A Proposal roposal for Content Provision Provisioning ing Platform of mobil mobile e financial financial service service As a Value Added A dded Serv Service ice To: Ethiopian Telecommunication Corporation (ETC)
Submitted ubmitted by: Yetim Yetim ePayment ePayment Servi Service ce Version Version 1.0
September, ept ember, 20 10 A ddis Ab aba, Et Et hiopia
Yet im is an inn ovat ive e-mon e-mon ey servic service e w h ic ich h is believed belie ved to chan change ge th e w ay of life life in Ethiopia
Yet im is an inn ovat ive e-mon e-mon ey servic service e w h ic ich h is believed belie ved to chan change ge th e w ay of life life in Ethiopia
Table of Contents 1.
Introduct Introduction.................................. ion.................................. .............................. ........................... .......................... ................ 1
2.
Understanding Understanding of the ETC Requirement of the RFP for Content Provisioning .......... ..... .......... .......... .......... .......... .......... ....... 2
3.
Yetim ePayment Services PLC: The Company and its associates ........... ..... ...... .......... ..... .......... .......... .......... .......... .......... .......... ......... .... 3
4.
3.1.
Yetim Company Company Profile Profile and History History............................... .......................... ........................... ....... 3
3.2.
iVeri Payment Payment technologies; Profile, Service Certifications, License, and Reference .......... ..... .......... ......... .... 7
Yetim: The Business Business Model Model ............................ .......................... .......................... .......................... .... 9 4.1.
5.
Yetim: The Solution Solution and the Service................................................... .......................... ............. 9
4.1.1.
The solution solution .............................. .......................... .......................... .......................... ........... 10
4.1.2.
The Service........................... .......................... .......................... .......................... ................ 11
4.1.3.
Workflow Workflow for each type of service ............................ .......................... .......................... ...... 12
4.1.3.1.
Buying electronic money (for the first time) ..................................................................... 12
4.1.3.2.
Subsequent purchase of electronic money or cash deposit .............................................. 13
4.1.3.3.
Transfer Transfer electronic money to a friend or family member (P2P transfer) .......................... ..... 14
4.1.3.4.
Withdrawing money or converting electronic electronic money to cash ................................ .............. 14
4.1.3.5.
..................................... ....... 16 Pay e-money to merchants for goods or services purchased purchased .....................................
4.1.3.6.
Airtime top-up ................................................................................................................ 18
4.1.3.7.
............................................................................................ 18 Bill payment using e-money ............................................................................................
4.1.3.8.
Microfinance payments .................................................................................................. 18
4.1.3.9.
Payroll administration administration..................................................................................................... 19
4.1.3.10.
............................................................................................................... 19 Balance inquiry ...............................................................................................................
4.1.3.11.
PIN Change ..................................................................................................................... 20
4.1.4.
Methodology Methodology of managing managing content content provisio provisioning ning .............................. .......................... ......... 21
4.1.5.
Service users users ............................. .......................... .......................... .......................... ........... 22
Why Yetim?............................. etim?............................. .......................... ........................... .......................... ........................ 23
6.
Yetim Content marketing strategy ............................... ........................... .......................... .............. 24
7.
Yetim Content Provisioning and Interface............................. .......................... .......................... ...... 24
8.
Content Language and Culture ........................... .......................... .......................... ........................ 26
9.
Price and Business Plan............................. .......................... .......................... .......................... ....... 26 9.1.
Yetim Price Scheme (Tariffs) for each service .............................. .......................... .................. 26
9.2.
Yetim Business Plan for each service............................. .......................... .......................... ...... 27
10.
Market Justification.......................... .......................... ........................... .......................... ........... 28
11.
Financial Proposal and Commercial offer.................................... ............................ .................... 29
12.
Technical Capabilities ............................ .......................... .......................... .......................... ....... 30
12.1.
The Mobile Network Operator (MNO) ............................... .......................... .......................... . 31
12.2.
Yetim ePayment service Data Center ............................ .......................... .......................... ...... 32
12.2.1.
The Software Platform...................................... .......................... ............................... ............. 33
12.2.2.
The Server Hardware .............................. .......................... .......................... .......................... .. 35
12.2.3.
Interconnectivity Devices ........................... .......................... .......................... ........................ 36
12.3.
Mobile Channel Module .............................. .......................... .......................... ................... 36
12.3.1.
SMS (Short Message Service) Gateway .............................. .......................... .......................... . 37
12.3.2.
IVR (Interactive Voice Response) Gateway ............................. .......................... ....................... 37
12.3.3.
USSD (Unstructured Supplementary Service Data) Gateway ................................................... 38
12.3.4.
WAP (Wireless Application Protocol) ............................ .......................... .......................... ...... 39
12.3.5.
POS (Point of Sales) ........................... .......................... .......................... .......................... ....... 39
12.4.
Internet and WAN (Wide Area Network) Connection ........................... .......................... ..... 40
12.5.
Customer Contact Center (Call Center) .............................. .......................... ....................... 41
12.6.
Security Considerations of Yetim Network Infrastructure .................................................... 42
12.6.1.
Security aspects of SMS use ........................... ........................... .......................... ................... 43
12.6.2.
Security aspects of IVR channel ........................... .......................... .......................... ............... 44
12.6.3.
Security of WAP Service.............................. .......................... .......................... ........................ 44
12.6.4.
Internet Security .......................... .......................... ........................... .......................... ........... 45
12.6.5.
Security aspects of Agents and connections from institutes like Banks and MFIs ..................... 45
12.6.6.
Data Center Security .............................. .......................... .......................... .......................... .. 46
12.6.7.
User Security ............................ .......................... .......................... .......................... ................ 46
13.
Risk Management ............................. .......................... .......................... .......................... ........... 47
14.
Conclusion and Recommendation ........................... .......................... .......................... ............... 53
15.
Annex I: Financial Forecast and Cash Flow ........................... .......................... .......................... .. 54
16.
Annex II: ETC Opportunity Cost Saving by Using Yetim Top-up service ........................................ 57
17.
Annex III: Yetim Initial Investment Outlay ............................. .......................... .......................... . 58
Table of Figures Figure 1: Chart of Mobile Use Growth Rate by number of subscribers
1
Figure 2: Yetim Organizational Structure
5
Figure 3: Process Flow - Buying electronic money (for the first time)
13
Figure 4: Process flow of transferring electronic money to a friend or family member
14
Figure 5: Process Flow of Withdrawing money or converting electronic money to cash for Yetim eMoney User
15
Figure 6: Process Flow of Withdrawing money or converting electronic money to cash for Non eMoney User
16
Figure 7: Process Flow - Pay e-money to merchants for goods or services purchased - POS Managed
17
Figure 8: Process Flow - Pay e-money to merchants for goods or services purchased - Unmanaged
18
Figure 9: Yetim ePayment services Network infrastructure connection schematic
25
Figure 10: Yetim ePayment services Network infrastructure connection schematic
31
Figure 11: Yetim ePayment service Data Center Architecture
33
Figure 12: Yetim ePayment Service Logical Application Services Connectivity
34
Figure 13: Yetim ePayment Services application modules
35
Figure 14: Yetim ePayment Service Call Center Connection Schematic
41
Glossary of Terms
ICT
-
Information Communication Technology
MFI
-
Microfinance Institutes
POS
-
Point of Sales
ATM
-
Automatic Tailor Machine
MNO
-
Mobile Network Operator
PCI
-
Payment Card Industry
KYC
-
Know Your Customer
SMS
-
Short Message Service
SMSC
-
Short Message Service Center
IVR
-
Interactive Voice Response
USSD
-
Unstructured Supplementary Service Data
WAP
-
Wireless Application Protocol
SSL
-
Secure Socket Layer
VPN
-
Virtual Private Network
HTTP
-
Hyper Text Transfer Protocol
HTTPS
-
Hyper Text Transfer Protocol Secured
EVD
-
Electronic Voucher Distribution
Executive Summary
Until recently, operation of banks in Ethiopia have mainly concentrated in cities and big towns providing cash based transactions, limiting the service access to the majority of the population living in the rural area who constitute 80% of the whole engaged in agriculture. As any developing nation the Ethiopian economy is mostly cash based. Though some sorts of electronic payment mechanisms have been introduced recently by the banks their actual usage is very limited due to several factors. For instance, significant proportions of the cardholders in Ethiopia are still using their card to withdraw money from ATMs rather than to effect payment for purchase of goods and services. On the other hand electronic payment mechanisms are being widely used in the developed world. Payment with card either on point of sale (POS) terminals or remotely on the internet are being expanded significantly over the globe. In relatively recent periods using mobile phones for payment is also being diversified in different countries. With alarmingly increasing rate of mobile phone users in developing countries the model of using cell phones for payment is being considered more beneficial in such nations as other Medias like ATM, POS and computers are not easily affordable for consumers in these countries. Considering the technology trend, ETC’s current and planned mobile coverage, and the need for new service demand by the public at large as well as the government, we have come-up with a complete value added service of mobile payment service in response to ETC VAS requirements. Our proposed VAS will not only introduce new mobile payment service, but also facilitate and aid the government’s planned economic growth by enhancing payment transaction in remote places where ETC has mobile coverage service. Furthermore, providing mobile based transactions throughout the country where 77% of the population is unbanked, it will also fill the gap of the government’s plan to create cashless community in the coming five years, while providing efficient and timely payment transactions. Whilst Yetim proposed services will have the above highlighted contributions to the nation, the main purpose of the proposal for value added services is to increase ETC’s ARPU through continuously growing mobile payment users utilizing its network on revenue/profit sharing business model benefiting all parties involved.
Our value proposition includes partnering with financial institutes like MFIs and Banks to achieve the required objective in a revenue sharing scheme. We believe this proposition is in line with the Service provider of Ethiopia, Ethiopian Telecommunication Corporation, policy and current governmental regulations. Hoping that this document will provide the required detail, we are looking for ETC’s approval to provide us the required services. Thanks and Regards,
Ibrahim Dawd Muzeyen
Chief Executive Officer (CEO) Yetim ePayment Services plc Addis Ababa, Ethiopia
1. Introduction Mobile phones have become an indispensable feature of life in most part of the world as tools for communication, entertainment, and information retrieval. Mobile devices are considered to be the developing world’s technological springboard. In 1990, there were just 11 million mobile phone subscribers worldwide. By 1999, the proliferation of wireless technologies had exploded to over 500 mi llion. Because of their ubiquity, accessibility, and ever-increasing functionality, mobile phones promise to become a gateway to financial services far more complex than the already existing bank based financial services. Electronic financial services have spread rapidly. Countries and consumers are increasingly getting connected. These new technologies not only allow countries to leapfrog in connectivity, they also open new channels for delivering e-financial services. Since the mid-90s investment in banking technology has focused upon online banking and brokerage services to increase convenience. Surveys done regarding mobile money transfer predict that significant growth in subscribers making domestic money transfers is being observed. The number of subscribers using mobile domestic money transfers is expected to grow to over 12% of total subscribers in 2012 for developed markets and to 9% for developing markets. This translates to a total of 504 million subscribers in 2012 that will make at least one money transfer using their mobile on their phones within their own countries.
Figure 1: Chart of Mobile Use Growth Rate by number of subscribers
The sole telecom network and service provider, ETC(Ethiopian Telecommunications Corporation), is currently engaged in large-scale nationwide network expansion projects. The next-generation all-IP network project brings together GSM, CDMA, WCDMA and CDMA2000 mobile networks as well as IP networks and landline PSTN. ETC plans to reach a staggering 15 million mobile subscribers by 2015. The Chinese ZTE (which is undertaking most of the current projects) and Huawei, Nokia-Siemens, Ericsson, Alcatel-Lucent, Cisco and other telecom network solution providers have been involved with ETC in the past in its telecom network and service provision endeavors for a subscriber base, as of current information is about 7 million, that has been deemed as one of the lowest in the world. Yetim is a company that is incorporated to provide a Mobile Financial Service solution to Ethiopian Market using the mobile as a prime tool for payment transactions from person to person and person to merchant/agent or to any financial or microfinance institute that aspires mobile Payments benefits. Yetim ePayment Service will create various and multiple channels for payment transactions to provide fast and convenient financial service to the unbanked society through financial institutions like MFIs and Banks operating in Ethiopia. The following subsequent topics discuss the value proposition, the solution and the partnership that needed to be incorporated to achieve the requirement in Ethiopian context. And also the value proposition to ETC in facilitating the payment mechanism through its network with a revenue sharing business model that will benefits all parties involved in the operation.
2. Understanding of the ETC Requirement of the RFP for Content Provisioning Understanding ETCs requirement for the RFP for Value Added Services, a detail overview of the proposed Yetim service offering and strategic engagement scenario with users/customers, merchants/agents, banks and MFIs need to be analyzed to address the need. In a mobile financial service business model there are multiple strategic engagement scenarios that are currently exercised in the business ecosystem around the world. Different scenarios may be applied in different market conditions and scopes (international, national or niche markets). Although other scenarios were already available, the following three scenarios describe the main alternatives for the Ethiopian
Implementation of the mobile financial service provisioning. These alternative scenarios are namely the Operator centric, the Bank/Service Provider Centric and a Third party financial service provider centric models. Appreciating the ETC requirement on providing the service with third party processors and other stake holders like Banks and MFIs, it is the result of most case studies done on the mobile commerce eco-system to provide the service in collaboration with the financial service providers of the country.
3. Yetim ePayment Services PLC: The Company and its associates Yetim is a third party service provider that will be a financial gateway for mobile and other types of transactions that are viable to its objectives. Yetim ePayment Services PLC is a company incorporated to provide financial solutions to Ethiopian Market with a business model that emphasizes on Revenue sharing mechanisms with financial solutions provider companies. As to the establishment Yetim Partnered with company named IVeri payment technology based in South Africa to implement the Core Multi Channel gateway application software solution.
3.1. Yetim Company Profile and History
Vision ‘Be the leading catalyst in accelerating the growth of electronic payment in Ethiopia’
Mission ‘To promote fast, convenient, secure and reliable forms of electronic payment through innovation and implementation of cutting edge technology’
Major Objectives In the realization of the above vision a nd mission statements Yetim will strive to achieve the following objectives.
Assisting banks, MFIs and other financial institutions to reach the unbanked and underbanked population
Facilitating money transfer services to and from the rural community
Reducing physical cash circulation
Enhancing electronic payment
Increasing customer base to banks and MFIs
Generating income to the promoters
Playing a tangible role to the Ethiopian economy
Establishment Yetim is a private limited company established with four shareholders at a capital of Br. 500,000.--, which will grow significantly once system installation is done. The shareholders are known and well respected business individuals playing significant positive roles in different sectors of the economy including technology, financial, mapping, real-estate and transport services. They believe that achieving the above cited objectives will create them another opportunity to contribute their share to the growth and development of the country. Yetim ePayment Services has taken further steps by investing on the latest, internationally accredited advanced solutions multichannel Payment Gateway ready for use prior to VAS agreements demonstrating its commitment to provide world class payment services. Yetim’s payment technology solution strategic alliance, iVeri is a well recognized electronic and mobile payment solution provider with international Visa/Master/PCI DSS accreditations and has wide installation bases. Brief profile of iVeri is described below enclosing references.
Yetim Organization structure
Figure 2: Yetim Organizational Structure
Roles and responsibilities of the CEO and the different work units 1. Chief Execut ive Officer
Develop policies and operating procedures
Set annual and quarterly targets of the company and monitor implementation
Supervise the activities of the different work units
Approve payments and control all financial movements of the company
Monitor proper maintenance of financial statements
Represent the company for all external communications including negotiation and signing of contracts
Identify risks and implement proper risk management mechanisms
2. Information technology
Administer the hardware, software and network components
Make sure that redundancy and disaster recovery components are in place to guarantee utmost level of business continuity in all circumstances
Follow up of hardware and software maintenance contracts signed with technology provides and ensure that SLAs are always intact.
Supervise the activities of the24X7 call center and properly respond to customer complaints
Always ascertain that appropriate system sizing is in place
Design technical specification for new product development ideas
3. Marketing and Product development
Create the necessary awareness on Yetim and its benefits
Promote the Yetim brand in collaboration with the customers i.e. financial institutions
Conduct periodic surveys to identify the leve l of customer satisfaction and propose improvement mechanisms based on their feedback
Monitor global e-payment trends and propose innovative ways of adopting latest technology
Design business requirements for any suggested innovation
4. Finance and Administration
Maintain the recording of books of accounts
Reconcile cash with bank balances and follow-up on pending items
Produce quarterly and annual financial statements
Prepare and deliver monthly settlement and reconciliation reports to each customer i.e. bank and/or MFI
Investigate customer complaints on settlement
Assess financial viability of any new idea generated by the marketing and product development wing.
Administer the Company’s payroll and maintain staff records
Facilitate annual audit by external auditors
3.2. iVeri Payment technologies; Profile, Service Certifications, License, and Reference Yetim has collaborated with company named Ivery Payment technologies for its Core software platform deployment of the payment solution. The short profile of w hich is described below.
Introduction to iVeri iVeri creates technology for banks and businesses to facilitate multiple-channel transaction acceptance. Their goal is to help customers create a profitable and sustainable business by enabling them to implement the right transactional channels for their market environment. They have been developing electronic payment technology since 1998. Today, they process millions of transactions and have customers in several countries. iVeri is a proven provider of best-of-breed multiple channel transaction technology. iVeri provides a Transaction Gateway that supports multiple-channel card acceptance and a Personal Banking solution that allows account holders to use a range of communication channels to access their bank accounts. iVeri’s Transaction Gateway provides mobile, internet, recurring payment, point of sale and card-notpresent card acceptance channels, as well as comprehensive reporting and back-office functionality for both the bank and the merchants. iVeri’s Personal Banking solution “MiBank” allows account holders to utilize the technology at their disposal to access their bank account and perform a range of transactions. Mibank supports voice, mobile phone, internet and email interfaces. Their experience gives them a distinct advantage when meeting the demanding needs of banks and businesses requiring multi-channel transaction acceptance. Their customers agree that their unique products, coupled with tried-and-tested back-office solution and a dedicated team of engineers, have been key to their success.
Their specialist knowledge of transacting in Developing Economies has resulted in the design of innovative and cost-effective solutions aimed at providing world-class services to underserved areas.
Key Successes
-
Process over 1.6 million transactions a month to the value of about USD100,000,000
-
Supplier to the 4th largest bank i n Africa
-
Solutions in 6 African Countries
-
Transaction Gateway supports 10 transaction delivery channels for card processing
-
MiBank Personal Banking supports 7 channels to access e-m oney accounts
Forward Strategy
-
Reduce the “barriers to entry” in the transaction processing market for clients
-
Continue to develop and implement new transaction channels
-
Partner with local support companies to provide in country on-site support to clients
-
Work with clients to find solutions to their unique transaction and payment challenges
Customer Base
-
Nedbank, one of South Africa's “big four” banks has an exclusive distribution agreement with iVeri for South Africa. iVeri also provides services to Nedbank Namibia.
-
iVeri is certified to Credit Card Services Company SAL, a bank registered in Lebanon and providing services to developing countries.
-
iVeri is certified to Mediterranean Smart Card Company, a Third Party processor registered in Egypt and providing services to developing countries.
-
Cards Technology Limited in Lagos, Ni geria is the MasterCard processor for Nigeria. CTL uses iVeri to provide internet and mobile card solutions to its customer banks.
-
Chams a listed company in Nigeria uses iVeri’s Transaction Gateway across a range of their business units to support card acceptance and a Mibank product for full mobile banking
-
I&M Bank in Kenya who are the first bank in Kenya to provide internet acquiring to the market uses iVeri Transaction Gateway.
-
Dashen Bank in Ethiopia uses iVeri to provide internet and mobile card solutions including money transfer to its customer.
-
CBZ Bank in Z imbabwe uses iVeri’s full Transaction Gateway.
Shareholders iVeri is owned 51% by RJB Trust and 49% African Development Corporation. African Development Corporation (ADC ) is a business development company with private funding, investing in companies across the African continent. The African Development Corporation is managed by a subsidiary of Altira AG (www.altira-group.de), one of the leading independent asset management companies in Germany.
Geographi c and General Representation iVeri’s head office is located in Sandton, South Africa. iVeri also has a permanent representative based in Nairobi, Kenya. iVeri is also represented by regional resellers in Kenya, Tanzania, Uganda, Rwanda, Burundi, Ethiopia, Malawi, Zimbabwe, Zambia, Mozambique, Botswana, India and Nigeria.
Certification iVeri has been a member of the International MasterCard Vendor program for the last 4 years. iVeri is a fully certified PCI DSS level 1 solution.
4. Yetim: The Business Model The mobile payment solution only has a chance to be accepted on the market if it is profitable for the key players to support and promote the service. All the features, offered to the end users, the security, the comfort, the wide reach may be in vain if there is no economic incentive for the service providers and banks. However, it is obvious also that the service providers alone cannot gain success if the users are dissatisfied with either the service or the terms of usage. With this regard the Yetim Business model is devised in a way where each party involved in the transaction will ge t satisfied.
4.1.Yetim: The Solution and the Service With the following major features the business model is designed in a way to cover the country at large serving for most payment needs of the public.
The technology channels to be used are mobile connection options GSM, GPRS and CDMA spread almost all over the country.
No need for separate registration. Individuals can use their cell phone to convert their cash to electronic money or vice versa; their personal identification will be taken at this stage in accordance with the KYC (Know Your Customer) principle of the Government Financial Regulations.
It facilitates providing financial services to unbanked polulation and enhances micro saving. For instance, one can receive his salary in the form of e-money and spend same in exchange for cash, goods or services as and when needed while leaving some value in his/her account.
Any type of payment either recurrent or one time can be supported using e-money
Transacting with voice instruction on IVR is much convenient to most Ethiopians. Hence low level of training is required.
The system is multi-lingual. The service will be given initially using the widely spoken local languages of Amharic, Oromifa and T igrigna together with English as a foreign language.
4.1.1. The solution The increasing need for mobile phones and the corresponding capacity diversification of the Ethiopian Telecommunication Corporation is a vivid fact in Ethiopia. Within the last two years alone the number of mobile subscribers has almost doubled. With this accelerated growth the number of mobile subscribers now reached about 7 million while the fixed phone users stagnate at below one million, which is only less than 15% of the mobile subscribers. Such developments are opportunities worth exploiting for the diversification of electronic payment methods in the country so that majority of the unbanked population will play a role in the formal financial industry than being hidden be hind the curtain. The core of the idea is to convert physical cash circulating in the country to electronic money that can serve as a means of value exchange in a more convenient, safe, reliable and flexible manner both to the payer and to the payee. Mobile phone (through GSM GPRS, CDMA 1x& 3G) and even fixed telephone lines will therefore be important Medias to facilitate the process. Implementation of the concept will have significant benefits from the national economic development perspective. It will open the door in bringing measurable proportion of the population to the formal financial sector through converting their physical cash to electronic money which will be more controllable. This will obviously provide tangible advantages in better
controlling the national monetary movement. Besides, the diversification of electronic payment methods will reduce the national budget required for production and distribution of paper money. Furthermore, it will also help in assisting the unbanked majority of the Ethiopian community to adopt modern ways of managing their hard earned money. The safety feature of the e-money model will also protect users from being exposed for theft while moving physical cash from place to place. In addition, due to its high level convenience of being handled on one’s own mobile phone without the need to invest money on equipments more users are expected to enjoy the service. For banks and financial institutions involved in the implementation of the scheme it opens the door for increasing their customer base, which will give them a great level of cross selling potential besides its advantage in bringing additional revenue stream to them.
4.1.2. The Service At a minimum the following services will be obtained from Yetim.
Buy electronic money in exchange for cash
Transfer electronic money
Convert electronic money to cash
Pay electronic cash to buy goods or services
Top-up of prepaid airtime
Settle utility bills
Disbursement and collection of Micro credit by Microfinance institutions
Distribution of payroll
Inquire balances
Change PIN
4.1.3. Workflow f or each type of service
4.1.3.1.
Buying electronic money (for the first time)
A potential customer may approach an agent
As a new applicant he/she will fill the application form and present a valid ID card for identification
The agent will capture the data on the POS from the application form
The agent will take the picture of the customer and ID card using the POS
The agent shall then process the transaction on the POS
The customer shall receive SMS confirmation for the credit of electronic money to his/her e-money account together with a four digit PI N
The customer shall then pay the amount to the agent and take a POS receipt from the agent.
If the SMS couldn’t be delivered immediately and if the message is seen as pending on the POS the customer should be notified of this case and should be given copy of the application form after being signed by the officer in charge to serve in place of the POS receipt.
If customer couldn’t obtain the SMS confirmation after a receipt is p rinted by the POS, the case shall be investigated immediately as it may be because of filling a wrong beneficiary mobile number. If that is the case a reversal shall be done immediately by the agent and the correct transaction should be passed again. The agent should then send a predefined SMS to the wrong beneficiary from the POS terminal requesting for apologies.
Figure 3: Process Flow - Buying electronic money (for the first time)
4.1.3.2.
Subsequent purchase of electronic money or cash deposit
An existing customer may approach an agent for cash deposit
The customer shall fill the e-money purchase form (cash deposit form)
The agent will process the transaction on the POS
The POS will print a receipt confirming the transaction
Customer shall also get an SMS message as additional confirmation
If SMS message is not delivered due to problem on the SMS gateway customer should be notified of the case by the agent based on the pending message on the POS
If the SMS message does not reach the customer after delivery confirmation is obtained on the POS the case shall be investigated and the transaction capturing process must be checked immediately. The potential cause for this is error on typing the customer account number. Hence, a reversal should be done immediately and the process shall be done again with the correct account number
The agent shall then send a predefined SMS via the POS to the user who received a wrong message to ask for apologies.
4.1.3.3.
Transfer electronic money to a friend or family member (P2P transfer)
The person will dial 511 and follow instructions to transfer e-money
An SMS confirmation of the transaction will reach the sender
The receiver will also receive an SMS confirming the e-money transferred together with the reference number of the transaction. If the receiver does not have a GSM the reference number will be given to him/her by the sender.
Figure 4: Process flow of transferring electronic money to a friend or family member
4.1.3.4. Withdrawing money or converting electronic money to cash a) For E-Money customers
The user will approach an agent and fill the cash withdrawal form
The agent will process the transaction on the POS after properly identifying the customer
The POS will print receipt for the transaction
The user will receive SMS confirmation of the transaction
The agent will pay the amount requested to the customer after obtaining his/her signature on its copy of the POS receipt
Figure 5: Process Flow of Withdrawing money or converting electronic money to cash for Yetim eMoney User
b) For Non E-Money customers
When a non registered user approach an agent to withdraw the cash he received from his friend or relative the agent should first capture him or her as a user. This will also help as a form of additional security as registration requires detail KYC. Then the whole process given above will be applied.
Figure 6: Process Flow of Withdrawing money or converting electronic money to cash for Non eMoney User
4.1.3.5.
Pay e-money to merchants for goods or services purchased
a) For merchants who are using POS terminals
User approaches a merchant
Buy the goods or services he needs
The merchant will process the transaction on the POS
The POS will provide receipt of the transaction in two copies
The user will also obtain SMS confirmation of the transaction
The user shall sign the merchant’s copy of the receipt and take the goods/services bought
Figure 7: Process Flow - Pay e-money to merchants for goods or services purchased - POS Managed b) For owner managed merchants
Owner managed merchants will not be provided with POS. They can use their own mobile phone to accept e-payment for the goods/services they sell. Thus, the process used for P2P transfer will be used.
Figure 8: Process Flow - Pay e-money to merchants for goods or services purchased Unmanaged
4.1.3.6. Airtime top-up To provide this service airtime should be purchased from ETC and loaded on the system for subsequent retail or Yetim will make arrangements with ETC to facilitate online purchase via direct interface. In both cases the user is expected to dial 511 and follow instructions for airtime top-up.
4.1.3.7. Bill payment using e-money With agreements to be signed with utility companies bill collection will be done via Yetim. The utility company or its authorized agent will handle the bill presentment and Yetim will facilitate the payment aspect. After obtaining the bill value the user can dial 511 and follow instructions to make payment.
4.1.3.8. Microfinance payments Operation of micro-finance is becoming increasingly important to the emerging economies as it gives the ability to advance funds into the sector as well as receive repayments on loans already advanced.
One case scenario involved a customer who was required to make regular weekly or fortnightly repayments but to do so involved one whole day of travel to reach an office that could accept the payment. That requirement resulted in the customer being unavailable for productive employment on that day and if a five-day week was assumed, the loss of productivity is around 20 percent. The use of the Yetim financial service will be helpful to solve this issue. Microfinance institutions can, therefore, use the Yetim platform to disburse as well as collect Microcredit extended to their customers.
Upon extending Microcredit an e-money account will be opened to the customer, which will be credited with the value of the loan. Proper KYC will be applied on the customer before opening the e-money account.
The value of the credit as well as amount and frequency of period settlements will be configured on the system
The customer will use the e-money account to withdraw cash, to transfer money or to effect payments.
Upon the date of the settlement the system will debit the value of the periodic payment from the e-money account with a credit of the MFI master account with Yetim. If the customer does not have sufficient e-money balance for the repayment, the e-money account will be overdrawn and upon which the MFI will claim the cash payment from the borrower who will be required to make cash deposit to the e-money account at any Yetim agent, without being limited to his MFI branch.
4.1.3.9.
Payroll administration
Companies can use the Yetim system to pay salaries in the form of e-money. Each employee may need to pass the KYC requirements and will accordingly have Yetim emoney account. The employer will either electronically or manually, as the case might be, forward the net monthly pay to be credited to each employee’s e-money account, which will be loaded on the system of Yetim for the appropriate update of employees’ emoney accounts.
4.1.3.10.
Balance inquiry
E-money users should be allowed to check their e-money balances at any time. They can do this by dialing 511 and following instructions or by sending SMS to the system in a predefined format.
4.1.3.11. PIN Change As part of securing the entire operation users should be allowed to change their PIN at any time. They can do this by dialing 511 or through the internet.
4.1.4. Methodology of managing content provisioning The company will sell this innovative service to micro-finance institutions, banks or the post office operating in the country. It will implement the entire system and the necessary call center and serve as a third party processor to interested financial institutions. The micro-finance institution, the bank or post office which wants the service will assign their branches all over the country as agents to receive cash and pay cash in exchange for e-money. The following will be the arrangement in handling e-money transactions.
a. The Network Operator: Ethiopian Telecommunication Corporation The corporation is a key component in providing the required infrastructure and connectivity solution to facilitate the service. The involvement will create a sound and reliable service offering for Yetim and better capacity utilization of ETC’s Mobile network. The provision of the mobile commerce and financial services is capable of generating a healthy revenue stream for ETC, but more importantly, it may create an additional incentive to take up mobile services. Although the added customers are unlikely to be volume users of the mobile services, they will still contribute in a material way to the operator’s net earnings.
b. Institutions
Institutions are like Banks, Microfinance institutions, and the Post office who wants to serve customers using the solutions of Yetim ePayment services PLC. Institutions need to sign contract with Yetim to start serving customers with Yetim. Institutions should notify the number and location of branches where they need to provide the Yetim service.
c.
Agents
Agents are branches of institutions who are assigned to register customers as well as to pay and receive cash. Agents shall be supplied with POS machines on which they register customers, pay out cash and receive cash.
d. Merchants
Merchants are traders who are authorized to accept Yetim ePayment for the goods and/or services that they sell. Merchants need to have accounts with those financial institutions partnering with Yetim in using its technology platform. Those owner managed merchants will use their own mobile phones to accept payments in the form of e-money. Other corporate merchants where the front desk cashier is different from the owner will be provided with POS terminals on which they will process e-money payments.
e. Users
Users are mobile phone subscribers who are registered to have e-money accounts. Upon registration at a branch location of a financial institution, users shall be assigned with emoney accounts on the Yetim platform. The Institution or bank that first registers the customer for e-money service is the owner of the user’s e-money account.
4.1.5. Service users The Yetim e-money service is to everyone in Ethiopia. Any person can buy and spend e-money. With this in mind the e-money service can be used in the following ways.
For urban dwellers to transfer money to parents in rural areas
For parents to transfer money to students in towns or universities
For any form of money transfer
For employers to pay salary to their em ployees
For anyone to purchase goods and/or services from any me rchant location
For prepaid airtime top-up
For settlement of utility bills
For settlement of loans to micro-finance institutions
For effecting periodic payments to associations or cooperatives
For Parents to pay school tuition fees of their chi ldren
For payment of any periodic payment like insurance premium
And wherever payment is needed
Thus, we can see that the Yetim e-money can serve everywhere to satisfy payment needs of the public. That is why it is called ‘Yetim’. It is because of this feature of Yetim we confidently claim that it is the only way to accelerate the shift from cash to electronic payment.
5. Why Yetim? Implementation of the concept will have significant benefits from the national economic development perspective. It will open the door in bringing measurable proportion of the population to the formal financial sector through converting their physical cash to electronic money which will be more controllable. This will obviously provide tangible advantages in better controlling the national monetary movement. Besides, the diversification of electronic payment methods will reduce the national budget required for production and distribution of paper money. Furthermore, it will also help in assisting the unbanked majority of the Ethiopian community to adopt modern ways of managing their hard earned money. The safety feature of the e-money model will also protect users from being exposed for theft while moving physical cash from place to place. In addition, due to its high level convenience of being handled on one’s own mobile phone without the need to invest money on equipments more users are expected to enjoy the service. For financial institutions involved in the implementation of the scheme it opens the door for increasing their customer base, which will give them a great level of cross selling potential besides its advantage in bringing additional revenue stream to them. Not only does it generate a cash float that can be used to improve the country’s economic situation, but it also helps to reduce fraud, money laundering and criminal acts such as robbery because the cash assets of the users are no longer being carried around in person.
6. Yetim Content marketing strategy Using the business model described above financial institutions are the direct clients of the Yetim service. They will be interested to buy the Yetim service as it gives a value add to their customers. Moreover, they can concentrate on their core business leaving the technology management side of their e-money service to Yetim including the call center. Though their involvement in the service is only on cash in cash out activities while the majority of the transactions are expected to be P2P transfers they will earn a proportion of the fee from all the transactions made by users initially registered by them. This will not only encourages financial institutions to use the service it also enhances the pace of the business growth as each institution will keep on exploiting every opportunity in increasing the number of its registered customers.
Yetim will strive to maintain standards of its own brand at each service location so that ultimate users will easily identify service locations and feel familiar with the type of service they get. Furthermore, Yetim will support the promotion and marketing efforts of institutions in the following major ways.
Create the necessary awareness on Yetim and its benefits
Promote the Yetim brand in collaboration with the customers i.e. financial institutions
Conduct periodic surveys to identify the level of customer satisfaction and propose improvement mechanisms based on their feedback
Monitor global e-payment trends and propose innovative ways of adopting latest technology
Design business requirements for any suggested innovation
7. Yetim Content Provisioning and Interface The intended service for Yetim ePayment Services will be implemented on a data network infrastructure that will be setup based on a proven methodologies for planning, designing, implementing, operating, and optimizing the performance of a variety of secure voice and data network solutions and technologies.
As the service required is to deliver a mobile financial services including delivering a branchless banking solution, the infrastructure should be able to deliver a fault tolerant, highly available and very secure system access to the customer, agents and other stack holders. To achieve this capability the network infrastructure should be designed and implemented in a redundant, scalable, highly secure and highly manageable manner to accommodate the required services. This requirement calls technologies and product implementation that are industry tested on similar operation scenarios of Yetim services or other financial transaction service institute best practices.
Figure 9: Yetim ePayment services Network infrastructure connection schematic
The Infrastructure Yetim is built on can be classified in to major infrastructure modules namely: The mobile Network Operator(service provider), the Data center Module,
Mobile access
Module(such as SMS, IVR, USSD, WAP and Internet), VPN Internet and WAN Connectivity Module and a Call Center Module for customer contact and relation management.
8. Content Language and Culture The system is multi-lingual. The service will be given initially using the widely spoken local languages of Amharic, Oromifa and Tigrigna together with English as a foreign language. As the service incorporates communication interfaces that are interactive to the service users or subscribers, communication mechanisms will be catered to include cultural and linguistic aspects of Ethiopian multi Ethnic values. The following systems will use a multi-lingual interface for the service deployment:
-
Multi-lingual SMS to and from the subscriber of the service
-
Multi-lingual IVR to and from the subscriber of the service
-
Multi-lingual USSD to and from the subscriber of the service
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Multi-lingual WAP to and from the subscriber of the service
-
Multi-lingual WEB Portal and email to and from the subscriber of the service
-
Multi-lingual Call Center service catered to the deployed services
9. Price and Business Plan 9.1.Yetim Price Scheme (Tariffs) f or each service The following price scheme will be used for payment transactions that are going to be deployed on Yetim ePayment services: Price of Service per transaction
Tariff (In Birr or Percentage)
Deposit (purchase of e-money)
-
Withdrawal (sale of e-money)
1.50
Transfer
1.75
Balance inquiry
0.50
PIN Change
0.50
Top-up (%)
8%
Table 1: Price Scheme (Tariffs) for Yetim Services
9.2.Yetim Business Plan for each service The e-money business is volume driven. The higher the volume the higher will be the corresponding income and cash flow. To be on the safe side we have developed the enclosed forecast for the coming five years in a very conservative manner considering the following.
The current number of mobile subscribers reach about 7 million and is expected to grow by 20% annually
It is estimated to obtain 10% of the mobile subscribers as Yetim users in the first year and addition 5% will be added every year subsequently
For the sake of increasing the number of users via encouraging purchase of e-money, the deposit service will be given free of charge.
Minimal fee of Br. 1.50, Br. 1.75, Br. 0.50 and Br. 0.50 will be imposed on cash withdrawal; money transfer, balance inquiry and PIN change services, respectively.
As per the current tariff of ETC on scratch card sales 8% commission is considered on each e-voucher sell of Airtime. This could be further negotiated as we will reduce cost of scratch card production and distribution for ETC.
Each Yetim user is expected to make an average of one deposit transaction per month. Moreover, the average number of withdrawal, transfer and Balance inquiry transactions is estimated to be 2 per month per user. PIN change is estimated to be done by a user once in six months on average. Each user will fill an average airtime of Br. 25.00 per month through Yetim.
Upon facilitating transfer services, two SMS messages will be delivered; one to the sender and the other to the receiver. Hence, the SMS cost per transfer using existing ETC charge for bulk SMS will be Br. 0.22 (0.11X2). All other services will involve a single SMS with a charge of Br. 0.35.
Banks or MFIs using the Yetim service will share 30% of the total revenue earned.
Hardware and software maintenance cost is considered to be 20% of the investment on hardware, software and networking.
Office and datacenter will be rented. It is estimated that a total of 500 meter square area will be rented at a cost of Br. 150.00 per meter square per month.
Income tax will be 30% of net income before tax.
For Detailed Income statement of Yetim ePayment service operation and the forecasted cash flow is stipulated on Annex 1 on this document. Please also refer the initial investment outlay for Yetim infrastructure and operation on Annex II.
10.
Market Justification
As indicated previously, Yetim’s operation partners include banks, merchants, retail agents, topup resellers as well as MFI institutions. To illustrate the user market projection of our proposal, here are two immediate market targets related with MFI with actual demand for the services which currently are underway. Currently in Ethiopia, there are 27 micro finance institutions with 3,019,284 active cl ients (expected to grow to 7,000,000 in three years) operating through 537 branches which are mainly in remote areas where other financial institutions are not present. All MFI have identified their problem of being lack of accurate and timely transaction information as well as creation of bankable community. With the economic growth, all are considering mobile payment and Point-of-Sales transactions to provide loan payment and repayments, which both require Yetim Payment services using ETC mobile network. Related to MFI, the Ethiopian government in partnership with international donors utilizes MFI branches to effect wages/payment transactions for the 7,400,000 SafetyNet workers throughout the country due to their presence in the remote areas. To enhance payments and reporting, use of mobile and point-of-sales is being considered by the government and World Bank in a period of 1-2 years period. Easier references of similar successful mobile payments for SafetyNet projects include Malawi, Kenya, Rwanda and etc..
11.
Financial Proposal and Commercial offer
Yetim promotes revenue sharing strategy, as this has proven to be the ideal approach to ensure long term success of the solution and the parties involved to achieve the objective. This approach breaks the traditional vendor customer model as it continues to be in the interest of all the technology providers to grow the market and customer base. Today technology and markets are continually evolving; ETC needs a partner to provide future proof technology. Our revenue-share model commits the parties involved like ETC, MFIs and Banks to continuously provide a solution that meets future requirements for underlying huge customer base. The following is our revenue sharing scheme, where aware of any variances or unforeseen issues we may at our discretion do a full assessment of the MNO and Banks options and provide a quote on the variances. Revenue sh aring Scheme
Banks or MFIs using the Yetim service will share 30% of the total revenue earned. Hardware and software maintenance cost is considered to be 20% of the investment on hardware, software and networking. ETC, on providing the solutions listed below and future services that will enhance the service provided by Yetim, will share 20.19% of the total revenue earned from the income:
-
Providing redundant IP based connections to ETC SMSC center from Yetim Data Center SMS Gateway for Bulk SMS transfers
-
Providing on Short Numbers for USSD, SMS and IVR services for Yetim Services
-
Providing redundant and reliable Data Connections to Yetim Data Center for Service like WAP and Web Portal of Yetim operation
-
Providing enhanced service and significant cost reduction on Data and Mobile services for Yetim operation
-
Providing toll free number for Yetim call center and IVR service
-
Providing a high secure Network connectivity to Yetim Data Centers
-
On providing an SLA to the services deployed.
Opportunity cost saving for ETC
In addition to the Income generated for ETC on deploying the services with Yetim, ETC will also benefit with cost saving that comes with the opportunity on services like Yetim Top UP for mobile recharge of air time. The most of this cost saving comes from the expenditures of ETC for Card Production, Logistics, Distribution, Storage and Risk Factor processes that are necessary to make avail and provide scratch cards to pre-paid users of the mobile service. Please refer to Appendix II of this document to refer the amount of cost saved by ETC on deploying the services with Yetim.
12.
Technical Capabilities
The intended service for Yetim ePayment Services will be implemented on a data network infrastructure that will be setup based on a proven methodologies for planning, designing, implementing, operating, and optimizing the performance of a variety of secure voice and data network solutions and technologies. As the service required is to deliver a mobile financial services including delivering a branchless banking solution, the infrastructure should be able to deliver a fault tolerant, highly available and very secure system access to the customer, agents and other stack holders. To achieve this capability the network infrastructure should be designed and implemented in a redundant, scalable, highly secure and highly manageable manner to accommodate the required services. This requirement calls technologies and product implementation that are industry tested on similar operation scenarios of Yetim services or other financial transaction service institute best practices.
Figure 10: Yetim ePayment services Network infrastructure connection schematic
The Infrastructure Yetim is built on can be classified in to major infrastructure modules namely: The mobile Network Operator(service provider), the Data center Module,
Mobile access
Module(such as SMS, IVR, USSD, WAP and Internet), VPN Internet and WAN Connectivity Module and a Call Center Module for customer contact and relation management. The following sub topics will discuss on each major module of Yetim Infrastructure components:
12.1. The Mobile Network Operator (MNO) The Mobile Network operator (MNO) is a core component for all the services that are planned to be deployed by Yetim payment systems. The security on the Mobile Network Operator is a critical concern in securing an infrastructure that is totally based on services that are passing through a network that is operated by a service provider like ETC. The services that are passing through the service provider or MNO are: SMS, USSD, IVR, and WAP requests of financial kind. And all these service channels include user credentials and transaction data of the payment service. The major security threats that come from the service
provider side on this technology channels, is interception of the data transmission on services like SMS and IVR on the Mobile operator network switches facilities. Access facilities to the mobile channels will be provided by ETC with Yetim subscription. It is observed that the sole MNO of the country has not currently deployed some of the technologies that are required to make the se rvice robust. These technologies include the use of single cable direct connection to communication channels like SMS and IVR gateways. And also the use of short number telephone numbers for IVR and call center services.
The initial
implementation of Yetim might not include this added technology benefits to decrease the hardware and management headraces of some services. However, the MNO is currently on the process of deploying these services and Yetim will implement or include these technology options phase by phase hand in hand with the MNO deployment schedule and policy.
12.2. Yetim ePayment service Data Center Yetim Data Center will house the main ePayment Software platform that will be used to transact customer account data from Servers interconnected with high speed backbone switching connectivity to and from the customer accessing the system through SMS, GPRS, WAP, Internet, and Interactive Voice Response (IVR). The system will also be connected to Internet and Wide Area Network connection with a telecom infrastructure and serves customers and retail agents securely through VPN tunnels. These customers and retail agents will have a Yetim Service Portal interface that will be hosted on the web servers of the Yetim Data Center.
The data
Center is implemented on four major network components required for the intended service namely: The software Platform, the server Hardware, Interconnectivity Devices and Miscellaneous Data Center Infrastructure equipments.
Figure 11: Yetim ePayment service Data Center Architecture
12.2.1.
The Software Platform
The softwares that are deployed on the Yetim Infrastructure will be installed and configured after performing various analysis and implementation base comparisons of electronic transaction services by the system design engineers employed for the intended purpose. The software platforms on Yetim implementation include Operating system softwares, Application Softwares and Management Softwares. Mixed Operating system architecture is used to accommodate the hosted services installation pre-requisites. Microsoft is the main platform operating system that is implemented for Applications such as Core channel management and service provisioning server, Data Base Service, Web and Directory Servers. Linux Operating system is also used for SMS and IVR applications.
Figure 12: Yetim ePayment Service Logical Application Services Connectivity
The core and the very important application software service that will be running on Yetim Data Center are the channel management and service provisioning applications. The application is used for the various Value Added Services typically offered by mobile financial service providers over mobile network operators. These include: Short Message Service (SMS), Interactive Voice Response (IVR), Wireless Application Protocol (WAP)/General Packet Radio Service (GPRS) and Unstructured Supplementary Service Data (USSD) portals. The application is selected according to the technical requirements of the intended service provisioning necessities. The Core Financial channel service is implemented with Application servers that are critically required to the operation of the service. These are the back end data base server, the web server and authentication and authorization servers. The backend database serves as a store for the users accounts and profiles. The communication between the service provisioning server and the backend database will be independent from the one between the mobile device and the MNO. And SSL will be used for all internal communications of servers used for the services.
Figure 13: Yetim ePayment Services application modules
Yetim Mobile payment application servers will profile client behavior like transaction pattern so that illegitimate abnormal usage should be detected on early basis. As an additional measure application servers will also use an alias of user account to transmit across network as a purpose to hide actual user account details on network. Appropriate antivirus softwares will scan the system regularly to avoid prevalent threats caused by V irus and other malicious applications.
12.2.2.
The Server Hardware
The software platform run on a fault tolerant Data Center hardware that is capable of being recovered from main faults that might hinder the operation of the service. All major network services of Yetim and application will be run on Server hardware that are intended and designed to provide non stop service to banking and transaction solutions. The selected Yetim Servers are from range of HP Blade Enterprise products range with a capability to grow as the operation of the system requires more resources. The servers will be
equipped with a large storage capacity with a fault tolerant configuration to have an instant data back up access in case of disk or server failures. Multiple Network connection will be provided by these servers using a multi-homing configuration in case of network link lose that might occur due to Network interface card failures.
12.2.3.
Interconnectivity Devices
All the services that are provided by Yetim are from Server Applications that are connected to Internetworking devices inside the Data Center. Virtually all traffic between the planned application and clients traverses the LAN backbone of the Data Center Network infrastructure. Hence the interconnectivity devices needs to be high-speed switching equipments and should have a capability to switch packets as fast as possible. W ith this regard, LAN networking devices will be selected from Cisco Systems products, a company that is an industry leader on the network infrastructure sector in providing reliable equipments, Cisco Systems. Yetim LAN backbone implementation is based on the Cisco Systems concept of Hierarchical (Layered) Network Design, such that each layer will be responsible for a certain task thereby resolving and alleviating design, implementation, and administration and troubleshooting responsibilities.
12.3. Mobile Channel Module The mobile channel module is the front-end component or a component that is facing the consumer to the Mobile payment services technologies provided by Yetim. These Mobile payment channel technologies can be categorized into two environments of Yetim implementation: Server-Side Technologies
Server-side technologies are those applications built on a server, away from the consumer’s SIM or Mobile handset, it this context at the Yetim Data Center infrastructure. Among many of these technologies the initial implementations of server-side technologies would include SMS, IVR, USSD2 and WAP gateways application softwares. Client-Side Technologies
Client-side technologies are those applications, solutions and service offerings built or embedded on a consumer SIM or mobile handset. The examples of Client Side technologies are
built on most of the handsets include, SMS, USSD, Voice, and WAP. And also the client side technologies that can be embedded or used as application platform softwares include S@T and J2ME (JAVA). Yetim ePayment services provide a multi-channel gateway solution which includes the following channels for the service deployment:
12.3.1.
SMS (Short Message Service) Gateway
SMS is a vital component on the implementation of Yetim e-Payment system, as it is deployed as a mechanism of confirmation for transactions made by the customers. It will also be used for a financial transaction channels with a limitation to avoid any potential risks. While SMS can also be used as a main transaction method as used in other implementations, due to its security issues involved on the service, it is decided only to be used for confirmation mechanisms and for a limited amount of transactions. The SMS processing computer applications runs on Yetim corporate data center servers that are connected to the SMS network through specialized connectivity technologies to the ETC SMS Center. These servers will be assigned short numbers instead of the traditional 10-digits mobile numbers, upon a request from ETC. These numbers, also known as short codes are usually 4 to 6 digits long. For Yetim implementation of the SMS server a short code number 511 or 0511 is selected, and it will be proposed to ETC for its availability and implementation.
12.3.2.
IVR (Interactive Voice Response) Gateway
Interactive Voice Response (IVR) is one of the most widely implemented, cost-effective, and useful technologies around. For example, IVR functionality is used in applications for obtaining movie schedules, bank transfers, plane ticket reservations, and prescription refills; and even for tele-voting in TV Shows. Most businesses today use some form of IVR system. IVR has become ubiquitous, with new applications being developed every day. Independent software vendors (ISVs) and system integrators need the right tools to develop these applications. Choosing the right hardware platform (media board) is essential, resulting in reduced costs, faster time to market, and more satisfied customers. As IVR is the most adaptable and easy to use telephone service, it is selected as a critical component for Yetim operation understanding the technology orientation of use by most
customers of Ethiopia and rural areas where its simplicity makes it a best case for the deployment of the service. The IVR implementation on Yetim Architecture is based on a Degium SwitchVox solution that is capable of handling 75 concurrent calls at the initial deployment and an ability to grow as the operation of the company escalated. In addition to the implementation of the IVR based payment transactions usage, the IVR voice system will be used as a landing point for customer who requires support and consultancy on the operation from the customer contact center. The customer contact center will be equipped with a full fledged Customer Relation Management application software platform that will be attended by pre-recorded voice instructions for mostly requested support inquires of the service.
12.3.3. USSD Gateway
(Unstructured
Supplementary
Service
Data)
In its simplest definition, USSD is a menu driven form of SMS where a customer would receive a text menu on their phone as opposed to a string of words. USSD is a data bearer channel in the GSM network. Like SMS, it transports small messages of up to 160 characters between the mobile handset and the network. Unlike SMS, which is ‘store and forward’, USSD is session based and can provide an interactive dialog between the user and a certain set of applications. In other words, both sides of the dialogue happen during a session whereas an SMS based interaction is broken into each segment of communication between the client and the se rvice. USSD1 only allows one way communication to the network, USSD2 allows two way communications between the user and the network. With USSD1, the interaction between the user and the service would be broken into each communication segment, much like SMS. With USSD2 it would be held in the same session and allow for a flowing conversation between the user and the service. This is similar to e-mail and instant messaging, e-mail waits for the recipient to read and respond while as instant messaging allows for immediate dialogue. USSD is one of the components of Yetim payment service implementation. However, as to the preparation of this document the service is still not available from the sole service provider of the country ETC. Although USSD have been used for balance request of pre-paid mobile user, the status of the service is yet to be confirmed for availability f rom the mobile network operator of the country, ETC. USSD is as standard a feature as SMS and is available in an estimated 95% of handsets today. And it requires no pre-configuration on the consumers SIM or handset and is already built into most GSM networks.
12.3.4.
WAP (Wireless Application Protocol)
WAP is best described as the internet on a mobile phone. WAP is an open international standard for applications that use wireless communication. Its principal application is to enable access to the Internet from a mobile phone or PDA. A WAP browser provides all of the basic services of a computer based web browser but is simplified to operate within the restrictions of a mobile phone. WAP is now the protocol used for the majority of the world's mobile internet sites, known as WAP sites. Mobile internet sites, or WAP sites, are websites written in, or dynamically converted to, WML (Wireless Mark-up Language) and accessed via the WAP browser.20 WAP or mobile internet banking offers a consumer a similar experience to that of internet banking. The consumer would browse to a mobile internet site by accessing the WAP browser on their mobile phone and entering the website address. The actual banking application resides at the bank and is secured and monitored in the same way as an internet banking website. The mobile phone and bearer (GPRS) is used to display or transmit the data between the consumer and the bank. A consumer’s handset would need to be capable (functionality developed/loaded by the handset manufacturer), and have the right configuration (provided by the MNO), in order to support WAP Banking. Most Mobile Network Operators often segment this functionality to post-paid customers only. In Ethiopian scenario it is available on both pre-paid and post-paid SIM users. Hence, Yetim ePayment solution also includes this functionality as one of the service as it is available in the current implementation of the MNO, ETC. Though its targeted use customers are small based as it requires some technology orientation of the user/customer, the customer base is assumed to grow as the technology adaptation of the country grow.
12.3.5.
POS (Point of Sales)
Point of sales (POS) is a key component of making available the mobile service that will be provided by Yetim to rural and remote Ethiopia where most of the target customer is located. The POS device selected is designed with a duel GSM/GPRS module for communication redundancy and battery driven to ensure optimal uptime for transactions. The Device also supports a camera, 2D barcode scanner and a Biometric fingerprint reader, these futures are ideal for client registration and will be used by agents.
The POS solution supports multi-applications allowing for Yetim P2P application to coexist with a Visa/MasterCard card processing application. The solution is taken a step further by allowing for SIM based money transfer systems to reside on the same terminal, allowing money to be moved between these schemes to the P2P solution. Initial Implementation of Yetim ePayment service will include at least two types of POS terminals that will be made available to the Agents and Merchants under a special policy and use requirement that need to be fulfilled upon request and signing of contractual agreement with Yetim.
12.4. Internet and WAN (Wide Area Network) Connection Physically, the outside network often begins with a WAN connection to the Internet. The physical characteristics of the currently provided service for the internet by ETC that are suitable for Yetim, are broadband Digital Subscriber Line (DSL), Fiber Optics and Fixed Wireless Local Loop Connection to ETC networks.
However, incorporation of other future connectivity
solutions that will be implemented by ETC will also be considered as soon us the confirmation of the service availability is acquired from ETC. Point-to-Multipoint WAN connections will be used at the Yetim data center with enough capacity to handle all transaction requests that comes from agents and institutes that are connected through the secure leased lines from ETC.
In
addition to the VPN infrastructure that is implemented through MPLS/VPN cloud in the ETC infrastructure, high end agents and affiliate institutes will be obligated to use a VPN tunnel from their system to Yteim data centre to enhance the security. Yetim Data Center will be available to the World Wide Web trough a dedicated 3Mbps redundant links acquired from ETC internet Connection. With the incorporated web service the e-Payment solution can also be accessed through any standard web browser secured by an SSL certificate supplied from the Yetim web servers. The Web service include a Web Portal that will also be accessed by the Agents and customer Banks with a registration on the Yetim Access servers after authentication with a credentials. For Web accesses through an Internet or a Wide Area network to an Agent Yetim Portal, it is designed to make necessary a use of VPN client on the user side with a pre-defined security protocol and certifications that will be made available during the operation.
12.5. Customer Contact Center (Call Center) Customers are becoming increasingly sophisticated and demanding in their expectations of organizations ability to provide higher levels of responsiveness, dependability, and convenience. In many financial sector companies, call centers are at the forefront—serving as the primary interface between the bank and its customers—clearly positioning them as a vital part of the larger organizational customer relationship management (CRM) strategy. Traditionally, call centers have been viewed as back-office functions—cost centers that serve no purpose other than to receive customer inquiries. Today, with the proliferations of new customer interaction capabilities and channels, call centers have become the logical centerpiece for banking and financial sector organizations to carry out many mission-critical activities. With this regard, one of the strategies taken by Yetim e-Payment service deployment is to implement a robust call center that will make the services available to customers, anytime, anyplace, regardless of how the customer chooses to access the services whenever it require a support on operation, use and guidance of the services provided. Hence, the initial deployment of Yetim Call Center will include a 24/7 support service that will be handled with 10 dedicated call center attendants working at a time and provide the support service requests through a well developed and adaptable procedures that are designed to decrease the period required for the responses that are generated by customer.
Figure 14: Yetim ePayment Service Call Center Connection Schematic
An IP based Voice solution, from a leading open source based Voice Call Manager manufacturer is selected in the design for this purpose. The solution, Degium SwitchVox, is a product that is capable of scaling as the demand grows and industry tested on similar setups for Voice solutions for call centers.
As for the Customer Relation Management (CRM) application that will be used it is vital to select an application that is catered to the use case. With this regard, Yetim deployment will incorporate CRM application software that can be easily integrated to the Voice call manager solution selected. CRM program, coupled with a central toll-free number for customer support, handles inquiries from both domestic and international customers.
12.6. Security Considerations of Yetim Network Infrastructure The services that Yetim is providing should be built on a bullet proof and secured data network infrastructure. Security, from the network infrastructure aspect, should be considered from all aspects of the solution provision starting from the data use access policy to data transaction and up to Physical access of the network. As Yetim service incorporate all the components that are required for an e-payment system such as, Data repositories, data processing and clients that are using different telecommunication services and channels, the security consideration should cover all these components and all aspects of the operations itself. Implementing security on infrastructure without having a security policy (either explicitly defined or at least implied) represents at best haphazard approach to addressing network security issues. The security policy of Yetim will be in writing, with input into the policy coming from the groups of stakeholders that Yetim is dealing with. These stake holders include the Company itself, ETC, the Company Users, the Company customers and all other parties that will be interfaced or connected to the system. Security policy Yetim is planning to develop for the payment service IT infrastructure will define the security goals that the company aspires to with respect to its computer network or, in a broader sense of its all information and technology assets. This definition of security goals creates a framework for the full development of a security policy by facilitating the following:
Identification of assets to be protected
Delineation of threats against the protected assets
Review of the available responses—that is, security solutions—to counter the perceived threats
Creation of rules that users are obliged to follow with respect to the utilization of the protected internal assists and services
Development of an action plan in the event of a security breach
Identification of a baseline against which compliance with security procedures can be measured and monitored on an ongoing basis
Identification of trigger mechanisms for updating and reviewing the policy
Hence, with the security policy of Yetim on hand, Security will be implemented and will be given a major consideration on the infrastructure to all services and network assets involved. With this regard the following areas explain all the areas where security is very critical and where due consideration given.
12.6.1.
Security aspects of SMS use
SMS banking is deemed to be the least secure of the mobile bearer channels. This is due to the number of points that the SMS data is available to others in a clear or unencrypted format. A consumer would initiate a transaction by sending an SMS to the bank using the bank’s SMS short code as a terminating address. The SMS would be automatically stored on the handset and be available to anyone that looks at the consumer’s phone. The SMS would then pass through the encrypted GSM/GPRS/CDMA communication channel, through the base stations and terminate at the mobile network operator, where it is typically stored unencrypted. The MNO may at this point pass the message onto the bank’s wireless application processor, SMS gateway, or mobile banking processor (which may be a third party), where it is stored either encrypted or unencrypted. The third party would then pass the message to the financial service provider, like Yetim, across an encrypted fixed line where it is typically stored in a secured environment. Due to these aspects of security issues, SMS service, for payment transaction, will not be deployed as a main transaction platform for large amount transfers. However it is used as a payment transaction channel for small amounts which encompasses assumed to be about 50% percent of the total transaction value that will be processed by Yetim. The security mechanisms that will be deployed on the SMS channels is mainly a process and procedural control type. These include the following schemes:
Limiting daily transaction amounts
Limiting Maximum transaction amounts
Limiting the number of transactions per day for a single SMS user
Educating and providing orientations of security treats to the SMS customers. Security of the IVR Service
12.6.2.
Security aspects of IVR channel
IVR, being a voice call, is protected by both the encrypted GSM communication layer as well as the GSM protection of the subscriber identity of the consumer and it is carried across the mobile network or a fixed line network to the Yetim IVR Server. Only at this point are the entries that the consumer has keyed into their phone, stored. As this is on the Yetim infrastructure the IVR calls are terminated, the security can be reinforced by comparing the Dialer Number and with PINs that are stored in a secure Data Center Environment in the Yetim Infrastructure. All IVR sessions will be recorded including the caller’s phone number, the sequence of transactions made by a customer. Pin or authentication data will not be logged as to avoid the threats that are caused by a customer data accessed by unauthorized user or system. Hence IVR, due to its simplicity of use, for the Ethiopian market, is been selected as an initial financial transaction channel to be used while the payment confirmation will be s ent by SMS.
12.6.3.
Security of WAP Service
WAP allows for a GSM/GPRS session to be opened between the handset web browser and the web application at the Yetim Data Center. This session is protected once again by the encrypted GSM communication layer and then can be further protected by encryption of the actual Yetim e-Payment service website that is being accessed. This makes WAP banking open to similar threats as internet banking.
For Yetim implementation, WAP service will be deployed for all the customers with ability to perform a web browsing activities on their mobile handset. As to the service coverage it is not assumed to hold a large customer base at the initial stage. However, as to its security Yetim will make available available this service se rvice as to its commissioning phase.
12.6.4.
Internet Security
Physically, the outside network often begins with a WAN connection to the Internet. The physical characteristics of the currently provided service for the internet by ETC are broadband DSL connectivity connectivity through through a Wireless/Cable Wireless/Cable Connection Connection to ETC networks. networks.
For Yetim Yetim Network
infrastructures, TLS/SSL tunnel will be mandatory so that entire session is encrypted from any internet browser or customer mobile device to the host system server. This technique might still leaves the data exposed in the web server. Therefore, end-to-end application-based encryption is still necessary. necessary. For this purpose, Yetim implementation, deploy the use of public key cryptography for establishing establishing security platforms platforms and authentication authentication solutions.
12.6.5. Security aspects of Agents and connections from institutes like Banks and MFIs Yetim payment services can be and will be accessed from Branches, and customer agencies like other banks through a WAN connection using a secured dedicated point-to-point leased lines from the ETC. These agencies, like microfinance institutes, and other affiliate banks will need to have a private line establishment to connect to the WAN WAN service. As to secure these channels from treats like eavesdropping and intrusion, a secure VPN will be used in addition to the MPLS/VPN service security provide by ETC point-to-point leased lines. The VPN will be terminated at a VPN server, in Yetim data Center and a VPN client need to be installed on customer sites sites to secure the connection and to have an access to the services provided by Yetim through WAN connections.
12.6.6.
Data Center Security
As to any F inancial Service provider company network infrastructure infrastructure the Data Center need to be secured starting from the physical access aspect to the application level of communication of the system. Like wise, Yetim Data Center is a repository of very critical data that includes user accounts and balances balances of financial kind. This will make the Data center, center, a very critical asset that should be secured from all aspects of treats. To accommodate the physical security requirement, Security cameras will be used to secure physical access to the Data Center servers, network devices and other equipments. The cameras will be plunged to a Digital Video Recorder with a capability of long period of recording and storing of Video data for future reference. Access controls will be used to secure the server rooms for authorization and accounting purposes. Authentication, authorization and Accounting softwares will be implemented with customizable customizable detailed reports of use of day to day activity of the system as well as to back trace previous activities activities of malicious nature and unauthorized unauthorized system access. access. System alerts, that that will also be implemented with applications, like Access Control Servers, would provide proactive monitoring and alerts to the system administrators that will operate 24/7. For Data Security, Industry tested implementation and standard of security will be used on all the devices, servers and network assets that will be deployed on the system.
12.6.7.
User Security
Various tutorial technical are designed for the clients accessing the system, as most security threats and risks are residing on the user/client side of the access. The tutorials include various instructions that are designed in a manner should be readable and understandable for all the community users. The delivery methods include direct customer tutoring on Yetim training centers, Written Pamphlets and flyers and through Internet Web pages and email notifications
Customer Education is a key component in securing the mobile ePayment infrastructure that is susceptible to various threats caused by ever emerging techniques of data theft. Also as for most security case studies, most threats can be addressed addressed by basic education of users. This basic education to the consumer of mobile e- financial services will be conducted in the following ways:
-
Customers Customers should be advised to use different PINs for different online services.
-
Instructions should be provided to customers on how to configure their mobile devices to access mobile banking and payment applications in a safe manner.
-
Customers should be advised as to the appropriate dispute handling, reporting procedures, and the expected time for resolution of complaints.
13.
Risk Management
While existing general business risk management principles remain applicable to electronic payment service activities, such principles must be tailored, adapted and, in some cases, expanded to address the specific risk management challenges existed on systems and services like Yetim service provisioning. Electronic payment services under bank-led model entails two major categories of risks; risks related to the customer usage of service and risks related to the technology involved on the service provisioning. Yetim will give a special attention to these these risks. Rule Based Based Risk Risk managem mana gement ent PIN based ba sed
Each user of Yetim will be provided p rovided with a four digit personal personal identification number (PIN) upon initial registration on the system. Users are therefore required to use this number whenever they need to make a transaction. They have also the option to change their PIN at any time in case they have a doubt that it is seen by anyone. anyone.
Tw o channels
The customer will make transactions following voice instructions of the IVR technology. This avoids the risk associated with sending the PIN on clear text over SMS. On the other hand the customer will receive SMS confirmation of the transaction which will serve as a controlling mechanism in addition to being an electronic document of the user evidencing the transaction. Lost or changed numbers
As the call center will be available 24X7 the customer can order blocking of his/her emoney account while losing or changing his SIM. Transact ion li mit
The scheme is basically meant for the unbanked and mainly required to handle small value transactions. Hence, to minimize risk of loss, single transaction as well as daily limits will be set in consultation with the interested financial institution. Legal documentat ion
Customers will fill applications for the service with relevant details of their identification which will also have the major terms and conditions governing the use of e-money. Upon signing the application the customer is simultaneously confirming his/her agreement with the terms of conditions specified. Transactions of purchasing e-money and withdrawing out of it will also be supported by signed forms besides the electronic documentation of SMS. Transfer of funds between two Yetim users will be supported by the SMS text message. In all cases the IVR platform also records each transaction initiated by customers. Fraud M onitoring
The system will have a fraud monitoring component which provides alerts of suspected transactions for further scrutiny. Alerts will be generated based on predefined rules on the system which could be specified in a way to identify abnormal transaction patterns so that suspected transactions will be subject to investigation.
Technology Based Risk management
The risk aspects of the technology can be sought from the point of view that includes relevant components the system incorporate. These components are the MNO network, the datacenter and network infrastructure, and individual user or customer. The risk management aspects of the technology will be described as the following: The MNO Network
Most service provided by the mobile communication takes place over the MNO networks. MNO networks usually have built-in mechanisms to provide security like mobile station authentication and data encryption. Though it's not easy for anyone with malicious intent to crack into the MNO network and the risk should also need to be considered on Yetim implementation, as it would not be enough for a financial institution to provide mobile banking services relying on de-facto GSM like protocol security. The risk involved on this component includes Physical or logical access to Mobile Network Operator (MNO) facilities by MNO's disgruntled employees or any unauthorized person. To avoid these risks is for Yetim to recommend and request some additional services and facilities to be implemented for the services deployed by Yetim. These include: Physical Security of MNO's Facilities
Physical premises of MNO's like Mobile Switching Centre (MSC) and Yetim data centers access should be properly managed. Proper access control and monitoring mechanisms should be in place. Access of employees on leave or those resigned from service should be immediately stopped. Similarly logs should be reviewed to assess any unauthorized access. Availability of Services
MNO's and Yetim must have proper technology infrastructure backup, disaster recovery plan and technical security infrastructure in place to ensure timely services availability to all clients.
Yetim ePayment Datacenter Risk Management
The risks available on the Data center are the loss of data and network availability that will cause the system unresponsive and un-operational.
To avoid this risk the setup of devices and applications is replicated to avoid the loss of system access due to device or application failure. As for the Data, tape backup of user and account information will be used in addition to various Disk RAID mechanisms that will be set on Server. The backup data on a Tape will be stored on remote and secure location for backup in case of data loss or data corruption of critical database repositories of the system. Power failure and fluctuations is a major issue in Ethiopian IT context. To avoid the risk of power failures, Multiple Uninterruptible Power Supply devices, with long period of operation, is used for all major network devices and applications. As a second line of defense Generators will be used.
Power supply of devices are usually susceptible to
failures, as to avoid the risk of system failure due to the power supply failures of major infrastructure equipments, a dual power supply configuration will be implemented. Frequent studies show that components of network equipments and servers fail due to an extreme heat that will be generated due to the very high work processing load of the devices. To avoid this risk the network devices are fitted with an adequate cooling system to reduce the heating. For Yetim data Center devices, a dedicated Air Conditioning Units will be used to cool the Data Center to an acceptable temperature. As to avoid the total loss of the Data Center that might be caused by natural disaster like incidents Yetim will implement a Disaster recovery site on a remote location. The site will be used as a second functional operation Data Center, identical to the Main data center, with a strip down setup to reduce the cost, but with all functionality required for the deployed services.
During the full operation of the main Data center, the disaster
recovery site will also be used as a Hot standby backup site. Networking and infrastructure capacity and Risk Management
The networking part is the most susceptible from risk point of view. As to In addition to the redundant configuration of networking devices that will be in the initial setup of the system, identical devices will also be hold in stock to avoid the delays that might be caused by the supply chain and purchasing processes . The possibility of rapid adoption of Yetim Service simply makes it more important to adequately consider the risk factors involved on the network and communication aspect. These factors are included In two areas –the capacity of Yetim own network system and the congestion on the service provider networks.
The ability of the Yetim to cope with the arrival of large numbers of financial transactions and services, at it‘s computer systems is very critical. to ensure that the service provider and banking channel has sufficient capacity to handle the customer interaction and transaction load. There will still be many more voice calls, SMS and Data traffic that load the mobile networks. Transactions are usually a very small fraction of the overall mobile network load. (a SMS represents the equivalent of about 0.1 seconds of speech on a GSM network). As to avoid the overload that will be raised due to service demands, Yetim implementation is designed with a capability of scaling the system capacity using various proactive monitoring and auditing tools on its network. Using this reports generated from the tools, current loads and future capacities of the system will be identified for equipments and individual services that might create the bottleneck to data transactions. For such issues Yetim strategies to use extra large system sizing, with a full consideration not to affect budget issues, as to cope with unprecedented overload of the system before it happens. The strategy will also make sure that service provided by Yetim will always be in relative to the number of customer subscription and number of transactions done per second. Redundancy and Risk of losing availability
Financial Enterprise classifies their network operations based on how critical they are to its business operations. The measures you take to ensure availability of a specific server or network device will depend on its importance to the overall operation of the business. As Yetim provide a service that is entirely dependent on the technology and connectivity solutions, its paramount importance to implement the system on a redundant platform with a very fast recovery potential of faults on operations. With this regard, Yetim Design of the network infrastructure is with a consideration to avoid single point of failures an all components of the setup. Hence the most areas of the infrastructure is given due consideration to avoid failures caused by unexpected reasons such as human errors. When serious failures occur, the use of dual devices and applications can effectively reduce the adverse effects system downtime that causes service interruptions. After a failure, discovery protocols help end stations choose new paths with which to communicate across the network. If each network connected to the failed device has an alternative path out of the local area, complete connectivity will still be possible.
Risk of Data Loss and Data Encryption
Data encryption from the customer equipment to Yetim service host servers is a paramount importance to avoid risks introduced in the transaction channels. As to the Mobile payment implementation that includes SMS and IVR, this mechanism can not be implemented as there is no viable technology that can be implemented to do so. And the
technologies
by
themselves
are
made
for
unencrypted
and
clear
text
communications. As to the to the Yetim infrastructure implementation, all server to server communication will use SSL links and Certificates these are technologies that are equipped with encryption techniques to secure communication channels between web server and web client, through the web browser. As for the Yetim services like Internet, WAP and VPN portal, the main communication interface is the Web browser or an http application interface, the browser secures all the data sent and received through a SSL link (secure tunnel or ‗pipe‘) that passes through the mobile or fixed line network all the way to the WAP or HTTPS Servers hosted by Yetim. These servers in turn communicate over a SSL secured links to the Yetim internal servers. The end-to-end security is thus guaranteed from the application on the handset or computer browsers through to the Yetim systems. The SSL link security is explicit running end-to-end from the handset through to the WAP or HTTPS Servers. Thus any insecurities that may exist in any of; the radio link between the mobile handset and the BTS, the path through the mobile network or through the core telephony network are bypassed.
Risk of Individual Users
Individual customer’s risks are the union of the business risks and the individual risks. A business risk generally affecting the business and therefore all individuals as well as the risks that the individuals are exposed to due to their specific use of the channel. The risks introduced by the individual are how the individual uses the service. As such the countermeasures usually involve user education. The risk can and will be minimized by disseminating appropriate tutorial materials on secure use of the se rvice upon signing of Registration forms through various consumer channels.
14.
Conclusion and Recommendation The single most important step in building a successful mobile payment system is to set the incentives for all stakeholders. Without this, there will be no progress. Each of the participants, furthermore, must accept certain fundamentals and step up as needed for the good of the entire operations that provide the service that will be provided. Mobile operators like ETC must consider the mobile payment system in the context of new ways to open up revenue streams, especially from monthly m-payment subscription charges or per transaction fees. Operators must also take full advantage of the positive side effect of introducing and embedding the mobile phone and their value added services even deeper into the life of the subscribers - a significant motivator as observed in success stories of some African countries like Kenya (MPESA).
With this regard we have explained in the previous topics and proposed that the idea of Yetim is technically achievable, financially feasible and economically viable. Considering the current fast developments in the financial sector of the country, coupled with the accelerated growth in mobile subscribers, it is appropriate to go fast with implementation of this innovative concept within the shortest possible time. One of the core beneficiaries and service provider of Yetim is ETC, as a part of the 5 year plan that is stipulated by the Government, the corporation will play a crucial role in facilitating and supporting a technologies, that are provided by third party service providers like Yetim, that facilitate the adaptation of electronic payment services and efficient network use by the customers/subscribers of the corporation. With this understanding of the government initiative on growth based on ICT implementation and also understanding the benefits that are gained through services provided by companies like Yetim, We are looking forward on the support and technology solution and services that are critically needed to be provided by the government institutes, like ETC, on achieving the proposed target.
15. Annex I: Financial Forecast and Cash Flow
Description Number of mobile subscribers
Year 1
Year 2
Year 3
Year 4
Year 5
7,000,000
9,100,000
11,830,000
15,379,000
19,992,700
10%
15%
20%
25%
30%
700,000
1,365,000
2,366,000
3,844,750
5,997,810
Deposit (purchase of e-money)
12
12
12
12
12
Withdrawal (sale of e-money)
24
24
24
24
24
Transfer
24
24
24
24
24
Balance inquiry
24
24
24
24
24
2
2
2
2
2
300
300
300
300
300
Deposit (purchase of e-money)
8,400,000
16,380,000
28,392,000
46,137,000
71,973,720
Withdrawal (sale of e-money)
16,800,000
32,760,000
56,784,000
92,274,000
143,947,440
Transfer
16,800,000
32,760,000
56,784,000
92,274,000
143,947,440
Balance inquiry
16,800,000
32,760,000
56,784,000
92,274,000
143,947,440
1,400,000
2,730,000
4,732,000
7,689,500
11,995,620
210,000,000
409,500,00 0
709,800,00 0
1,153,425,00 0
1,799,343,00 0
-
-
-
-
-
Withdrawal (sale of e-money)
1.50
1.50
1.50
1.50
1.50
Transfer
1.75
1.75
1.75
1.75
1.75
Balance inquiry
0.50
0.50
0.50
0.50
0.50
PIN Change
0.50
0.50
0.50
0.50
0.50
Proportion of Yetim users Number of Yetim users Average number (value) of transaction per user per year
PIN Change Top-up (in Birr) Total number of transaction per year
PIN Change
Top-up (in Birr) Price per transaction Deposit (purchase of e-money)
Top-up (%)
8%
8%
8%
8%
8%
-
-
-
-
-
Withdrawal (sale of e-money)
25,200,000
49,140,000
85,176,000
138,411,000
215,921,160
Transfer
29,400,000
57,330,000
99,372,000
161,479,500
251,908,020
8,400,000
16,380,000
28,392,000
46,137,000
71,973,720
700,000
1,365,000
2,366,000
3,844,750
5,997,810
16,800,000
32,760,000
56,784,000
92,274,000
143,947,440
80,500,000
156,975,00 0
272,090,00 0
442,146,250
689,748,150
924,000
1,801,800
3,123,120
5,075,070
7,917,109
1,848,000
3,603,600
6,246,240
10,150,140
15,834,218
3,696,000
7,207,200
12,492,480
20,300,280
31,668,437
1,848,000
3,603,600
6,246,240
10,150,140
15,834,218
154,000
300,300
520,520
845,845
1,319,518
924,000
1,801,800
3,123,120
5,075,070
7,917,109
9,394,000
18,318,300
31,751,720
51,596,545
80,490,610
Revenue in Birr
Deposit (purchase of e-money)
Balance inquiry PIN Change Top-up
Total revenue
Cost and expenses
SMS text charges Deposit (one SMS per transaction) Withdrawal (One SMS per transaction) Transfer (two SMS per transaction) Balance inquiry (One SMS per transaction) PIN Change (One SMS per transaction) Top-up (One SMS per transaction) Total SMS charges Toll free payment (10 cents per transaction) Agent commission (30% of revenue)
6,860,000
13,377,000
23,186,800
37,678,550
58,778,538
27,930,000
54,463,500
94,403,400
153,405,525
239,312,619
Marketing and promotion
16,100,000
15,697,500
19,046,300
22,107,313
34,487,408
Salaries and benefits
1,200,000
1,440,000
1,728,000
2,073,600
2,488,320
Software maintenance
2,415,000
4,709,250
8,162,700
13,264,388
20,692,445
Hardware maintenance Other Telecom charges including broadband connection
1,120,000
1,120,000
1,120,000
1,120,000
1,120,000
240,000
288,000
345,600
414,720
497,664
Rent expense
900,000
990,000
1,089,000
1,197,900
1,317,690
Depreciation and amortization
4,796,000
4,796,000
4,796,000
4,796,000
4,796,000
Miscellaneous expenses
1,610,000
3,139,500
5,441,800
8,842,925
13,794,963
Total costs and expenses
72,565,000
118,339,05 0
191,071,32 0
296,497,465
457,776,256
Net income - Before tax
7,935,000
38,635,950
81,018,680
145,648,785
231,971,894
Income tax
2,380,500
11,590,785
24,305,604
43,694,636
69,591,568
Net income after tax
5,554,500
27,045,165
56,713,076
101,954,150
162,380,326
Net Income
5,554,500
27,045,165
56,713,076
101,954,150
162,380,326
Add: Depreciation
4,796,000
4,796,000
4,796,000
4,796,000
4,796,000
Cash flow from operations
10,350,500
31,841,165
61,509,076
106,750,150
167,176,326
Total transaction related payment to ETC
16,254,000
31,695,300
54,938,520
89,275,095
139,269,148
20.19%
20.19%
20.19%
20.19%
20.19%
Cash flow forecast
Proportion against total revenue
Table 2: Financial Forecast and Cash Flow in Ethiopian Birr
16. Annex II: ETC Opportunity Cost Saving by Using Yetim Top-up service Opportunity Cost Saving to ETC on Using Yetim Top up Service for Mobile Air Time recharge(Birr) ETC Cost of Scratch Card Number of Scratch Cards Used Per Year Per User(Minimum of 25Birr Card) ETC Prepaid users that use Yetim Top-up(95% of Yetim Subscribers) Number of Scratch Cards Avoided by Yetim Service ETC Cost saving per Top-UP ETC Cost saving per Top-UP of Scratch Card Management including(Logistics, Distribution, Storage and Risk Factors) Total ETC Cost Saving
1.50
1.50
1.50
1.50
1.50
12
12
12
12
12
665,000
1,197,000
1,915,200
2,872,800
4,136,832
7,980,000
14,364,000
22,982,400
34,473,600
49,641,984
11,970,000
21,546,000
34,473,600
51,710,400
74,462,976
598,500
1,077,300
1,723,68 0
2,585,520
3,723,149
12,568,500
22,623,300
36,197,280
54,295,920
78,186,125
Table 3: ETC Opportunity Cost Saving on Using Yetim Top-up Service
17. Annex III: Yetim Initial Investment Outlay
Description
cost in Birr
Server Hardware
3,500,000
Application Software
1,400,000
Operating systems and DB
700,000
Networking
1,400,000
Data center Equipments & Arrangement
2,800,000
Disaster recovery (redundancy)
2,100,000
Software and solution integration
1,260,000
Hardware configuration
420,000
Pre-opening expenses
2,100,000
Office furniture and equipment
2,800,000
Vehicle (5)
3,500,000
Miscellaneous
2,000,000
Total long term investment
23,980,000
Annual expense
Months coverage
Working capital
Total SMS charges
5,368,000
3
1,342,000
Toll free payment
3,920,000
3
980,000
Marketing and promotion
9,200,000
3
2,300,000
Salaries and benefits
1,200,000
6
600,000
Software maintenance
1,380,000
3
345,000
Hardware maintenance
1,120,000
3
280,000
Rent expense
900,000
6
450,000
Miscellaneous expenses
920,000
12
920,000
Total working capital
Total investment
Table 4: Yetim ePayment Service plc Initial Investment Outlay
7,217,000
31,197,000
