1 Simpa Networks Clean energy through mobile payment Date of creation : 2011 Location : Bengalore, India Nb staff : 12 people Households income : $10-$20/day Price of an SHS : ~ $300 Down payment : % Loan duration : ~ 3 years Innovation : Progressive Purchase pricing model and system Case Study Established in 2011, Simpa Networks is a venture-backed technology company which sells distributed energy solutions (Solar Home System) on a Progressive Purchase basis to underserved consumers in emerging markets.
2 2 CASE STUDY SIMPA Networks Incorporated in India in mid 2011, Simpa Networks is a venture-backed technology company with a bold mission: To make modern energy simple, affordable, and accessible for everyone It has developed and is now brokering a new kind of mobile phone-based micropayment system, which is both a risk mitigation tool for investors and a way to lower the up-front costs of renewable energy systems for the end-users. With it, Simpa Networks aims at making sustainable energy choices radically affordable to the 1.6 billion Base of the Pyramid (BoP) 1 consumers who currently lack access to electricity. Problem tackled and magnitude of the problem Worldwide, approximately 1.6 billion people have no access to electricity and another 1 billion have extremely unreliable access. Without ready access to electricity, the poor depend on kerosene lanterns and battery-powered flashlights for light. As a matter of fact, for a person with little or no savings and low and uncertain income, it is usually impossible, due to high upfront costs and no access to formal credit, to purchase good solutions to access electricity (SHS, Solar Micro-grid, Battery Rental...) So the problem that Simpa Networks aims at tackling is : How to make renewable energy solutions simple and affordable for a BOP costumer and how to turn this project «investable» for a bank. Innovations Progressive Purchase Pricing Model : Progressive Purchase is a new pricing model that shares some characteristics of the familiar prepaid, pay as you go, and installment plan pricing models. Under Progressive Purchase, the consumer makes a series of payments, each of which unlocks the usage of an electronic device for a paid amount of consumption. Once the prepaid consumption is exhausted, the device is temporarily disabled until another payment is made. Once the consumer has fully paid the total purchase price of the product, full functionality is restored and the product is permanently unlocked. «Progressive Purchase» System : The designed and built technology allows the regulation of the usage of an electronic device based upon the receipt of payments. For that it uses : A Regulator : a tamper-proof, system-integrated microcontroller and user interface that regulates the function of an electronic device based on proof of payments a Revenue Management System : a centralized software solution in the cloud, accessible via SMS gateway and over the internet, for payment processing and accounts settlement Impacts expected Simpa Networks has conducted its first round of pilot testing with informal population in Karnataka and the results have been very promising. So far all loans have been successfully refund. In 2012, they signed a sales agreement with SELCO India to sell 1000 solar home systems, growing to 5000 plus systems through SELCO and other distributors in By 2014 they aim to have sold 25,000 SHS demonstrating a clear model and scale approach. And their final target is to reach 1 million households within the next five years.
3 SIMPA NETWORKS 3 Business to Customers : Business Model Simpa Networks places itself, as the financing system, between a costumer requiring a Solar Home System (SHS) and a SHS provider. It buys SHS from a supplier (e.g.: SELCO India 2 ) then sells them to their end-users on a Progressive Purchase model. This is how it works: 1. A customer makes a small initial down payment (10% or 20%) for a SHS. 2. A SHS supplier s technician installs a blocked SHS. To unlock it, the costumer buys an energy recharge (between $1 and $10), using their mobile phones. Each payment allows customers to get energy for a paid amount. 3. Once the prepaid consumption is exhausted, the solar home system is temporarily disabled until another payment is made. 4. Once the total amount of his payments reaches the purchase price of the product (average $300), the SHS is permanently unlocked and start delivering free electricity for the expected 10-years life of the product. NB: The customers usually don t feel the progressive purchase model as a loan and refund the system on average in 3 years. To make sure that the solar vendors take good care of the maintenance of the sold and installed SHS, Simpa Networks has put in place an adapted remuneration model. The criteria to select the costumers are less restrictive than the ones from traditional banking systems. Indeed, the risks taken are lesser: If a costumer wants to use a light, he has to pay, and if he never pays, them the SHS is taken away from his home. Business to Business : Simpa Network sells their progressive purchase systems to renewable energy companies that use them to guarantee their costumers payments. With this business model, Simpa believes it can address all three dimensions of affordability that are critical to BOP consumers: the initial purchase price, the total cost of ownership, and the flexibility of expenditures over time. 1. In his book, The Fortune of the Bottom of the Pyramid, CK Prahalad develops the idea that companies dedicate their products for the 800 million richest people, which constitute the top of the pyramid. His theory shows that targeting the poorest populations with suitable products can reduce poverty. 2. SELCO Solar Pvt. Ltd, a social enterprise established in 1995, provides sustainable energy solutions (e.g. Solar Home System) and services to under-served households and businesses. Sources : Networks..pdf
4 4 CASE STUDY Technology overview : Mobile payment Definition Mobile payment, also called mobile money, refers to payment services operated under financial regulation and performed from or via a mobile device. Instead of paying with cash or credit cards, a consumer can use a mobile phone to pay for a wide range of services. Technologies There are currently various forms of mobile payment: SMS : The consumer can, for example, send an SMS surcharged or buy a pre-paid card. Direct Mobile Billing : Providers connect any number of merchants with the operators transparently and securely. They enable mobile subscriber to purchase goods directly from the merchant, without credit cards, directly debiting their pre or post paid mobile phone account. Mobile web payments : The consumer uses web pages displayed on the mobile phone to make a payment. Near Field Communication (NFC) : NFC technology typically takes the form of a small chip embedded in a phone. The phone is simply placed on or very near a reader device (such as a pad on a debit card terminal, kiosk machine...) - or another portable NFC device - to initiate a transaction. Usages In developing countries, mobile payment solutions have been deployed as a means of extending financial services to the community known as the «unbanked» or «underbanked». This community is estimated to be as much as 50% of the world s adult population 1. In these countries, these payment networks are often used for micropayments and are mainly performed by SMS while in North America and Western Europe, the transactions are mainly performed via a mobile Internet connection. Because of the small proportion of the population with access to banking services in emerging countries, mobile payment is largely in advance compare to France for example where it is still marginal. Size of the potential market In 2012, there were 212,2 million phone users making such payments and the number of users has not stopped growing since According to Gartner experts, we are to expect an average annual increase of about 42% until 2016, reaching a market of 617 billion dollars with 448 million users. 1. According to Financial Access 2009 Report Half the World is Unbanked Sources :
5 SEVEA Synergie pour l Echange et la Valorisation des Entrepreneurs d Avenir - is a not-for-profit organisation that strives for an improvement of the answers brought to energy and water issues (from an environmental, a social and a societal perspective) in developing countries by supporting social enterprises from these sectors. Our partners Our references Project from Contact: Sevea, Association Loi Chemin de Cugnet Les marches FRANCE : Sevea - January 2013
Clean Energy Services for All: Financing Universal Electrification Stewart Craine, Evan Mills, Justin Guay June 2014 Executive Summary One in five people around the world, approximately 1.3 billion people,
1 FINANCE Off-Grid Business Models IN PARTNERSHIP WITH THE BUSINESS CASE FOR OFF-GRID ENERGY IN INDIA 2 www.theclimategroup.org TABLE OF CONTENTS LIST OF FIGURES AND TABLES LIST OF ACRONYMS DEFINITIONS
THE JOURNEY TOWARD CASH LITE Addressing Poverty, Saving Money and Increasing Transparency by Accelerating the Shift to Electronic Payments Commissioned by BFA acknowledges the helpful comments received
Real-time Payments Hold Economic Value May 2013 Table of contents Impact points... 2 Executive summary... 2 Introduction... 3 Research findings Real-time payment applications... 4 Faster really is better...
Is Connectivity A Human Right? For almost ten years, Facebook has been on a mission to make the world more open and connected. For us, that means the entire world not just the richest, most developed countries.
+ MAINSTREAMING MICRO-PAYMENT SYSTEMS AND THEIR APPLICATION TO MOBILE NETWORKS MICRO-PAYMENT SYSTEMS AND THEIR APPLICATION TO MOBILE NETWORKS Examples of Mobile-Enabled Financial Services in the Philippines
Copyright 2007 World Resources Institute. All rights reserved. Data copyright International Bank for Reconstruction and Development/World Bank Group A co-publication of World Resources Institute and International
Sreyamsa Bairiganjan (CDF-IFMR) Ray Cheung Ella Aglipay Delio (WRI) David Fuente (CDF-IFMR) Saurabh Lall (WRI) Santosh Singh (CDF-IFMR) POWER TO THE PEOPLE Investing in Clean Energy for the Base of the
The Contribution the ICT Industry Can Make to Sustainable Development A Materiality Assessment by the Global esustainability Initiative April 2008 Prepared by: 1 Dear Colleagues, In response to rapid advances
The Next 4 Billion Market size and business strategy at the base of the pyramid Four billion low-income people, a majority of the world s population, constitute the base of the economic pyramid. New empirical
Sustainable Energy for All: The Business Opportunity A comprehensive analysis of priority actions across 19 industry sectors Contents Foreword Introduction Sustainable Energy for All: Its Value to Global
OPEN DATA FOR ECONOMIC GROWTH June 25, 2014 Transport & ICT Global Practice 1 Table of Contents Acknowledgments:... 3 Summary... 4 Introduction... 4 The Size of the Potential Prize... 5 Unique Characteristics
Towards a barrier-free information society Action Programme 2011 2015 Programmes and strategies 3/2011 Towards a barrier-free information society Action Programme 2011 2015 Ministry of Transport and Communications
MODULE C Ursula Product-Service Systems; Tools and cases Tischner and Carlo Vezzoli What does this module offer to successfully implement PSS activities? To keep the methodology simple and straightforward,
Identity and access management as a driver for business growth February 2013 Identity and access management (IAM) systems are today used by the majority of European enterprises. Many of these are still
Technology that matters Harnessing the technology wave in banking Using new technology to reshape your bank for the future Up to two thirds of the profitability uplift required to be a high performer of
Leveraging Information and Communication Technology for the Base Of the Pyramid Innovative business models in education, health, agriculture and financial services A JOINT REPORT BY SPONSORED BY IN COLLABORATION
A report by MARKETING INNOVATIVE DEVICES FOR THE BASE OF THE PYRAMID Lessons from 15 global pioneers that challenge conventional sales & marketing approaches to successfully serve the poorest Final report
It s in your hands Supported by : It s in your hands June 2014 About the The is the UK s leading association for the banking sector representing the interests of more than 250 member organisations with
ericsson white paper 284 23-3149 Uen February 2011 more than 50 billion connected devices More than 50 billion connected devices taking connected devices to mass market and profitability Everything that
Monitor Produced by Monitor Group in collaboration with Acumen Fund Created with funding from the Bill & Melinda Gates Foundation From Blueprint to Scale The Case for Philanthropy in Impact Investing by
www.pwc.in Logging into digital banking Creating access, transforming lives Foreword from TRAI I am happy to learn that ASSOCHAM is organising its 2 nd National Summit on IT and Mobile Banking, with the