Nepali Times
Leapfrogging with phone cash

MOBILE MONEY: CEO of Kumari Bank, Radhesh Pant (right) transfers Rs 100 to Leapfrog's Himal Karmacharya to test Kumari Mobile Cash ahead of the launch of the service this week. Leapfrog partner, Ramesh Pant (centre) checks if the transaction has gone through.

Growing up in a small village in Syangja, Himal Karmacharya excelled in school. He got a scholarship to the Massachusetts Institute of Technology, and worked for five years at Oracle. He could have stayed on like many of his peers, but decided to return to Nepal.

Karmacharya set up Leapfrog Inc. with Ramesh Pant and in collaboration with Kumari Bank, inaugurated Nepal's first phone banking project this week. "I had no doubts I'd eventually return to Nepal," Karmacharya says. "I always had this nagging guilt that I wasn't doing enough for my country. Now I have a chance."

Karmacharya's technical skills perfectly complement Ramesh Pant's marketing background, from having worked for Xerox and WIPRO. Pant is a St. Xavier's graduate, and has returned to Nepal after 52 years, taking advantage of the new facility granted to overseas Nepali investors. "We have perfect synergy with Kumari Bank," explains Pant. "It's a forward-looking bank, the first to start e-banking, and our visions are aligned."

Kumari Mobile Cash will use software developed by Leapfrog to offer banking services through cell phones to millions of Nepalis. A World Bank study shows only 20 per cent of households in Nepal are currently banking, and the bank branch and ATM penetration rate in Nepal is one of the lowest in the world.

However, mobile subscribers are growing at 36 per cent annually and by 2014 there are expected to be 14 million hand phone users, nearly half the population.

CEO of Kumari Bank, Radhesh Pant, is thrilled with the partnership. "We have been talking for years about the 80 per cent of the population outside the banking net," he says. "Kumari Mobile Cash allows us to leverage a rapidly expanding technology to bring banking services to every mobile phone user in the country."

Radhesh Pant sees phone banking as a means to remit money directly and instantaneously. The family of a migrant worker doesn't have to travel to a bank branch, women don't have to walk long distances to settle microfinance interest payments, pensioners don't have to spend two days going to towns to collect their paychecks, and parents don't have to waste time while paying school fees.

To demonstrate the ease of the facility, Radhesh Pant flips out his phone and sends Rs 100 to Himal Karmacharya's phone, which alerts him about the incoming transfer almost instantaneously. "It's very simple, and we are hoping adoption will be viral," says Karmacharya. A technical team from Kumari and Leapfrog have been working round-the-clock for 10 months to set up the software, iron out the kinks and solve teething problems. Subscribers to all three GSM networks in Nepal ‚Ä" NT, NCell and Hello ‚Ä" will be able to phone bank.

Radhesh Pant admits there will be challenges: new regulations for mobile banking have to be enacted, the bank needs to set up a nationwide network of agents, and the technology barrier among illiterate phone users has to be overcome. Leapfrog says it has a multi-layered security system. Anyone who wants to phone bank has to join the service by applying, in much the same way he or she would open a bank account. A pin code will be required for transactions, to be executed from the customer's phone.

Phone banking may sound futuristic, but the optimism of Leapfrog and Kumari stems from the experience of Kenya and Philippines, where mobile banking has taken off in a big way. Kenya's M-PESA has 7 million customers (out of a population of 38 million), barely three years into operations. Studies have shown that the income of Kenyan households using M-PESA went up by upto 30 per cent once they adopted phone banking.

Says Radhesh Pant, "Kumari Mobile Cash is a game-changer, because it piggybacks on the rapid proliferation of mobile phones to spread banking access to those who are out of reach."

Kunda Dixit


* 80 per cent of Nepali households that don't have access to banking
* Families of migrant workers, for safe and instant cash transfers
* Customers making payments to shops, restaurants, airlines
* Customers paying utility bills
* Peer-to-peer lending
* General public, to add stored value and turn cell phones into electronic wallets

It's the bank's business, ASHUTOSH TIWARI
Join the joyride, PAAVAN MATHEMA

1. hange
Fantastic!  While I realise that there is no silver bullet, this indicates what is hopefully the beginning of a good trend: NRNs returning to Nepal to harness their skills for the betterment of the homeland.  Given our geography and resulting isolated communities and lack of infrastructure, mobiles have taken off.  Using this to fill a void in the banking sector is a win-win situation:  good for the wider Nepali public who now have easier access to funds, good for the hard-working labourers sweating away abroad to send money home, good for the banking sector who can tap an unreached customer base, and good for the Nepali economy as a whole since, like Kenya, this may be the beginning of increasing income and investment.  Again, let's not count our chickens before they hatch, but I find this very exciting & promising.  Great job gentlemen: Nepal welcomes you back!

2. Idiot

Wish Mr Dixit were clearer about explaining how this works... Could someone help me understand how this actually works? Sounds like an interesting idea but isn't it risky in Nepal to do banking transactions through mobile phones? Just curious.

3. chandra Gurung
So, Idiot, what do you want? Source code?

4. ypas
just wait till this is hacked ... there are reasons why banks with amazing technologies don't do this yet, even in advanced countries. oh well, by then the buzz is likely died down, and the bank ceo is likely gone to next best paying bank anyway. this is not worth the hoopla writer presents here.

5. Idiot
@ Chanda Gurung: c'mon wiseguy, what the hell am i going to do with the source code? 

I just want to understand how this system works... Is this about transferring funds from one bank account to another using cell phones? If I want to send Rs7000 to someone in a village in Syangja, what advantages does this system have over, say, a bank-to-bank money transfer system that might already exist?  

6. Tim
This is going to work. It worked in US  and it is picking up more speed, and yes I do online banking, send $$, receive, transfer between account.

Pretty much most of us who are looking at this page have experience with a smart phone. Todays smartphone pretty much do anything, browsing, game play and I even do RD connection to my Windows server using my iphone. For God sake we are connecting a Mac hardware to a Windows Hardware :) One day we will have a device in our pocket that we will ever need, will replace phone, music player, TV, live sports coverage, and the list goes on. People will start relying on it like never before.

I wish all the best to Himal for this venture.

About the hack, anything is hackable, it is just the amount of time that is required. As long as they use a good cipher, it will be fine.

7. Sandesh
Great start - every great venture has a humble beginning.

There is a flip side to the coin as well - I returned to Nepal a few years ago after a few very successful years overseas but was humiliated at every turn and vilified by almost everyone  (people even asked me if I had returned because my visa ran out or I was deported etc). Without going too much into the details, I also got caught in the politics. I stayed for 8 months in Nepal and finally had no option but to return overseas. Now I have a decent job and have also acquired an international reputation in my field of work.

Now with the benefit of hindsight, the mistakes I had made were that I did not stay out of the country long enough and had not returned with a bankload of money.

Perhaps stories like ours also need to be told. I wonder for every successful returnee, how many people like myself have had to lose crucial time of their prime careers?  

I understand some people will class me as a perennial whinger and probably also as someone who did not try enough, but trust me, I tried my hardest and failed spectacularly. 

8. sagar
Such is the sorry state of banking in Nepal that they don't know anything about technologies they're using/promoting. There is no such thing as secure sms, and there is no way for the bank to tell if the payment request is not a fake one (even with mobile no. & pin). A rogue insider in telecom may be all it takes to create havoc. And the result can be untrackable! It is not a coincidence that the payment giants like Paypal don't use sms for anything. These company duos don't seems to know their stuff much either, or are after some quick bucks. And this newspaper/site needs some good writers who understand technology to really write on it.

9. Gutere
SMS is not the correct technology to do this. There are specifically designed mobile applications intended for this purpose, exactly because SMS was never made to do such job. Worldwide, SMS is restricted to sending notifications, and not actual banking.

10. Arthur
#3, #8, #9 it would be possible for a smartphone to use SMS securely. The automatic encrypted secure transaction would look like garbage transmitted by SMS but SMS is no worse than internet. Combination of PIN, USIM and handset IMEI would be similar level of ID to ATM card.

Published standards (and source code) for the software would be necessary for security review. Without such publication  and review it is safe to assume the application is insecure. "Secret" code is usually a sign of not understanding how security actually works. Insecurity may not matter much for small transactions in Nepal. Or it may ;-)

Bigger problem would be the "nationwide network of agents" holding actual cash to dispense in response to phone transfers.

If they are merely relying on caller ID and SMS of plaintext messages with PIN numbers from customers to bank without special smartphone software then of course it would be very vulnerable. Again that might not matter much for small transactions in Nepal. Or again, it might!

#6 "good cipher" is not enough. Security requires thorough public review of complete system. Hacking banking transactions is too lucrative for the amount of time required to be a significant issue.

11. Babu Ram Sharma
Mr idiot,  it is very common now a days, n it is not easy to brief u that how it works. How it works is only the game.  But i am so happy with this kind of facility adopted by Nepali bank and we should not only depend on Khukuri to show our bravery but the time have come to show  Nepalese talent/intelligibility.
We are using this system around the world then why not in Nepal. Thanks Mr pant and Kumari Bank, please go ahead.  All Nepali janta are with u.

Babu Ram Sharma

12. ndpas
Tim, sms has no cipher and no way to put it in ... get it? you're at the mercy of clear control packets where sms rides. all you have is gsm's security, and even that is shown to be insecure, specially in places with loose legal standards like Nepal. These banks should watch out.

13. Yukul
#10 Arthur - As u say, the key word is - smartphone! 'Cause they can run actual secure apps for such banking transactions. Standard feature phones, as kumari bank ceo boasts above, are useless for such end-to-end secure transactions. What you have described as vulnerable may actually be what they are doing! Do these banks really know what they're being sold?

14. Arthur
#12 the insecurity of GSM (even for verifying caller ID) is the reason encryption of the transaction messages is required. Any system that can send plaintext can obviously send ciphertext. It is just "garbage" plaintext. The way to "put it in" has to be special smartphone software (which first decrypts the stored users banking keys when user provides banking PIN and then uses those keys plus handset IMEI and USIM ID and PIN to encrypt and authenticate the transaction messages before sending them as "garbage" SMS messages).

15. conman's paradise
well, it's a very good start....but looking at the nepal's cost in smartpnones and it's availibility, also the the amount to be sent not in few grands but in BIG lakhs as businesses want. there are plenty of problems. 
e.g someone being taken by big thugs like maos and asking to send the money instantly than to cash out check out which might give a person time to think.
This program in a non secure country with plenty of loopholes, shit law and justice system it's gonna make a conman's dream come true. lots of people are gonna loose thier hard earned cash in seconds.....
there needs to be a proper pilot phase, random fault finding, top security within the establishment which will need money money money. nope there is too many things i can go on about it.
Sorry about being pessimistic but it's good thinking and making life easier for my beloved country; but the big boys hardly gives a rat's ass about this venture if they lose few money and pull out.... but the normal citizens gonna lose big in terms of their savings and earnings

16. Martin
There are ways to make simple SMS work for banking transactions.  Companies like Obopay and Dinube have shown how it can be done.  Auto-dialback for PIN verification.  Hats off to these guys!  This solution should be good for Nepal.  However, other banks like Laxmi Bank have implemented a similar solution a little earlier in Nepal.

17. jiwan
The new innovation is good start up for country like nepal. But I have a doubt about the infrastructure standard.Though how good enough your coding is if your infrastructure is old enough it can be cracked in many ways.So our goverment must emphasis more on cyber laws, less tax on computer related HW like servers, routers etc. With your old systems, old infrastructure you can make less qualtiy SW products.

18. Sunanda
Agree with Arthur.  You can encrypt using an application.  Also, it is possible to use plain old SMS for transactions if you overlay another security layer: auto-callback for PIN authentication. Obopay and Dinube have successfully used this method for mobile banking over SMS.  Hats off to these guys!! Laxmi bank has also started a similar program sometime back albeit only to their account holders.

19. Chatuare
Article above seems to boast that so much can be done with mobile pay using standard phones (not smartphones) that are in the hands of so many Nepalis. That means, SMS as is, with no extra software on top. That means, no encryption or cipher, inviting unmanageable risks for banks. Clearly, Nepali Times needs tech writers who can understand and analyze such issues in its articles. The company described here seems to be handling this problem as a software implementation challenge, but in reality, it is a mobile communication challenge. Also didn't they get this tech from some other company and just selling it? Where is the much needed journalism?

20. Arthur
It is unclear from the article whether the system is intended to work without smartphones. This should have been made clear.

#16, #18 if without smartphones then it is true callback would be less insecure but it would still be (very) insecure. ie a gang with sophisticated equipment could pretend to be a particular handset and receive the callback as well (when the real handset is not in service). If existing services are using this method it may confirm that for small transactions in poor countries the costs of doing that plus collecting diverted funds without being traced may not be worthwhile so the (very) insecure system could still be workable.

It does seem that Obopay and some other Mobile Payment Systems are using such (very insecure) methods with just SMS (as well as more secure transactions with smartphones), so that would suggest it could work for small transactions in Nepal too.

However it may also also depend on corruption level - ie with corrupt police and judiciary protecting criminal gangs in Nepal fraud could be a bigger problem than in less corrupt countries.

21. topbahadru
i have learned such system is widely practiced in africa. if the system is tested ok in "nigeria" then it should very well work in nepal. this tehnology should have come to nepal long long time before.

22. chandra Gurung
After reading comments above, I conclude that these commentators are childish. None of them have either written a code for such service or have used such service. They are skeptic because they think nothing can be done in Nepal. Shame how educated Nepali behave.

23. Bhupendra
I am excited about the initiative and am less worried about the fact whether the product vision works or not. I am sure when good people come together they can bring many products even if mainline fails. It is important for good people to work on new challenges and overcome the issues with innovation and hardwork.

Any doubts of failure is just a reason to make us more serious. Everything will work fine in the long run if business is done with passion.

Nepalis are not unproductive and non-innovative. Nepalis in Nepal are. We have proved our capability outside. Now is the time to overcome the national boundary for innovation, and take Nepal to the next level.

All the best for the team Leapfrog. 

24. Sargam

It is quite normal that folks when they encounter an advanced technology they feel a sort of ingrained distrust. And so why they take precautions right from the start.

That said, we are here in presence of a dilemma as to how to conceal information exchanged between the emitter and the receiver, that's a bit of a poser!

Firstly, the emitter or sender encrypts the information and then emits, and the receiver decrypts the same before reading it. The information in transit is unintelligible to an eventual eavesdropper.

This mechanism is quite feasible if the microprocessor or software used is based on the use of an asymmetric algorithm, a simple computer language.

It shouldn't be hard to explain how open source software can facilitate diverse economic operations as it has been put into practice since a pretty long time. Our access to credit, savings, insurance and other miscellaneous bank services are met with success without so much troubles as certain skeptical individuals might imagine.

The payments carried out through mobile system permit users to deposit money into a certain mobile wallet and distribute it via text messages (SMS). This system well put in practice is cheaper than sending money through banks, post offices etc. By using this system, anyway people in remote villages can forgo long and tedious traveling to the bank and the post office and thereby enabling them to be more productive in their stints.

Or, simply by paying with e-money with the help of their mobile phones while they go for shopping, that means, without the presence of currency in their pockets, things will be far better organized. It will

be possible only when all shops are equipped with the adequate devices to be paid by means of e-money.

Of course, thanks to greater mobile penetration among the rural areas in poor countries some astute entrepreneurs could sure enough make money by selling services to the grassroots. This is a vivid example of bottom-up mobile banking management.

The development of open source software which exists since 1997 must be adapted to Nepalese way of life by means of translation if possible into Nepalese but in Latin alphabets with the ability to process payments would solve such a conundrum The software would provide a bridge between mobile payment systems and equally it helps turning a computer into a mass-SMS communication hub.

Hopefully, by the early 2011 everywhere mobile payment systems should come up with full swing. It will provide billions of populace across the developing world with a tremendous occasion for better standards of living. It is already working fine in Kenya, Philippines, in some parts of India, and in some countries in South America for some time.

Next, digital signatures make public key cryptography the most practical tool in real-life applications which are already in use for signing business transactions taking place in online banking and payment applications.

A secure version relevant to digital signature and encryption provides banks with the possibility to improve banking transactions.

A digital ID is amply used nowadays for passport, driver's licence, health care, insurance policy and et al. Digital IDs are created and digitally signed by the relevant authority.

The more the mobile payment systems are unshackled from the operators' portals, the better opportunities provided to the new entrepreneurs and mobile users to make overall progress in m-payment as well as in m-commerce services. (m : mobile).

We don't complain about the laptops and desktops morphing into hand-held iPads and iPhones.

Last but not least, you never know as to how fast the new technology leapfrogs over. Maybe, one of these days simply by introducing a chip and PIN (personal identification number) under your skin our lives will become even more hassle-free.

Still, folks hesitate at the idea of resembling their beloved pets who have already their tags - dogs, cats, and parrots and et al. FYI!?!

(Pl. notice some corrections made. Bunch of thanks-Pl. delete this line.)

25. BAJE

Wel done guys. What an excellent news. My hats off to my countrymen who are trying very hard to uplift the moral of our country.

Any project when you start comes with problems but that can be solved by technical expertise and know how.

In the 21st century one does not need to be physically present in Nepal to participate in the economic development of the country. So gentlemen you can make contribution from where ever you are in your area of expertise.

I only wish our politician take a leaf out of our expat countrymen and be less selfish and more giving.

26. Binoy Yonzon
I too would like to know how this system actually works.  And no, I don't mean the source code, as one smartass remarked above.

Here are my questions to start:

1. How is the security handled?  What if the mobile phone is hacked?
2. Is the transaction between the accounts within Kumari Bank or also between different banks?
3. How would the money actually be distributed?  Would Kumari Bank need to open branch all over Nepal?

I have many more questions...  But if this is successful, this will be wonderful for the country and the companies associated.

Perhaps Nepali Times can do a follow-up article that addresses these questions.


27. jukule
since neither the writer of this article nor representative of the company or the bank is providing further info on this service, one is forced to conclude questionable security of the technology implemented. it does not take a genius to see that text messaging (sms) in a standard phone by itself just can not be used securely for this purpose. one can obviously built a service using simple sms with sim/phone no. and pin, but that is too amateurish to be seriously taken by a bank to offer as a service. let's just hope kumari bank is not being taken for such ride.

28. akshay
wow. he wasted all that time to do this?? this is totally going to get hacked

1. We are kind of surprised and pleased to find out that Nepal is getting mobile payment system this quickly. Kudos to Karmacharya and Pant. We had this wish for a sometime now. Read more here:

2. Security is paramount in such transfers. Those interested could read comments in this article on the economist. (needs registration though)

3. With what has happened in those African countries where mobile payments were introduced, this has every potential to change the Nepali 'economicscape'.

30. sammy
Arthur for Prime Minister...!

31. Poudyal 9
This is a brillient technology for Nepal. I have seen it work in Kenya as Kunda has mentioned and it does work very, very well. Becuase of M-pesa's sucess, which is run by a mobile company (Safaricom) and not by a Bank, there were general protest by the Banks in Kenya as their traditional turf was being taken over. You can expect this to take place in  Nepal too as banks start losing money on transfer fees. Great news from generally gloom and doom Kathmandu.

32. pasale
People who're saying that this worked in Africa or whereever else don't have a clue on the underlying technology .. everywhere there are multiple layers of security imposed on users such as call back, store visit etc. And no, it's not skepticism about tech or Nepal that makes this look like fools gold. People who know such tech know that there is no way to make regular sms secure enough for banking purpose, even with encryption, such as what seems like Kumari Bank is offering. For eg, how many banks in US have such sms banking for standard phone (not smartphone app)? None. It's definitely not for lack of market. Go figure ...

33. P
Do your HW before saying this technology doesn't work. Look all over the world and you will see many companies getting into mobile payment and banking. A simple google search reveals the widespread use, success and effectiveness of this technology.

Eg. of companies - obopay, paypal has a mobile version, mChek (very successful in India) and many others are getting into this. mobile payment is the hottest sector of growth now.

My questions to the skeptics - 

1) If it has worked in other countries, why wouldn't it work in Nepal? It may be buggy initially but will be robust over time. Remember - Microsoft Windows has bugs.

2) Don't we trust the technology built by fellow Nepalese? Where is your sense of self-esteem? Before you complain of technology and businesses built by Nepalese, think - if you were a rock star engineer and built a rock-solid product and someone jeered at you because it was built by you, a Nepali engineer - how would you feel? I have worked with and hired and mentored many Nepali engineers and I highly respect their work ethic, quality and technical abilities.

We should learn to encourage Nepali entrepreneurs and be positively critical. Don't be negative. 

Behind every challenge lies an opportunity. Those who understand and capitalize on this will be successful. Those who complain will be left behind to keep complaining.

(11 JAN 2013 - 17 JAN 2013)