Must Read of the Week:
In response to the Government of Pakistan’s Biometric Verification System (BVS) drive, telecommunication (telco) providers in the country have reported a loss of 23.375 million subscribers and a 16% reduction in Pakistan’s cellular teledensity, according to a report from the Daily Times. To put that in perspective, that 23.375 million represents 11.9% of the entire Pakistani population (196.2 as of July 2014) and 17.1% of Pakistan’s adult population (130.8 million as of July 2014).
The BVS program required Pakistanis to link their phone’s sim card to their biometric information, usually fingerprints. The telco providers then shut down the non-registered accounts after a period of 90 days. The drive to expose and shut down the fraudulent accounts was, many believe, a response to the Peshawar school attack in 2014 where the perpetrators communicated over their cell phones. Post-linkage with biometric data, the sim card, and thus phone, can be traced back to a person’s information and other information can be verified – name, occupation, address, etc. The government would then be able to better target possible terrorists or criminals.
The re-verification process came at no small cost, however. Starting in January 2015, the drive led to the installation of 80,000 biometric re-verification devices being installed by the cellular companies – at an estimated $60 million cost. As well, the companies shut down the fraudulent accounts and lost a portion of their customer base – Mobilink, for example, lost 5.3 million connections and U-Fone lost 6.6 million accounts.
The impact of such initiatives on the global mobile money landscape is quite clear and significant. Since each mobile money account is linked to a sim card, the mobile money account will be able to be traced to a specific person. In a time when regulators and governments are paying close attention to money transfers in response to funding terrorism – for example, Kenya froze money transfer companies in the wake of the university attack in April – it would not be surprising to see other governments track use of mobile phones, and related services, via a person’s biometric data. This would of course put pressure on the telco providers to roll out the necessary re-verification terminals at a great cost to themselves. On the bright side this might result in the mobile financial service providers using the fingerprint as a means of authentication for mobile money transactions at the bio-metric enabled agent locations.