Unbanked Success: Pakistan

18 May 2010


Always on the look out for a success story, I was fortunate to be introduced to Abrar Mir of UBL by the head of cards at a major UK bank. Abrar’s team has built a stellar product that has addressed key needs of the unbanked and more specifically internally displaced persons (IDPs) with applicability in other disaster relief scenarios.

Fortunately for Pakistan, they have developed the National Database and Registration Authority (NADRA). Since 2000, NADRA has registered over 96M Pakistanis. The ability to issue a national ID, with electronic verification, provides Pakistan with a unique infrastructure which supports KYC in advance of most other countries around the world.  From an emerging markets perspective, distribution and KYC are thorny issues for addressing the needs of the unbanked.

2 years ago Pakistani’s fled the Wazir regions due to conflict. Abrar and his team at UBL worked with the government to issue relief funds, via Visa Debit Cards, to persons displaced from this crisis. As refugees entered camp, they were documented (NADRA), issued National IDs, issued Visa Debit Cards and subsequently educated on how to use these cards through a class and video. Within the camp, stores kiosks and ATMs supported the Visa Debit infrastructure.

As “refugees” moved and assimilated into other areas.. there were issues with debit card acceptance. IDPs had no way of exchanging value on their Visa Debit cards. This is where Abrar and the UBL team stepped in to develop a superb application and innovative model based around agent card acceptance. UBL developed a mobile application which allowed local agents to accept cards and earn commission. This new UBL “Agent” network provided IDPs with ability to transfer funds, pay bills, “cash out” and other services. Agents have signed on with UBL in a structure similar to a “Visa merchant agreement” where they take not only the card, but validate it against the national ID. UBL working together w/ NADRA manage authorization (and fraud issues).

As a result of this effort other institutions (World Bank, World Food Program, USAid and Government of Pakistan) are looking at this as a model program for deployment around the world. The World Food program (along w/ NGOs and Governments) have solid data to support their move AWAY from physical distribution of goods to electronic distribution of funds. It should be noted that Pakistan (and other countries like India) are likely to develop their own internal payment network which would circumvent the costs associated with riding the Visa/MA rails (think Star, Interact, NPC).

UBL is likely to see expansion of card from 200k.. to 4M in next 6 months. The potential card growth in this model is tremendous. 50M in Pakistan alone over next 2 years. I found the UBL “Agent” mobile application very unique.. giving retail shops the ability to support/enhance their role in community by turning merchants’ phones into both POS terminals and terminals to sell/open new bank accounts. This UBL project has become a recent “case study” for Visa … although Visa neither supported or knew of UBL’s efforts until recently.

Key findings

  • UBL thought leadership. What a Stellar team can do in the right environment
  • National ID is a key element of serving unbanked and those in need
  • Business model. Bank led models to the unbanked can be successful, particularly in government (G2P) payments, with government partnership
  • Agents are keys to success for both banks and MNOs
  • Success is driven by people in the field with the contacts, knowledge and ability to execute. This entire model was built within Pakistan, by Pakistani’s.
  • Visa and MA should think about creating new rules and rates to serve unbanked.

2 thoughts on “Unbanked Success: Pakistan

  1. Pingback: Reaching the Unbanked: Thoughts from Pakistan « FinVentures

  2. Pingback: Payments and Expanding the Global Economy « FinVentures

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