Before I start, it should be noted here that Mobile money, which allows cash to travel as fast as a text message, is not an extension of banking. It is a new form of banking, just as mobiles are a new form of communication and it is not in any way a replacement for landlines rather it is an extension of landline phones.
Kenya is a country on eastern cost of Africa bordering Indian ocean, Somalia, Ethiopia, South Sudan, Uganda and Tanzania. This country is having many ethnic groups such as Kikuyu, Luhya, Luo, Kalenjinn etc and have a long history of power struggle, elections marred by violence and corruption in the public sector apart from poverty. In spite of many adversities, this country has presented a great lesson to the World financial sector by successfully introducing micro-payments in the form of M-pesa Mobile money transfer to its citizens.
Current population of this country is estimated around 41 million out of which there are more than 25 million mobile users. In 2007, when m-pesa was started, the population of Kenya was estimated to be 37 million and the mobile population was around 8.5 million.
In 2007, penetration of Banking services was very low in Kenya. Only 38% of the population was having access to some kind of financial services. Out of this, only 19% were having access to regulated banks. This low penetration of banking services has prepared a strong platform for Safaricom to launch mobile money services. Quickly, over a period of 5 years, the concept has been adopted by the masses and it has become most successful mobile phone based financial service in any developing country.
M-pesa agents at work
To understand this phenomenal growth, let us understand the growth of m-pesa over the last 5 years(Figure of 2011 is estimated):
Let us examine this here through graphical representation:
Sustained growth in M‐PESA registration for both subscriber and agent is notable. The amount of financial transactions in terms of amount transferred through the medium is also noteworthy. The recent update is that the total amount circulated in M-pesa network in one month is more than the total amount used on Western Union Money Transfer Globally in one year.
There could be several reasons for the success of M-pesa, but in my opinion following five reasons have worked as main catalyst for the success of M-pesa in Kenya:
A large number of poor and unbanked population.
Comparatively small spread of Bank branches in rural Kenya.
Virtually unregulated operation within the law of the country.
Comparatively large number of mobile users in comparison to total population.
Migration pattern of Kenya is typical of a Rural to Urban resulting split of family for work.
M-pesa has been built on a simple concept of sending and receiving money, but it has brought a huge impact on Kenyan’s life. This system allows them to deal with emergency family situations, better co-ordination of business transactions and has opened a financial system for excluded Kenyans. Only the time will tell us whether the M-Pesa model can be successfully replicated in other countries or not.
Recently, I had written an article on how conman are devising new methods to steal money from innocent customer’s bank account. You can visit this post by clicking on Conman devised new ways to steal money from your card.
Now there was a news item in Times of India dated 21st December, 2011. Two minor boys from a nearby slum have shown their skills to nearly break open one ATM to steal money when the cops caught them red-handed. This happened in a suburb of Mumbai and the time was a little earlier than 3 am. Learn more details on this Times of India story by clicking here.
Here is again an image of this news item presented for the readers:
Times of India news story
I have personally visited various ATMs belonging to both of private Banks and public Banks. I have found that over the years, some banks have become very casual in managing ATM centres. Non-presence of security or the security man sleeping inside ATM room are very common now a days. If you enter into some ATM rooms, you will find that even ACs are not working. It feels that you have entered into a furnace cubical. Dusty and untidy ATMs are very common in India. I have found ATM centres of HDFC and ICICI are somehow presenting a nice look as per their Bank’s image. But condition of most of the other Bank’s ATM centres are better not to be mentioned here.
Recently, there were several cases of ATM related theft and fraud. Banks are not taking minimum precautions to stop these theft. In most of these cases, an outside agency is managing ATM centres and the money kept inside ATM is insured. But that does not mean that minimum guidelines laid down for maintaining ATM centre should be ignored. Non-presence of camera or camera not working are some of the very common complaints heard after ATM money theft.
I would also like to mention one of my related concern here. The ATMs installed in India are also visited by many foreigners. Tourists coming from foreign destinations will be carrying a bad image of our country, if they find our ATM centres untidy and dirty from inside. Banks should not forget that these ATM centres reflect image of Bank, as more and more customers are visiting ATM to withdraw money. So all possible steps should be taken by the Banks to present a nice interior of ATM centres for the customers. Here is a nice article which can tell you about the conditions of most of the ATMs. It says that ATM centres are found to be as dirty as public toilets. Most of the ATM centres are full of bacteria enough to cause cold-cough related sickness and diarrhoea.
Through this article, I urge RBI to take necessary steps to improve condition of ATM centres in India and have an independent monitoring system to inspect, rate and submit report to banks. An RBI guidelines on this would be welcomed by customers.
Three people coming from well affluent families and having sound financial position, have been caught red-handed stealing money from card accounts. This story is coming from National capital of India and this could be a new case study for risk and fraud control professionals of the card industry.
Names of accused: Lalit Kumar (27), Leader Khan (25) and Ranjeeth Sahni (22)
ATMs targeted: Various unmanned ATMs of Axis Bank, Punjab National Bank of southeast Delhi.
Total number of fraudulent transactions : 44
Amount withdrawn: Several lacs of Indian rupees( 1 lac = 100,000)
Modus Operandi: To understand modus operandi of this operation, I focus on the following main points of this operation:
- Unmanned ATMs were the easy target for them.
- They used glue to fix hash(#) key on the key pad so that entire keypad starts behaving suspiciously resulting in the customer to leave the ATM room in a huff without completing transaction.
- Next comes one of the conman and he offers help to the cardholder in completing the transaction. – Unsuspected cardholder repeats the transaction in front of conman and exposes his PIN.
- Again ATM refuses to delivery cash but ATM keeps the details of card in its temporary memory(transaction was not cancelled).
- As soon as cardholder leaves, the trio unlock hash(#) key, complete the transaction and withdraw money.
Lesson learned : Cardholders took help of stranger inside ATM room to withdraw money and did not reported suspected incident to their Banks.
Hot Questions unanswered: The company responsible for managing these ATMs claims that they have changed the software and the new software will not allow these types of fraudulent transactions. Probably, they will not allow these transactions further to take place on their switch. However, this incident should be reported all over the World so that all the ATM switch owner can take precautionary measures in their operation command area.
The other hot questions may raise debatable points for the readers as under:
- Banks are not keeping their ATMs attended by security guards on 24×7 basis.
- It took about 4 months to stop these types of suspected transactions.
- Card transaction was not cancelled properly by the customers.
- A lot is needed to educate customers on ATM transactions’ security.
- So many improvements, so many technology has not stopped fraudulent ATM transactions to take place even today.
And the ATMs that fell to these kind of traps were one swipe ATMs. Does this mean that one swipe ATMs are more vulnerable to fraudulent transactions than the swallow ATM(the ATM ,which retains card for completing the transaction) ?
I am a credit cardholder. I would like to share my experiences of using a credit card to avail maximum benefit from this electronic medium of spending. Though, I do not claim that these are the best approaches for using a credit card, but these can be termed as well-thought approach of a credit card holder.
I have 3 credit cards from three different Banks. All the three credit cards are having different credit limit. The one from Bank A is of Rs.50,000, the other from Bank B is of Rs.75,000, the third from Bank C is of Rs.50,000.
The above credit limit does not reflect my purchasing power. As some of my friends are doing, it is not difficult to get a credit card with higher limit. I know, if I try, I can get a card having credit limit of Rs.500,000 also. But, my credit card expenses are always limited and I hardly use my credit cards for celebrations, party, enjoyment or as a mean to fill the gap of shortage of cash in my life. I have a friend, who is fond of applying every new type of card that comes in the market with big advertisements and publicity campaigns. But I do not apply for these cards, as I feel that the above three cards are sufficient to meet my various spending needs and all my needs are well controlled and are within the limit of my financial capabilities.
Now, why I have three credit cards? Out of the three credit cards, the card from Bank A is used most by me. The rest 2 cards accounts for less than 10% of my total transactions in a year. I use card of Bank A mainly because it is my first card and its interest / service charge components are lower than other twos. And also, since I am a regular user of the card from Bank A, I have built a rapport of a good customer of Bank A and they provide me excellent service all the time.
To give me a comfort of utilisation and payment, all the three cards I have selected are from 3 different billing cycles. Card from Bank A generates bill on last date of every month, Card from Bank B generates bill on 10th of every month and card from Bank C generates bill on 20th of every month. Every card gives a minimum of 15-20 days time to make a payment. And the interest free credit period varies from 45-50 days.
The other two cards are used sparingly mainly in case of following circumstances:
The billing cycle of first credit card is very near.
(I want to avail maximum benefit of interest free credit period for the new transaction).
The transaction initiated using first card fails.
(This may be due to poor connectivity between issuer and acquirer or the host of issuer is down).
At the time of transaction, I find that issuer and acquirer of the second or third card are same.
(This is to ensure that in case of dispute with merchant, the reversal of transaction is within the control of the same bank…i.e. chargeback period does not stretch too much).
For some online transactions, if I find that the payment gateway provider is the same as the issuer, I select that card whose issuer is also among one of the payment gateway providers.
(Again this approach is due to the above mentioned reason and to minimise the chances of failure of transaction).
The above article is a true account of a credit card holder who always uses his best selected approach to avail the maximum benefit of a card. He pays the bill on time and also ensures that he does not have to pay any extra amount in the form of interest, service charges or over limit charges etc. He uses the card when he sees that transaction amount is high so that he can get benefits in the form of reward points.
The information contained in mycardclub.com is for general information purposes only and does not constitute professional financial advice. Please contact an independent financial professional for advice regarding your specific situation.
By reading this blog you acknowledge full responsibility for your actions with respect to any loss or damage caused or alleged to be caused directly or indirectly in connection with the blog.
Kenya is a country on eastern cost of Africa bordering Indian ocean, Somalia, Ethiopia, South Sudan, Uganda and Tanzania. This country is having many ethnic groups such as Kikuyu, Luhya, Luo, Kalenjinn etc and have a long history of power struggle, elections marred by violence and corruption in the public sector apart from poverty. In spite of many adversities, this country has presented a great lesson to the World financial sector by successfully introducing micro-payments in the form of M-pesa Mobile money transfer to its citizens.
Recent Comments