FUNDAMO - CELPAY CASE STUDY

JANUARY 2009

Fundamo (Proprietary) Limited 12 Plein Street, Durbanville, 7550, South Africa Copyright 2008 Fundamo (Pty) Ltd. All rights reserved.

CELPAY CASE STUDY

TABLE OF CONTENTS
1. CELPAY OVERVIEW ...................................................................... ERROR! BOOKMARK NOT DEFINED. 2. KEY BUSINESS ISSUES .....................................................................................................................3 3. CELPAY SERVICES............................................................................................................................3 4. REVENUE MODEL ...........................................................................................................................5 5. ABOUT CELPAY ...............................................................................................................................5 6. ABOUT FUNDAMO .........................................................................................................................5

2009 FUNDAMO PTY (LTD)

ALL RIGHTS RESERVED

CELPAY CASE STUDY

1. CELPAY OVERVIEW
Celpay is an innovative financial services company operating in Zambia and the DR Congo on behalf of a number of banks to provide a mobile account that is primarily accessed using cell phones and GSM POS devices. The mobile account is operated through the Fundamo technology and is intergrated with the partner banks and mobile operators. These accounts are fully functional bank accounts with advanced features which include account transfers, bill payments and cash deposits and withdrawals with real time clearing. The operation is functioning within the rules of the central bank and conforming to all the applicable banking laws. The system allows subscribers to send payment instructions through encrypted SMS and internet to the banking platform and, assuming funding has been deposited in the system, immediate confirmation of the transaction to the payer and payee. A transaction turnaround time is approximately 20 seconds. Transactions vary significantly in size with the largest transactions in excess of $100,000 and the smallest of a few USD. The business in Zambia has been operational since August 2003, following a long pilot phase and resolution of the regulatory framework for the business model, focuses on payments where such can replace cash or cheques. The business in Congo became operational in May 2004.

2. KEY BUSINESS ISSUE

How to facilitate payments and financial services in emerging cash based economies using the rapid expansion of cell phones in a secure manner. Market conditions typically identified: relatively low bank account penetration; weak banking and payment infrastructure footprint; cash based economy with the following issues: High costs of managing cash Little of no transactional history for granting of credit facilities Reconciliation overhead due to manual or paper systems Long delays for payment instruments such as cheques Additional risks of carrying cash High costs of servicing remote customers through branch and ATM infrastructure Low usage of electronic infrastructure such as switches due to cash transacting

3. CELPAY SERVICES
The following types of payment transactions are provided by Celpay: Business to business (B2B) In many countries payment for deliveries is made in cash or cheque. With significant delays in cash settlement and absence of automated processing, cheques are an expensive means of payment for the recipient. Celpay offers a convenient solution where for example the driver receives confirmation of receipt of funds by his employer so that he can continue with the delivery. This eliminates cash counting, improves ease of reconciliations, reduces the risk of theft and has proved its value in eliminating fraud.
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2009 FUNDAMO PTY (LTD)

CELPAY CASE STUDY

Business to consumer (B2C) Payroll and staff allocations for fuel or airtime are among the applications that fall in the B2C segment of the market. A very large proportion of the employed in emerging countries are still being paid in cash, or where they are paid in cheque or bank transfer, they tend to withdraw their funds immediately to avoid queues in banking hall. An easy solution with cash back agents such as relatively cash rich supermarket or petrol station chains should have appeal to consume and consumers retailers alike. Consumer to Business (C2B) This includes the standard payment by a consumer at a petrol station or restaurant but also bill payment to utilities. Currently Celpay Zambia offers the payment of satellite TV and internet bills as well as mobile airtime. Some of these bills can be paid at Paypoints for those that are not Celpay customers. Consumer to consumer (also person to person, P2P) Person to person transactions are commonplace in any part of the world. This includes payme payments to relatives, colleagues, etc. One of the largest financial flows into Africa is composed of foreign remittances, which is target market for Celpay.

2009 FUNDAMO PTY (LTD)

ALL RIGHTS RESERVED

CELPAY CASE STUDY

4. REVENUE MODEL
Primary revenue streams for Celpay consist of transaction fees and commissions from airtime and bill payments. The member banks benefit from increased cash float generated as well as improved customer service in areas where previously no service was possible.

5. ABOUT CELPAY
Celpay is a mobile banking and payment solutions provider that serves both individual consumers and corporates. The company was incorporated in 2002 and is widely recognized as a pioneer in mobile banking and payments. Celpay won the 2003 Wall Street Journal Europe Innovation Award and is recognized as one of the first mobile payment solutions in the world to have a profitable model. Celpay Zambia is one of the subsidiaries of Celpay International BV a company incorporated in the Netherlands. The holding company also has mobile banking and payments companies in the Democratic Republic of Congo (DRC) and Tanzania. Celpay International BV will be opening new operations in Zimbabwe and Kenya in the near future. Celpay is currently handling and processing transactions worth K100 billion (or US$25,000,000) per month from payments made by individuals and corporates for goods and services. Celpay is tried and tested and US$500 million worth of transactions were processed in the last five years. Celpay Zambia expects to reach the US$1 billion mark by 2010.

6. ABOUT FUNDAMO
As the worlds largest specialist mobile financial services provider, Fundamo has the expertise to build the technologies, the experience to build the businesses and the vision to build the industry. Fundamo is a leading provider of mobile applications and business solutions for organisations wishing to do banking, payments and other transactions from mobile devices. The company has established its leadership position based on a history of technical innovation and successful deployments. This knowledge ensures that its clients will always hit their target markets with the right offerings, appropriately packaged and effectively deployed. With over 30 successful deployment projects in over 20 countries, Fundamos technology and deployment strategy are proven. Fundamos suite of products enables mobile banking, person-to-person payments, cash on delivery payments, airtime purchases, bill payments, retail payments, payments for virtual content and many other mobile applications. The transactions offer immediacy, convenience, security, simplicity and affordability. Fundamo has provided solutions and supporting services to customers in a number of markets with sizable customer bases and transactional volumes being processed on a daily basis. Fundamos major shareholders include bluechip organizations; Venfin, Sanlam and HBD.

2009 FUNDAMO PTY (LTD)

ALL RIGHTS RESERVED