepared to listen when you are a proven operator, and no-one wants to be left out. It’s understandably painful for an MNO to hear ‘we’re running road-shows and giving away SIMs from X mobile network to your customers because they want to use our service, but can’t because we don’t have a partnership’. Today we have the top 3 mobile operators on board.’
One of the challenges Splash have faced has been getting access to USSD gateways. Because integration in this area has been slow, the only way for customers to use Splash is through unstructured SMS. In a market where customers are not yet well versed in SMS, this is a challenge, though ‘ not as big of a problem as you might think’, according to Ben. ‘Don’t get me wrong, I don’t want to stick with unstructured SMS any longer than I have to and we are working on USSD – but there are fewer user errors than we anticipated’. One factor that Ben suggests is likely delaying the process of accessing USSD gateways is that there hasn’t been a ‘commercial precedent’ for providing 3rd party access in Sierra Leone. Thus, MNOs have needed time to work through pricing and processes. To move things along, Ben encourages MNOs to expedite the process as a means of gaining a competitive advantage (i.e. ‘XYZ MNO customers can use Splash in a more convenient way than customers on other networks can’).
An ambitious product roadmap…
Ben: ‘Our product roadmap is ‘enormous and growing by day. We’re looking at enhancing our retail feature set to facilitate a high volume of transactions in one location – this is a big deal in restaurants, bars or large markets with many employees or participants. We also constantly refining our suite of management tools to enable Agents to manage their float effectively across multiple outlets and tills. We’ve also had great success with salary disbursements. But to scale this we’ll need to work on refining and tailoring reporting applications to integrate effectively with the payroll, finance and auditing systems used by our corporate partners. Eventually, we’ll integrate with billing systems too so people can pay for satellite TV, water, electricity – this has obviously been a great success elsewhere and something we expect to bring online at the end of Q1-2010.’