OPENED QUESTIONS at: PFS@upu.int - PowerPoint Presentation

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2. OPENED QUESTIONS at:PFS@upu.int

3. PANEL/SESSION 1THE GLOBAL PAYMENT SERVICES MARKETLE MARCHÉ MONDIAL DES SERVICES DE PAIEMENT

4. Mr Mohit DAVARChairmanInternational Association of Money Transfer Networks (IAMTN)

5. UPU Postal Financial Services ForumThe Global Payment Services Market28th March 2014International Association of Money Transfer Networks

6. International Association of Money Transfer NetworksFounded in 2005Founded as a body that could represent the industry at an international levelIAMTN works closely with Governments, regulators, regional associations and payment stakeholders IAMTN represents and defends the common interests of it's Members and work on removing obstacles that prevent institutions from implementing their activities.

7. Remittance FlowsDeveloping World received $414 billion in remittances during 2013 (increase of 6.3% over the previous year)2016 – estimated $540 billionUSA, Saudi and Russia are the biggest sender markets during 2013India, China and Philippines the largest receiver markets during 2013Informal remittances is estimated to be 40% of volumes

8. ChallengesWeak policy formationInefficient marketLarge informal marketIncomplete dataHigh transfer costsAccess to bank accountsInconsistent regulatory approaches

9. OpportunitiesChanging Patterns of Global Migration and RemittancesSmall reduction in the cost of sendingImprove regulatory environmentsNon-banking Financial Institution distributionTechnologyFinancial Education/LiteracySecuritisation of Remittance FlowsDiaspora Savings

10. Thank youVeronica StudsgaardCEOveronica@iamtn.orgMohit DavarChairman

11. Ms Tammy WHITCOMBDeputy Inspector GeneralUSPS Office of Inspector GeneralUSA

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15. Mr José ANSONEconomistUniversal Postal Union (UPU)

16. Financial Inclusion Through the Banco Postal: an Evaluation2014 UPU Postal Financial Services ForumBern, 28 MarchJosé Ansón and Laia Bosch Gual – DER (jose.anson@upu.int)

17. Origin of the studyWhy Brazil?An innovative way of financial inclusion: correspondent bankingIntroduction

18. The research questionsData presentation and empirical approachBanco Postal: Evaluation of the ExperienceDiscussionOutline

19. Role of the Brazilian postal network in promoting financial access in deprived areas?Complementarities or substitution effects between different financial networks?Causal effect of Banco Postal on local development outcomes?Research questions

20. 1999: legislation adapted to allow contracting non-financial firms as correspondentsReceiving and forwarding requests for bank account opening, loans applications; executing payments, transfers, withdrawals; collecting savingsImplemented in priority in un-banked or under-banked areas or municipalitiesCorrespondent banking

21. The research questionsThe Brazilian financial systemData presentation and empirical approachBanco Postal: Evaluation of the ExperienceDiscussionOutline

22. Period: 2000 ─ 2006Geographical coverage: all 5,561 municipalities in BrazilSources: merging several huge databases including Correios (Banco Postal), the Brazilian Institute for Geography and Statistics, the Institute of Applied Economic Research, the Central Bank of Brazil Panel data

23. Un-banked municipalitiesMore than 40 % of municipalities without banks in 2002 => increasing transactions costs for the poor and less well-off (e.g. transport to another city, time, etc.)

24. Brazil

25. Descriptive regional analysisDescriptive municipal analysisCausal analysis, treatment effects and matching methods Methodological approach

26. The research questionsThe Brazilian financial systemData presentation and empirical approachBanco Postal: Evaluation of the ExperienceDiscussionOutline

27. BP: evaluating access2002: 2,450 BP agencies,822 agencies where no bankor other correspondent2003: 3,813 BP agencies,1,108 agencies where no bankor other correspondent2004: 5,362 BP agencies,1,299 agencies where no bankor other correspondent2005: 5,444 BP agencies,1,154 agencies where no bankor other correspondent2006: 5,567 BP agencies,856 agencies where no bankor other correspondent

28. BP: Evaluating Access2006Semi-deciles of population (number of inhabitants)Least populatedMost populated

29. BP: Evaluating Access2006Semi-deciles of population (number of inhabitants)Least populatedMost populatedOther bank correspondents/agents even more concentrated than banks in largest cities

30. BP: Evaluating Access2006Semi-deciles of population (number of inhabitants)Least populatedMost populatedFull financial inclusion is difficult to achieve without the postal network and its reach of the rural world

31. BP: Evaluating Access2002BP ag.Banks ag.Corr. ag.Pop.#Semi-decile pop.% of total in the semi-decile1the least populated 5% of municipalities: < 2,442 inhab.1.92 %0.25 %0.07 %0.31 %22,442 to 3,072 inhab.2.12 %0.38 %0.15 %0.43 %…109,056 to 10,417 inhab.4.12 %1.50 %0.29 %1.54 %…1948,959 to 88,477 inhab.7.67 %8.87 %10.88 %10.37 %20the most populated 5% of municipalities: > 88,477 inhab.19.31 %58.29 %76.54 %54.22 %

32. BP: Evaluating Access2005Semi-deciles of income (GDP per capita)PoorestRichest

33. BP: Evaluating Access2005Semi-deciles of income (GDP per capita)PoorestRichestOther bank correspondents/agents slightly less concentrated than banks in « rich » cities

34. BP: Evaluating Access2005Semi-deciles of income (GDP per capita)PoorestRichestFull financial inclusion very difficult to achieve without the postal network and its reach of the poor

35. BP: Evaluating Access2002BP ag.Banks ag.Corr. ag.Pop.#Semi-decile GDP p.c.% of total in the semi-decile1the poorest 5% of municipalities: < 1405 reals4.21 %0.42 %0.00 %2.28 %21,405 to 1,603 reals3.84 %0.59 %0.00 %2.57 %…103,561 to 4,025 reals4.29 %2.18 %3.01 %3.29 %…199,741 to 13,244 reals6.49 %13.56 %15.96 %11.11 %20the wealthiest 5% of municipalities: > 13,244 reals10.13 %31.13 %26.91 %19.79 %

36. Mobilizing savings In the 50 % poorest municipalities Less than 30 % of the total population Half of the total savings accounts of Banco PostalBP: Inclusion Success

37. BP: Evaluating the Use2005Current depositsSavings depositsAccountsPop.#Semi-decile GDP p.c.% of total in the semi-decile1the poorest 5% of municipalities: < 1976 reals3.86 %4.42 %4.53 %2.49 %21,976 to 2,236 reals3.92 %4.36 %4.29 %2.55 %…105,035 to 5,658 reals4.78 %4.58 %3.89 %3.76 %…1913,485 to 18,296 reals5.53 %5.26 %8.33 %10.38 %20the wealthiest 5% of municipalities: > 18,296 reals9.93 %11.62 %12.69 %20.65 %

38. Access to microfinance and loans In the 20 % poorest municipalities 10 % of the total population 25 % of all loans and micro-loansBP: Inclusion Success

39. BP: Evaluating Access2005Semi-deciles of income (GDP per capita)PoorestRichestFull financial inclusion very difficult to achieve without the postal network and its reach of the poor

40. From Access to UseSemi-deciles of income (GDP per capita)2005PoorestRichestThe postal network reach of the poor translates into use of financial services first by the poor

41. From Access to UseSemi-deciles of income (GDP per capita)2005PoorestRichestThe postal network reach of the poor translates into use of financial services first by the less-well off

42. The “one million dollars” question Does a higher access to finance and use of financial services by the poor lead to higher economic development and growth? Historically challenging to assess impact of financial development on economic development and growth (e.g. Rajan and Zingales, AER, 1999) – particularly at an aggregated levelWhat about growth?

43. Local Development Effects?Without Banco Postalin the municipalityWith Banco Postalin the municipality:average treatment effect up to 163 new firms up to 1,209 new jobs up to 9 new banks for 100 municipalities up to 201 new firms (+ 23%) up to 1,381 new jobs (+ 14%) up to 14 new banks for 100 municipalities (+ 56%) Robustness checks: effects more likely if already some degree of financial intermediation (1 to 5 banks before BP opening – not too poor not too rich), only the “new firms” variable resist to the use of regional controls (+ 17%), no effect found on GDP growth of muncipalities (well measured?) Other effects: formalization of the economy, increase in the average size of firms

44. Local Development Effects?BP effects (What? Where?)Relatively low-incomeIntermed-iate incomeRelatively high-incomeAccessPositive effectPositive effectNo effect detectedUsePositive effectPositive effectNo effect detectedDevelop-mentNo effect detectedPositive effectNo effect detected

45. The research questionsThe Brazilian financial systemData presentation and empirical approachBanco Postal: Evaluation of the ExperienceDiscussionOutline

46. Thank youJosé Ansón and Laia Bosch Gual – DER (jose.anson@upu.int)

47. Mr Marcelo QUINTEROSBack-office Operations Centre ManagerUnión Postal de las Américas, España y Portugal (UPAEP)

48. PUASP contribution to the development of the Postal Financial Services in the Latin American regionUPU Postal Financial Services Forum 2014

49. Regional contextIn 2013 the remittances market exchanged 61.300 millions USD in South America and the Caribbean.México (22.446)Guatemala (4.782)Colombia (4.076)El Salvador (3.911)República Dominicana (3.158)Honduras (2.894)Perú (2.779)Ecuador (2.451)

50. BackgroundSeptember 2007Signature Agreement Spain and UPUFebruary 20081st workshop (pilot)MontevideoJune 20082nd workshop (pilot)Santiago28 July 2008Official launch of CorreoGiro Service24th UPU CongressSeptember 20091st workshop (extension + clearing)San JoséMarch 20102nd workshop (extension + clearing)MontevideoOctober 20103rd workshop - closure (extension + clearing)Bogota28 September 2012Official launch of UPU Clearing & Settlement Services20102011200820092012

51. UPU-PUASP future actionsContinue supporting the deployment of the Correogiro service in the region, contributing:to identify where the migrants areto increase the number of corridors, not only in the regionContinue the collaboration with the UPU in the operation of the PPS*Clearing System.Training events:Workshop “Sharing experiences in Postal Money Orders”Workshop “Formación de Expertos Inclusión Financiera”

52. Thank you!Please contact the PUASP at: secretaria@upaep.com.uyMarcelo QuinterosBack-office Operations Centre Manager

53. Mr Shri VASUMITRAChief Postmaster General (Delhi Circle)Department of PostsINDIA

54. Global Payment System

55. Global Payment SystemCashNon - CashNon – ElectronicElectronicChequesLetter of CreditBills of PaymentCards Non - CardDebit Card Credit CardContact Less Card Virtual Card Prepaid Card - Open loop, Restricted loop, Closed Loop (types - Magnetic strip, Smart Card)virtual currencye-payment, e-wallet, m-payment, m-walletDirect Debit Credit transfer

56. World Payment System 2013 Report( By Capgemini and RBS )Size of market 1. Non-cash transactions a. 2011 - 307 billion transactions. Growth rate. 8.8% b. 2012 - 333 billion transactions. Growth rate. 8.5%Use of cards 1. 2011 a. Debit card transactions - 124 billion. Growth rate - 15.8%. b. Credit card transaction - 57 billion. Growth rate - 12.3%.

57. World Payment System 2013 Report( By Capgemini and RBS ) M-payments 1. Annual growth - 58.5%. 2. 2014 a. Expected no. of transactions 28.9 billion. b. Amount transacted $ 796 billion. 3. 2012 a. Amount transacted $ 256 billion. 4. User base a. 2009 - 53.3 million people. b. 2015 - expected 154.3 million people.                 Kenya - 14 million people, 60% population.E-payments 1. Annual growth. 18.1% 2. 2014 a. Expected no. Of transactions 34.8 billion.3. User base a. 2012 - 212 million, 32% growth over 2011.

58. Market 2011Mature market - Share 77%.Developing market - Share 23%.Growth rate1. Developing markets - 18.7%.2. Mature markets - 6.2%.Developing markets - 23% share a. Emerging Asia Share - 6.5%, Growth rate 22.1%. China. 10 billion transactions, 30% growth b. CEMEA. Share- 6.9%, Growth rate 21.9%. Russia 4 billion transactions. 18.1% growth         

59. Market 2011….  c. Latin America Share - 9.5%, Growth rate 14.4%. i. Growth in Direct Debit transactions - 15.9%, ii. Growth in credit transfer transactions - 10.3% Brazil shares 70% of it (22 billion transactions), growth 12.6%.d. Asia Pacific Share - 9.8%, Growth rate 11%.  South Korea - Growth 12.2%. Japan - Growth 11.6%. 2. Mature market - 77% share. a. North America Share - 40.4% , US - 114.2 billion transactions and growth rate 6.6%.  Canada - 9.8 billion transactions and growth rate 4.3%. b. Europe - 26.8% share and growth rate 4.2%. Growth (%) i. Poland 14.6%.                        ii. UK 7.6%. iii. Denmark 7.1%. iv. Finland 10%. v.   Spain.     ( -) 1%. vi. Ireland.  ( -) 0.8%.

60. Market 2011….Per Capita transactions 1. Finland  405 2. US.  367 3. Portugal. 171. growth 5.9%Cheques.  2011.   ( -) 7% growth Growth. 2012 1. CEMEA - 25.5% 2. Emerging Asia - 24.4% 3. Europe - 3.5% 4. N. America - 4.8%Increase in transactions in 2012 over 2011 by 25 billion. Mature market grew 13 billion.

61. Indian Scenario( India Post as a service provider)Direct Benefit Transfer: B(G) to C Credit transfer. Direct subsidies e.g. Cooking gas UID Aadhar Card is a game changerMNREGA( an employment guarantee scheme): wages by credit transfer.Social welfare schemes – Old age Pension payment, Women and Child care: credit transfer, e-MO (electronic money order)Utilities - Telephone, Electricity, Gas Bills: by e-Payments, Cards, Cheques, debit transfer (ECS)Direct Taxes: cheques, cards.

62. Indian Scenario( India Post as a service provider)Fund transfer: Domestic and International by e-MO, IMO, MO videsh, IFS, IMTS – Western Union and Money Gram.ATM: debit cards.Mobile money transfer : m-payment. e Post Office

63. India Post – ePost Office

64. Post Offices1,54,856Departmental Post Offices25,468Urban POs15,692(10.16%)Rural POs1,39,164(89.84%)Gramin Dak SewakPost Offices1,29,3882, 09, 000 Departmental Employees2, 58, 000 Gramin Dak SewakEmployeesOn an all India average, a post office covers an area of 21.23 sq. km and serves 7,815 peopleAll Departmental Post offices are Computerized India Post – NetworkOvercoming Distribution Challenges64

65. SFTP serverGeneration of electronic wage list at Village HQ DOP’s Server Banks HO 1 A/C HO 2 A/C HO 3 A/C…..Electronic wage list is digitally signed by first signatory Electronic wage list is approved by second person by putting his digital signature HO /SO1 HO /SO2 HO /SO3…..Accounts of workers in POsWage ListFTOFTOPayment File placed on server of ministriesResponseResponseFund TransferElectronic Payment File Direct Benefit Transfer (DBT) – electronic Payment System of India PostResponsePayment to Beneficiaries

66. DevicesHandheld ComputersThermal PrinterBiometricScanner2D ImagerSmartcard / Mag StripeReader and WriterRural ICT Solution Overview66 IT Modernization – Rural ICT Solution – The ArchitectureFinancial Services of India Post

67. FI network - POs and Banks

68. Thank You !