TELENOR EASYPAISA

Department of Business
Forman Christian College

BUSN 585
(SPRING 2017)

CASE STUDY
Telenor Easypaisa

SUBMITTED TO:

Ms. Maryyam Khan

SUBMITTED BY:

Zain Khalid

ROLL NO: 18-28016

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Case Study

Telenor Easypaisa: Decreasing Market Share

Having a fine cup of evening tea in his office, Mr. Ali Riaz Chaudhry was thinking about Telenor Easypaisa’s

decreasing market share in Pakistan. He was much worried about falling market share of the company.

Mr. Chaudhry getting deep into the issue called his secretary, Ms. Sana Tariq and asked for a detailed

report about easypaisa’s market trend. The report presented by Ms. Sana clearly showed the decreasing

trend of Easypaisa’s market share in Pakistan over past 6 years. The company had a 90% market share in

2009, when it started providing branchless banking services in Pakistan, which decreased to 53% in 2014

after the entry of various competitors in the market. The position was still satisfactory as the market share

of easypaisa was highest among all. The 53% of easypaisa’s market share was almost double of its nearest

competitor UBL Omni, which held 23% of share during the reported duration. After Easypaisa and UBL,

Waseela’s Mobicash (Now called Jazzcash) became the third major player with 9% percent market share.

Ufone’s U-Paisa managed to get 5% market share while Warid’s Mobile Paisa service retained 4% of

market-share. The situation got adverse by 2016, when easypaisa’s market share decreased further to

40% while Jazzcash grasped 41% of total market share and became market leader of mobile financial

services. UBL Omni’s market share decreased to 15% while all other players had a total of 4% market

share. The situation of losing market leader’s position was very alarming for the company since they

invested a lot of time and resources to get the agents the required training and customer-base, which was

now freely capitalized by new-entrants against extra-incentives. Increased growth in new player’s market-

share was mainly attributed to shared-agents that were previously selling Easypaisa-only products but

now they are lured by new-entrants with more incentives.

Easypaisa is a branchless banking service offered by Telenor, Pakistan’s second largest mobile

network operator. It is primarily a mobile phone based service offered by Telenor but it also provides over

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the counter services to non-mobile users as well. Launched in October 2009, in association with Tameer

Microfinance bank, the mobile service provider entered into an agreement to acquire 51% of the shares

in Tameer Microfinance Bank for a foreign direct investment (FDI) of USD 12.5 million (PKR 1 billion

approximately). State bank regulations enjoining the exclusivity of financial transactions to financial

institutions were a major factor behind this strategic move. In March 2008, the State Bank of Pakistan

globally introduced guidelines around branchless banking. The regulations allowed a number of different

business models and permitted agents to deliver financial services on behalf of banks, and were designed

specifically to encourage banks to look at branchless banking as a viable option. In this move, Telenor

Easypaisa was the first company to offer branchless banking services in Pakistam. Easypaisa has grown

rapidly since its inception. By November 2010 the service was available at more than 11,000 agents across

Pakistan. With more than 500,000 unique users in October 2010 alone conducting more than 1 million

transactions with a value of Rs2 billion in throughput, Easypaisa was helping to provide people across

Pakistan with much needed financial services. New registrations started growing at a phenomenal rate

and Easypaisa customers could easily make money transfers, bill payments and donations (over the

counter services) without being Telenor subscribers or even mobile phone users. Telenor service

subscribers had a supplementary facility to open an account with Tameer Microfinance bank through

which they could make deposits, withdrawals and loan repayments through a mobile phone. Easypaisa

executed its operations in a streamlined and well planned fashion. It introduced over the counter services

first and advertised extensively on television and print. Over the counter services included bill payments,

money transfer and donations. It initially focused on retailers in SEC C and SEC D areas that were

authorized Telenor airtime resellers. Telenor appreciated the fact that the most effective way to gain a

customer’s trust was to ensure that their experience with the service is a good one and it expanded its

network in a cautious manner. The selection of agents and their location was very important in order to

provide easy access for consumers and ensure liquidity was easily managed within the agent network.

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When deploying Easypaisa, Telenor Pakistan, employed over 5,500 agents – a staggering number. Telenor

Pakistan carefully selected the number and location of these agents in order to link the disparate and

disconnected Pakistani population; a problem which was augmented by the challenging geography of

Pakistan. The roll out of the offering was also supported with a targeted marketing campaign to aid

consumer understanding. The campaign increased uptake, as potential customers were made aware of

the service, and existing customers gained visibility of the new offerings available. It also enabled Telenor

Pakistan to educate the subscribers on the benefits of branchless banking service. The initial deployment

was concentrated in urban areas, where the service was used predominantly to send money to the more

isolated areas in rural Pakistan but then it was also deployed into more rural areas. This provided financial

services to the huge rural populace of Pakistan, who until this point, had been unable to access them due

to the isolating geography of the country, and the expense required in building brick and mortar banking

branches. Easypaisa overcame these problems, and was able to provide rural people with a mobile wallet

service. International remittances were then introduced as key service which enable people working

outside Pakistan to easily send and receive money to their families living in Pakistan. Tameer Microfinance

Bank and Telenor Pakistan launched a new service in February 2010. Within a few months bill payment

and money transfer services had generated a significant amount of transactions with close to 420,000 bill

payment transactions and more than 120000 money transfer transactions. Mobile accounts were the new

service being offered under the Easypaisa brand. On the back of this success Easypaisa introduced mobile

accounts. A novel product offering, this allowed financial transactions to be executed through a

customer’s cellular phone. This service allowed customers to pay utility bills, transfer money and use cash

in/cash out services through their Telenor connection. Through this service customers could also carry out

cash withdrawals and deposits through Easypaisa retail franchises, service centers, Tameer Microfinance

Bank branches and Telenor franchises throughout the country. This service operated like a virtual bank

account for Telenor subscribers which allowed them to access their account and conduct transactions

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from their cell phones at any given time. The only time they needed to visit an authorized outlet was to

deposit or withdraw cash. However, Telenor subscribers had to register themselves to avail the service.

Easypaisa, other than providing branchless banking services, also delivered huge benefits to Telenor

Pakistan. It proved itself to be a customer acquisition tool. In the second quarter of 2010, Telenor Pakistan

saw a 14% increase in its subscribers, compared to the second quarter in 2009, as more and more people

joined Telenor to take advantage of Easypaisa mobile account services. Later, after the entry of

competitors in the market and their active moves, Easypaisa’s mobile account service was made available

for all other network users and every person with a cell phone could open and use Easypaisa mobile

account services.

Currently, Easypaisa has the largest financial footprint in Pakistan with over 75,000 Easypaisa shops

in all the cities of Pakistan. Even in some areas of Pakistan, typically northern areas, where mobile phone

signal coverage is a major problem, Telenor and Easypaisa have deep footprints in such areas too and are

providing their services in those areas in the most efficient way and Easypaisa is the most popular service

in those areas as compared to its competitors. Nearly 650,000 transactions are conducted on Easypaisa

every day by 20 million active customers. In 2015, Easypaisa moved nearly 3% of Pakistan’s GDP. Easypaisa

has the largest product portfolio of services for its customers including remittances, payments, savings

and insurance and offers ATM cards and IBFT services that work with all banks connected through 1-Link

in Pakistan. In addition to success in the domestic market, Easypaisa has received wide-ranging

recognition globally. Easypaisa has been honoured with multiple awards and has gained global recognition

which is a testament of Easypaisa’s success that it shares with the world. Being the first and largest

branchless banking solution, these international awards reaffirm the impact Easypaisa has had while

contributing to the economic growth of Pakistan.

 Awarded “Best Mobile Money Launch” of the year 2009

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 Best New Entrant in Global Mobile Money Transfer Award 2011

 Identified as “Mobile Money Sprinter” by GSMA MMU in 2012

 Nominated as “Best Mobile Phone Product & Service” at the GSMA Awards 2012.

 Awarded “Best Mobile Money Service” at the GSMA Awards 2014

 Awarded “Best Mobile Service for Women in Emerging Markets” at the GSMA awards 2014.

 Awarded “Wall Street Journal’s Financial Inclusion Challenge People’s Choice Award’ 2015.

 Nominated as “Best Mobile Money service for Women in Emerging Markets” at the GSMA

Awards 2015

 Nominated as “Best Mobile Money service for Women in Emerging Markets” at the GSMA Awards

2016

On the detailed analysis of the report, Mr. Chaudhry figured out that Easypaisa’s sales had been not

much affected over the years, but have increased with a consistent growth rate. Increase in number of

Easypaisa retailers in the country has also kept total sales growth consistent despite of competitor’s active

moves. The only problem was with the total market share of the company which has decreased over time.

Mr. Chaudhry got really confused from this scenario that the only problem with the company was

decreasing market share but not the sales. He called Ms. Sana to his office and asked her to figure out the

main reason behind this problem. After an hour of working, Ms. Sana Presented another report on

competitors’ analysis to Mr. Chaudhry, and told him that the main reason behind decreasing market share

of Easypaisa was active and wise strategies of competitor companies. She further told that after the big

success of Easypaisa in 2010, new competitors entered the market and started to use different strategies

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to penetrate the market to increase their market share and sales. The wisest strategy used by competitors,

especially Jazzcash, was providing free credit facilities to the retailers. As Easypaisa was only dealing in

cash payments with the retailers since its launch and because of Easypaisa’s monopoly, retailers were

bound to pay in advance for the funds with hard cash. Competitors took advantage of the fact that no one

likes to invest their own money due to risk factors associated and like to avail credit facilities. They found

out that providing credit facilities to the retailers was the best and most efficient way to penetrate in the

market and grasp market share from Easypaisa. The biggest competitor, Jazzcash, started providing full

easy and free credit facilities to the customers without any interests or charges. Ms. Sana further told him

that other competitors started to follow the same strategy, which shifted Easypaisa’s market to other

branchless banking companies and retailers started to use and offer competitor’s services to the

consumers. Retailer margin offered by the competitors was same amount which Easypaisa was giving to

its retailers i.e. Rs 10 per transaction. The only strategy they used to penetrate the market was offering of

credit facilities which retailers found quite beneficial and started to prefer their services. The biggest

competitor, Jazzcash, ensured their availability all over Pakistan by contracting with around 60,000 shops

all over the country and snatched a large part of market share from Easypaisa in 2015. By 2016, Jazzcash

managed to grasp 41% of total market share while Easypaisa fell to 40% and this led Jazzcash to become

market leader to mobile financial services in Pakistan. This fact really shocked Mr. Ali Riaz Chaudhry and

he became much worried on losing the leader of market leader in branchless banking services. He called

for a board to directors meeting next day to discuss this serious issue with other directors. After explaining

all the situation to the directors, Mr. Chaudhry asked for different alternatives that could be used to regain

the position of market leader and increase the market share of the company again. All of the directors got

really worried regarding this issue and was much confused regarding what to do to overcome this major

problem of the company. Mr. Irfan Wahab Khan suggested that they could also provide credit facilities to

the retailers in order to get their market share back and become the market leader again. He further told

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that Easypaisa still has the highest market coverage all over Pakistan with around 75,000 agents. If they

start to provide credit facilities to its retailers, there is a great chance they would regain their market

position again within a very short period of time. The idea was liked by other directors. Mr. Salim Raza,

exclaimed that providing credit facilities to such a large number of retailers would increase company’s

risk. As most of the company’s retailers are in northern areas of Pakistan, so it would become difficult to

check and balance the credit payments and manage such a large number and credit based agents. All the

directors appreciated this point. Ms. Uzma Khan, another director, gave her opinion that they could also

get back their market share by attracting customers by offering extra incentives to them by increasing

their margin. As Easypaisa and all other competitors are giving Rs. 10 Per transactions to their retailers,

so if Easypaisa increases the retailer margin from this amount they could attract new and existing retailers

to get back to Easypaisa and in this way, they could regain their market position again and grasp back their

market share. Mr. Chaudhry, appreciated her idea but further added that this strategy will increase total

costs of the company which will eventually decrease company’s profit. Mr. Chaudhry ended the meeting

saying that he will think deeply about the other alternatives in coming week and would let them know

soon about the decision.

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Annexures

Telenor Easypaisa Case Study

Not Just a Banking Service

Branchless Banking Services Market Share (July 2014)

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Branchless Banking Services Market Share (September 2016)

4%
15%

40%

41%

Easy Paisa Jazz Cash UBL Omni Others

Slab Charges

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References:

 Telenor Pakistan

www.telenor.com.pk

 Easypaisa

www.easypaisa.com.pk

 Amena Sibghatullah (Hamdard University, Karachi, Pakistan), Telenor Easypaisa.

 Fundamo, Telenor Pakistan – Scaling to meet accelerated growth.

 Press Release (Islamabad, May 25 2016), Easypaisa revolutionizes financial inclusion.

 Aamir Atta (2014), Easypaisa Holds 53% Market Share in Mobile Financial Services

https://propakistani.pk/2014/10/27/easypaisa-holds-53-market-share-mobile-financial-

services/

 Propk Staff (February 2016), Jazzcash Outruns Easypaisa to Become Market Leader for

Active Mobile Accounts.

https://propakistani.pk/2017/01/20/jazzcash-outruns-easypaisa-become-market-leader-

active-mobile-accounts/

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