Mobile Money Opportunities in BRIC Countries

Mobile Money Opportunities in BRIC Countries Market Intelligence Report Reference code: TE0003MR Published: March 2012 BRICdata John Carpenter House 7 Carmelite Street London EC4Y 0BS United Kingdom Tel: +44 (0) 20 7936 6400 Fax: +44 (0) 20 7336 6813 www.bricdata.com www.bricdata.com

EXECUTIVE SUMMARY 1 Executive Summary Brazil The Brazilian mobile payment market recorded XXX million transactions in 2011 with an average transaction size of US$X.X, and is set to reach over X.X billion transactions with average transaction size of US$X.X by 2016. In value terms, the mobile money market is expected to reach US$XX.X billion by 2016. A large unbanked population supported by developed mobile and banking system will be the fundamental driver for the growth of mobile-based financial services in Brazil. The majority of mobile money initiatives are led by banks. The need to gain access to the potential market through the unbanked population is driving strategic business alliances between banks and mobile operators. The Brazilian retail industry is one of the most developed in Latin America, which is expected to provide a strong platform for the growth of mobile payment services. Brazil has a well regulated network of banking agents, who are authorized to carry out various banking tasks, and this well regulated agent network strengthens market fundamentals by providing strong operational infrastructure. Global competitors such as Telefonica, MasterCard, VISA and Paypal have been entering the Brazilian mobile payment market, which is expected to drive the overall development of the industry. There is an increasing trend of collaboration between banks to share operational infrastructure, focusing on reducing costs while improving levels of market penetration and launching new services. Credit and microfinance have emerged as potential markets for mobile money services. Brazil has great diversity across regions in terms of population, economy, household income and culture, which creates additional challenges for companies looking to offer unique solutions while building enough scale to generate a reasonable return on investments. Russia The Russian mobile payment market stood at X.X million transactions in 2011, with an average transaction size of US$X.X. This is set to reach over X.X billion transactions with average transaction size of US$X.X by 2016. In value terms, the mobile money market size is expected to reach US$XX.X billion by 2016. Operators are placing a strong emphasis on making contactless mobile payment service available to users using the NFC standard, with NFC-enabled mobile payment trails initiated for making retail payments or on public transport. All three leading mobile operators, Megafon, MTS and Vimpelcom, collaborated to provide users with common access to each other s mobile payment services. A new regulation, which requires mobile payments to be made in collaboration between mobile operators and electronic payment companies, is proving favorable for mobile operators. Russia is a large smartphones market and by combining the device cost with mobile data service contracts, operators are offering savings to consumers, making the overall deal a lucrative option. The entry of PayPal will help drive the mobile payment market in Russia, which is currently dominated by e- currencies, Yandex.Dengi and WebMoney. The key challenges in the mobile payments market are the high cost of mobile data plans, the high rate of commission charged by mobile operators on every transaction and a lack of effective mobile banking applications, with banks only offering a limited set of functionalities to users. While SMS-based mobile banking is still very popular, its market share is expected to decline as mobile banking applications are implemented. Social Media Marketing Strategies and Emerging Opportunities in BRIC Countries Page 2

EXECUTIVE SUMMARY India China The Indian mobile payment market stood at XX million transactions in 2011 with average transaction size of US$X.X. This is set to reach X.X billion million transactions, with an average size of US$X.X by 2016. In value terms, the mobile money market is expected to value US$XX.X billion by 2016. The growth of mobile money services increased as regulatory changes were implemented. Brought into effect by the Reserve Bank of India (RBI) the new regulations increased the per-day mobile money transfer limit to INRXX,XXX (US$XXXX) from the existing limit of INRX,XXX (US$XXX). The regulatory change, which allow postal departments, kirana stores and corporate to act as business correspondents, is also expected to be the key driving factor for mobile banking in the country. All leading telecom operators are expanding their mobile money service in rural locations. To implement this, Airtel are collaborating with the leading Indian bank, State Bank of India, and Vodafone in partnership with ICICI. The rapidly growing mobile money market is driving the established business correspondents (BCs) to directly offer mobile payment services. Unlike other countries such as China, contactless mobile payment is a new concept in India and as such has limited support from operators. To facilitate inter-operability pertaining to payments across service providers, the National Payments Corporation of India (NPCI) launched an Inter Bank Mobile Payment Service (IMPS). The key challenges comprise the low value of mobile banking transactions, a limited mobile money ecosystem and a lack of awareness among the Indian consumers. China s mobile payment market stood at XXX million transactions in 2011, with an average transaction size of US$X.X. This is set to reach X.X billion transactions, with an average size of US$X.X. In value terms, the mobile money market is expected to reach US$XX.X billion by 2016. China is an upcoming destination for mobile money services owing to its large mobile subscriber base and increasing government support. The country is recording an increase in the uptake of contactless mobile payment services, with near-field communications (NFC) being the primary technology adopted for the utilization of this service. China s UnionPay, a card network operator in China, in collaboration with China s leading banks, wireless operators and handset manufacturers, is forming a mobile payment industry alliance. This alliance is expected to enhance mobile payment coordination across industries by providing a single open mobile payment platform to users. Contactless mobile payment services in China now comprise supermarkets, restaurants and public transport. Chinese mobile users are utilizing mobile money for the payment of utility bills. Minimal mobile payment network partnerships are restricting the market reach of mobile payment platforms in China. Key challenges comprise China s uneven growth distribution and the domination of cash-based payments. Social Media Marketing Strategies and Emerging Opportunities in BRIC Countries Page 3

TABLE OF CONTENTS TABLE OF CONTENTS 1 Executive Summary... 2 2 Mobile Money Market Attractiveness of BRIC Nations... 9 2.1 Key Competitors, Business Models and Success Factors in the Mobile Money Ecosystem... 9 2.1.1 Key competitors and business models... 9 2.1.2 Critical success factors... 11 2.2 Benchmarking of Mobile Money Market Environment in BRIC Nations... 12 2.2.1 Relative positioning of emerging markets with regards to the adoption of mobile money... 12 2.2.2 Market attractiveness benchmarking in BRIC... 13 2.3 Market Size and Future Prospects of Mobile Money in BRIC nations... 15 2.3.1 Benchmarking market size in value terms by financial services... 15 2.3.2 Benchmarking Market Size by Volume of Transaction and Average Transaction Size... 16 3 Mobile Money Opportunities in Brazil... 17 3.1 Introduction to Mobile Money in Brazil... 17 3.2 Mobile Money Market Size and Forecasts 2011 2016... 19 3.2.1 Market size by value... 19 3.2.2 Market size by volume and average transaction size... 20 3.2.3 Market size by financial services... 20 3.3 Key Drivers of Mobile Money in Brazil... 21 3.3.1 Business and technology drivers... 21 3.3.2 Consumer drivers... 23 3.4 Key Trends... 23 3.4.1 Business trends... 23 3.4.2 Infrastructure and technology trends... 24 3.4.3 Consumer trends... 24 3.5 Challenges... 25 3.6 Mobile banking regulations in Brazil... 25 3.7 Mobile Banking Services Launched in Brazil... 26 3.7.1 Others... 27 3.8 Case Example... 28 3.8.1 Oi Paggo... 28 3.8.2 Vivo... 29 3.9 Future of Mobile Money in Brazil... 30 4 Mobile Money Opportunities in Russia... 32 4.1 Introduction to Mobile Money in Russia... 32 4.2 Mobile Money Market Size and Forecasts 2011 2016... 34 4.2.1 Market size by value... 34 4.2.2 Market size by volume and average transaction size... 35 4.2.3 Market size by financial services... 36 4.3 Key Drivers of Mobile Money in Russia... 37 4.3.1 Regulatory drivers... 37 4.3.2 Business and technology drivers... 37 Social Media Marketing Strategies and Emerging Opportunities in BRIC Countries Page 4

TABLE OF CONTENTS 4.3.3 Consumer drivers... 38 4.4 Key Trends... 39 4.4.1 Business trends... 39 4.4.2 Infrastructure and technology trends... 39 4.4.3 Consumer trends... 40 4.5 Challenges... 41 4.6 Mobile Banking Regulations in Russia... 41 4.7 Mobile Banking Services Launched in Russia... 42 4.7.1 Telecom operators... 42 4.7.2 Leading banks investing in providing mobile banking functionality to users... 43 4.8 Case Examples... 44 4.8.1 Though a deferred move, PayPal enters the Russian Market... 44 4.9 Future of Mobile Money in Russia... 45 5 Mobile Money Opportunities in India... 46 5.1 Introduction to Mobile Money in India... 46 5.2 Mobile Money Transactions and User Forecasts 2011 2016... 48 5.2.1 Market size by value... 48 5.2.2 Market size by volume and average transaction size... 49 5.2.3 Market size by financial services... 50 5.3 Key Drivers of Mobile Money in India... 51 5.3.1 Regulatory drivers... 51 5.3.2 Business and technology drivers... 52 5.3.3 Consumer drivers... 52 5.4 Key Trends... 53 5.4.1 Business trends... 53 5.4.2 Infrastructure and technology trends... 53 5.4.3 Consumer trends... 53 5.5 Challenges... 54 5.6 Mobile Banking Regulations in India... 55 5.7 Mobile Banking Services Launched in India... 56 5.7.1 Telecom operators... 56 5.7.2 Leading banks investing in providing mobile banking functionality to users... 57 5.7.3 Other mobile banking services... 57 5.8 Case Example... 58 5.8.1 Growing importance of BCs in banking the unbanked... 58 5.9 Future of Mobile Money in India... 60 6 Mobile Money Opportunities in China... 61 6.1 Introduction to Mobile Money in China... 61 6.2 Mobile Money Transactions and User Forecasts 2011 2016... 63 6.2.1 Market size by value... 63 6.2.2 Market size by volume and average transaction size... 64 6.2.3 Market size by financial services... 65 6.3 Key Drivers of Mobile Money in China... 66 Social Media Marketing Strategies and Emerging Opportunities in BRIC Countries Page 5

TABLE OF CONTENTS 6.3.1 Regulatory drivers... 66 6.3.2 Business and technology drivers... 66 6.3.3 Consumer drivers... 66 6.4 Key Trends... 68 6.4.1 Business trends... 68 6.4.2 Infrastructure and technology trends... 68 6.4.3 Consumer trends... 69 6.5 Challenges... 70 6.6 Mobile banking regulations in China... 71 6.7 Mobile Banking Services Launched in China... 72 6.7.1 Mobile banking initiatives of key telecom operators... 72 6.7.2 Mobile banking initiatives of leading banks... 73 6.8 Case Example... 74 6.8.1 Mobile payment industry alliance expected to support mobile money growth in China... 74 6.8.2 Rise of contactless mobile payments in China with increased efforts from banks, telecom and handset operators... 75 6.9 Future of mobile money in China... 77 7 Case Study on Emerging Markets... 78 7.1 Safaricom s M-Pesa in Kenya... 78 7.2 Globe Telecom s GCash in Philippines... 80 7.3 MTN s MobileMoney in Uganda... 81 7.4 Telefonica and Mastercard in Latin America... 82 8 Appendix... 83 8.1 About BRICdata... 83 8.2 Definitions... 83 8.2.1 Areas of expertise... 83 8.3 Methodology... 84 8.4 Disclaimer... 85 Social Media Marketing Strategies and Emerging Opportunities in BRIC Countries Page 6

TABLE OF CONTENTS LIST OF FIGURES Figure 1: Mobile Money Value Chain Key Competitors and Business Models...9 Figure 2: Mobile Money Market Evolution Target Customer vs Market Penetration and ROI... 11 Figure 3: Relative Positioning of Emerging Markets Mobile Payment Adoption and Maturity... 12 Figure 4: Attractiveness of BRIC Countries Mobile Penetration vs Access to Financial Services... 13 Figure 5: Relative Positioning of BRIC Market Competitiveness vs Regulatory Readiness... 14 Figure 6: Mobile Money Market Potential in BRIC Breakdown by Key Financial Services, 2016... 15 Figure 7: Mobile Money Market by Volume of Transaction and Average Transaction Size, 2011 2016... 16 Figure 8: Brazilian Mobile Money Market Size by Value, 2011 2016... 19 Figure 9: Brazilian Mobile Money Market Size by Volume and Avg. Transaction Size, 2011 2016... 20 Figure 10: Brazilian Mobile Money Market Size by Financial Services, 2016... 20 Figure 11: Mobile Users in Brazil (Million), 2007 2016... 22 Figure 12: Russian Mobile Money Market Size by Value, 2011 2016... 34 Figure 13: Russian Mobile Money Market Size by Volume and Avg. Transaction Size, 2011 2016... 35 Figure 14: Russian Mobile Money Market Size by Financial Services, 2016... 36 Figure 15: Usage of Mobile Internet in Russia... 37 Figure 16: India Mobile Money Market Size by Value, 2011 2016... 48 Figure 17: Indian Mobile Money Market Size by Volume and Average. Transaction Size, 2011 2016... 49 Figure 18: India Mobile Money Market Size by Financial Services, 2016... 50 Figure 19: Wireless Subscriber Base (in millions) and Wireless Teledensity (%), September 2009 September 2011... 52 Figure 20: Mobile Money Service, Eko, Made Available at a Local Kirana Store... 59 Figure 21: Chinese Mobile Money Market Size by Value, 2011 2016... 63 Figure 22: Chinese Mobile Money Market Size by Volume and Avg. Transaction Size, 2011 2016... 64 Figure 23: China Mobile Money Market Size by Financial Services, 2016... 65 Figure 24: Mobile Users in China (Million), 2007 2016... 67 Figure 25: Snapshot of Mobile Banking Application launched by Bank of China (Hong Kong)... 73 Figure 26: Snapshot of SIMpass, an NFC-enabled Card Manufactured by Watchdata... 76 Social Media Marketing Strategies and Emerging Opportunities in BRIC Countries Page 7

TABLE OF CONTENTS LIST OF TABLES Table 1: Value Proposition and Competitive Positioning in Mobile Money Market... 10 Table 2: Mobile Payment Development in Brazil based on Scope of Services Offered... 17 Table 3: Key Drivers of Mobile Money Market in Brazil... 18 Table 4: Mobile Banking Services Offered by Leading Brazilian Telecom Operators and Banks... 26 Table 5: Mobile Payment Development in Russia Based on Scope of Services Offered... 32 Table 6: Key Drivers of Russian Mobile Money Market... 33 Table 7: NFC Initiatives Undertaken by Leading Russian Operators... 40 Table 8: Mobile Banking Services Offered by Leading Russian Telecom Operators... 42 Table 9: Mobile Banking Services Offered by Leading Russian Banks... 43 Table 10: Mobile Payment Evolution in India Based on Scope of Services Offered... 46 Table 11: Key Drivers of the Indian Mobile Money Market... 47 Table 12: Interbank Mobile Payments Service (IMPS) Transaction Data... 54 Table 13: Mobile Money Regulations in India... 55 Table 14: Mobile Banking Services Offered by Leading Indian Telecom and Handset Operators... 56 Table 15: Mobile Payment Evolution in China based on Scope of Services Offered... 61 Table 16: Key Drivers of Chinese Mobile Money Market... 62 Table 17: Mobile Application usage in China... 69 Table 18: Process for Booking Plane Tickets Through Mobile Banking in China... 70 Table 19: Mobile Banking Services Offered by Leading Telecom Operators in China... 72 Table 20: Growth in M-Pesa Customers and Agent Network, 2007 2011... 79 Table 21: BRICdata Mobile Money Definitions... 83 Social Media Marketing Strategies and Emerging Opportunities in BRIC Countries Page 8

Mobile Phone Penetration MOBILE MONEY MARKET ATTRACTIVENESS OF BRIC NATIONS 2 Mobile Money Market Attractiveness of BRIC Nations Large unbanked populations and low income groups with limited access to financial services are driving the attractiveness of the mobile payment industry at a fundamental level among BRIC nations. The mobile payment ecosystem is developing rapidly with a series of competitors across the value chain entering the market. This chapter comprises three sections focusing on defining the fundamentals in emerging markets and evaluating the attractiveness of the market by taking into account a series of important parameters for the mobile payment industry. The focus is primarily on BRIC countries with an overview of other emerging markets. Section 2.1 defines evolving models and critical success factors in BRIC countries. Section 2.2 evaluates the attractiveness of BRIC countries on the basis of the overall market environment, taking into account factors such as mobile penetration, market competitiveness, regulatory readiness and access to financial services. Section 2.3 compares BRIC countries on the basis of market size and future growth potential. This takes into account factors such as market size in value terms, transaction volume, average transaction size and breakdowns by financial services. 2.1 Key Competitors, Business Models and Success Factors in the Mobile Money Ecosystem Over the last few years, a number of competitors have emerged in the mobile payment industry, making the entire landscape a complex mix of services, technologies and business models. BRICdata s analysis of the mobile money market suggests that four markets banking / financial services, telecommunication, online competitors and retail will define and control the primary value chain of the industry. In terms of market dynamics, BRICdata expects that a focus on building an optimal pricing structure, which can be attractive to end-customers as well as agents, and interoperability will be the key success factors in the industry. 2.1.1 Market attractiveness benchmarking in BRIC At a broader level, the attractiveness of BRIC countries in terms of the development of mobile financial services is assessed as strong, with mobile subscriber penetration levels of over XX% and, with the exception of Russia, large unbanked populations. Using traditional mechanisms to collect and distribute minimal amounts of cash is unsustainable. The key challenge is to offer products and services to low income groups which can generate a reasonable amount of profit. The following figure shows the relative positioning of BRIC countries in terms of mobile penetration and access to financial services. Access to financial services includes all types of access such as banks, micro finance institutions and other financial institutions. Figure 4: Attractiveness of BRIC Countries Mobile Penetration vs Access to Financial Services 200% 180% 160% 140% 120% Brazil 100% Russia 80% 60% 40% 20% China India 0% 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% Access to Financial Services Source: BRICdata analysis Size of the bubble represents market size in value terms by 2016 BRICdata Social Media Marketing Strategies and Emerging Opportunities in BRIC Countries Page 9

Market Competitiveness MOBILE MONEY MARKET ATTRACTIVENESS OF BRIC NATIONS Across BRIC countries, regulations are yet not developed completely and biased towards financial institutions, which is expected to impact growth in the short-term. Consequently, the majority of the initiatives in the mobile payment industry are expected to be bank-led, especially in the early stages. However, this is expected to change as regulatory guidelines enable the participation of other competitors in a significant way. The following figure shows the relative position of BRIC countries in terms of market competitiveness and regulatory readiness. Market competitiveness includes competitiveness across the mobile payment value chain, especially mobile operators and banks. Regulatory readiness captures guidelines for initiating mobile payment services for competitors across the value chain. Figure 5: Relative Positioning of BRIC Market Competitiveness vs Regulatory Readiness High High Readiness Brazil China Mean Sample Russia India Low Low Readiness Mean Low High Regulatory Readiness Source: BRICdata analysis BRICdata Social Media Marketing Strategies and Emerging Opportunities in BRIC Countries Page 10

Transaction Volume in Million MOBILE MONEY MARKET ATTRACTIVENESS OF BRIC NATIONS 2.2 Market Size and Future Prospects of Mobile Money in BRIC nations 2.2.1 Benchmarking Market Size by Volume of Transaction and Average Transaction Size Mobile money transactions are expected to increase over 2013 2014 with China leading the BRIC nations in terms of volume and size. Mobile payment service transactions in China are expected to reach over X.X billion by 2016, while volume of transaction for India is likely to reach X.X billion. Mobile payment transactions in Russia and Brazil are expected to reach X.X billion and X.X billion, respectively by 2016. However, in terms of transaction size, Russia is expected to lead the BRIC nation s with an average transaction of US$X.X by 2016, followed by Brazil with an average transaction size of US$X.X. The following figure shows mobile money market growth in BRIC countries by the volume of transactions and the average transaction size. Figure 7: Mobile Money Market by Volume of Transaction and Average Transaction Size, 2011 2016 8,000 7,000 Average Transaction Size (US$) in 2016 4.1 6,000 5,000 4,000 3,000 2,000 3.3 6.2 5.3 1,000 0 2011 2012 2013 2014 2015 2016 Source: BRICdata analysis BRICdata Social Media Marketing Strategies and Emerging Opportunities in BRIC Countries Page 11

Transaction Value US$ Million MOBILE MONEY SERVICES IN BRAZIL 3 Mobile Money Opportunities in Brazil This chapter provides information on the mobile money market in Brazil with information on transactions and user forecasts over 2011 2016. In addition, it highlights the key trends, drivers, challenges and regulatory environment in the country. This chapter also details mobile money services launched by leading telecom and handset operators, and banks. It provides case examples and information on the future of mobile money in Brazil. 3.1 Mobile Money Market Size and Forecasts 2011 2016 Brazil s large unbanked population supported by a well-developed mobile and banking system will be the fundamental driver for the growth of mobile-based financial services in the country. Combined government and private sector initiatives, and the entry of a number of leading financial services and technology platform providers, is expected to help in developing the ecosystem for the mobile payment industry. Clear regulations are expected to be developed and put into effect over the next two years, which will drive market growth. Offering targeted services to an economically diversified Brazilian population will be a challenge, but one which is unlikely to impact growth. 3.1.1 Market size by value In value terms, the Brazilian mobile money market is expected to reach US$XX.X billion by 2016 from a value of US$XXX million in 2011. Strong volume growth and new services, which will increase the average size of transactions, will drive value growth. The following figure shows the market size in value terms from 2011 2016. Figure 8: Brazilian Mobile Money Market Size by Value, 2011 2016 14,000 12,000 Market Size by Value (2016): US$12.6 billion 10,000 8,000 6,000 4,000 2,000 0 2011 2012 2013 2014 2015 2016 Source: BRICdata analysis BRICdata Social Media Marketing Strategies and Emerging Opportunities in BRIC Countries Page 12

Transaction Volume in Million Average Transaction Size in US$ MOBILE MONEY SERVICES IN RUSSIA 4 Mobile Money Opportunities in Russia This chapter provides information on the mobile money market in Russia with information on mobile money transactions and user forecasts over 2011 2016. In addition, it highlights the key trends, drivers, challenges and mobile money regulation in the country. This chapter also elaborates on the mobile money services launched by leading telecom, handset operators and banks. It further highlights mobile money case examples, and provides information on the future of the Russian mobile money market. 4.1 Mobile Money Market Size and Forecasts 2011 2016 Russia has a mobile penetration rate of over XXX%.BRICdata analysis suggests that the remote locations of a sizable proportion of the population will drive the adoption of mobile payment services in Russia. Increased smartphone penetration will further support the development of mobile payment services across consumer segments. The following sections detail the market size and forecast of mobile payment services in Russia. 4.1.1 Market size by volume and average transaction size The Russian mobile payment market stood at XXX million transactions in 2011, with an average transaction size of US$X.X. This is set to increase over the forecast period, reaching X.X billion transactions with an average transaction size of US$X.X. The following figure shows market size trend in volume terms and average transaction size. Figure 13: Russian Mobile Money Market Size by Volume and Avg. Transaction Size, 2011 2016 3,000 2,500 Market Size by Volume (2016): 2.7 billion Average Transaction Size (2016): US$6.2 7 6 2,000 1,500 1,000 5 4 3 2 500 1 0 2011 2012 2013 2014 2015 2016 0 Average Transaction Size (US$) Mobile Payment Transactions (Million) Source: BRICdata analysis BRICdata Social Media Marketing Strategies and Emerging Opportunities in BRIC Countries Page 13

MOBILE MONEY SERVICES IN CHINA 5 Mobile Money Opportunities in India This chapter provides information on the mobile money market in India with information on mobile money transactions and user forecasts. It highlights the key trends, drivers, challenges and regulation in the country. This chapter also elaborates on the mobile money services launched by leading telecoms and handset operators, and banks, providing case examples and information on the future of mobile money in India. 5.1 Mobile Money Transactions and User Forecasts 2011 2016 Compared to other BRIC countries, India has been relatively late in developing mobile-based financial services. Nevertheless, market fundamentals remain strong with high rates of mobile penetration, a developing retail industry, a large unbanked population and an underserved low-income group. Recent regulatory changes such as increased limits on the daily amount which can be transferred through mobile platforms are expected to support volume growth. BRICdata expects the Indian market to record strong levels of growth over the forecast period with a series of regulatory changes and new service launches designed for Indian consumers. The following sections detail the market size for mobile payment services in India. 5.1.1 Market size by financial services BRICdata expects domestic and international remittances to account for a market share of XX% by 2016. Pre-paid top-ups, merchandise payment, and bill payment are expected to account for respective market shares of XX%, XX%, and XX%. The following figure shows a breakdown of financial services in the mobile money market. Figure 18: India Mobile Money Market Size by Financial Services, 2016 5.0% 23.0% 26.0% 25.0% 21.0% Remittances Bill Payments Prepaid Top-ups Merchandise Payment Others Source: BRICdata analysis BRICdata Social Media Marketing Strategies and Emerging Opportunities in BRIC Countries Page 14

CASE STUDY ON EMERGING MARKETS 6 Mobile Money Opportunities in China This chapter provides information on the Chinese mobile money market with information on mobile money transactions and user forecasts over 2011 2016. It highlights the key trends, drivers, challenges and regulation. This chapter also elaborates on the mobile money services launched by leading telecoms and handset operators, and banks highlighting mobile money case examples, while providing information on the future of mobile money in China. 6.1 Mobile Money Transactions and User Forecasts 2011 2016 With high level of mobile penetration, a sizable underserved market in terms of financial services and a comparatively low poverty headcount ratio, the growth prospects of mobile-based financial services are strong in China. The adoption of MVAS and mobile payment services has been impacted by the adoption of different technology standards by leading mobile operators. However, this is set to change with operators adopting a common standard for mobile payment, enabling interoperability. The following sections detail the market size of mobile payment services in China. The Chinese market has seen the launch of a series of mobile phones catering to people across all income brackets. Although the smartphones market is growing, the traditional mobile end of the market is expected to be the primary target and will post the highest growth rate. High mobile phone penetration rates makes mobile phones a viable financial instrument China, with more than XXX million subscribers, posted a XX% mobile penetration rate as of July 2011, as reported by MIIT. The mobile subscriber base grew at a year-on-year rate of XX.X% in July 2011, and a total of 70 million subscribers were added in the first seven months of 2011. China is the world s largest market for mobile phones and is reporting significant growth which makes mobile phones a viable device for financial inclusion in China. Figure 24: Mobile Users in China (Million), 2007 2016 1500 100% 1200 80% 900 60% 600 40% 300 20% 0 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 Mobile Users (million) Mobile Penetration (%) 0% Historic Data Forecasts Source: BRICdata analysis BRICdata Social Media Marketing Strategies and Emerging Opportunities in BRIC Countries Page 15

APPENDIX 7 Appendix 7.1 About BRICdata This report provides in-depth analysis of mobile money strategies in BRIC countries, the four biggest emerging markets. The report provides a detailed understanding of how new markets are emerging for mobile money and value chain is evolving with participation of several competitors. The report provides insights into the mobile money market size for each country for a period of 6 years (2011 2016) in value and volume terms, along with strategic insights into business models, market trends, drivers, opportunities and challenges. It also provides insights into future mobile money strategies expected to be adopted for increasing market shares. 7.2 Definitions For the purposes of this report, the following timeframes apply: Forecast period: 2012 2016 The key market categories featured in the report are defined below: Table 21: BRICdata Mobile Money Definitions Market Mobile money or mobile payment Definition Mobile payment refers to transfer of funds in return for a good or service through a mobile phone. Mobile phone as a device executes initiation and confirmation of the payment. This excludes payments made while accessing internet through a mobile phone device. Mobile banking Mobile banking in this report refers to accessing banking functionality through the mobile phone. This includes banking services provided by banks over the internet in the form of online banking and telephone banking. Source: BRICdata analysis BRICdata 7.2.1 Areas of expertise BRICdata operates a dedicated, multilingual team of in-house industry analysts with significant experience of global and country-level research. BRICdata also maintains data and research partnerships with other research companies, industry experts and trade associations, along with a network of independent industry consultants and former industry participants contributing research and reports to bring additional insight and expertise in more specialist areas. BRICdata s research offering spans the following industry areas: Construction BRICdata publishes reports covering the entire construction value chain: construction materials, equipment, construction services, architectural services and interior design. It also covers the main value sectors of construction activity: commercial, infrastructure, industrial, institutional and residential. This comprehensive view of the market enables BRICdata to detail key growth sectors and countries and identify the most attractive industry opportunities. Consumer goods Covering a broad range of areas across the consumer goods market, from interior products to fast-moving consumer goods (FMCG), ingredients, and packaging, BRICdata offers a comprehensive insight into key consumer sectors across fast-growing markets, identifying key trends, future innovations and growth opportunities. Comprehensive data sets including unique primary survey-driven research creates accurate market forecasts and understanding of the factors driving consumption behavior. Financial services Providing detailed insights into insurance and banking markets, BRICdata s financial services reports identify key market opportunities, emerging technologies and channel strategies. The reports provide unique data combined with local examples of best practice and expert insights into the market. Retail BRICdata maintains a comprehensive database of forecasts of retail spending, along with a series of unique indicators enabling a forward view of retailers prospects in emerging markets. The reports identify emerging concepts in retail, including the nascent online and mobile retail sectors in the BRIC countries and other emerging markets. Social Media Marketing Strategies and Emerging Opportunities in BRIC Countries Page 16

APPENDIX Technology BRICdata tracks key trends and innovations, emerging technologies and markets, and the key operators in both emerging markets and technologies. Covering a range of emerging and disruptive technologies including telecoms, social media, online and mobile retailing, and telemedicine, BRICdata examines strategies for success, the state of the competitive landscape and the inherent threats and opportunities in the emerging technological economy. 7.3 Methodology All BRICdata reports are rigorously sourced and created according to a comprehensive, two-stage methodology. This includes internal audit and primary research. A) Internal audit Review of in-house databases to gather existing data: Historic market databases and reports Company database projects database B) Primary research Review of the latest company strategy and asset management trends 1) Research A. Sources Collection of the latest market-specific data from a wide variety of industry sources: Government statistics Industry associations Company filings Broker reports International organizations B. Expert opinion Collation of opinion taken from leading industry experts Analysis of third-party opinion and forecasts: Broker reports Industry associations Official government sources C. Data consolidation and verification Consolidation of data and opinion to create historical datasets Creation of models to benchmark data across sectors and geographies 2) Research Analysis Market forecasts Feed of forecast data into market models: Macroeconomic indicators Industry-specific drivers Analysis of Market Databases to identify trends by sector: Latest trends Key drivers of the market 3) Report Writing Analysis of market data Discussion of company and industry trends and issues Integration of survey results Annual review of trends Standardization of market definitions using recognized industry classifications 4) Quality Control A. Templates Detailed process manuals Standardized report templates and accompanying style guides Complex forecasting tool used to ensure forecast methodologies are consistently applied QC checklists Social Media Marketing Strategies and Emerging Opportunities in BRIC Countries Page 17

APPENDIX B. QC process Peer review Senior-level QC Random spot checks on data integrity Benchmark checks across databases Market data cross-checked for consistency with accumulated data from company filings 7.4 Disclaimer All rights reserved. No part of this publication may be reproduced, stored in a retrieval system or transmitted in any form by any means, electronic, mechanical, photocopying, recording or otherwise, without the prior permission of the publisher, BRICdata. The facts of this report are believed to be correct at the time of publication but cannot be guaranteed. Please note that the findings, conclusions and recommendations that BRICdata delivers will be based on information gathered in good faith from both primary and secondary sources, whose accuracy we are not always in a position to guarantee. BRICdata can, therefore, accept no liability whatsoever for actions taken based on any information that may subsequently prove to be incorrect. Social Media Marketing Strategies and Emerging Opportunities in BRIC Countries Page 18