Mobile Money : The Spin and Legends

Believe it or not , Africa is considered the global pioneer and undisputed leader when it comes to Mobile Money. African Telcos have leveraged their networks and devices to accelerate financial inclusion while African Banks have developed such unique financial services on smartphones which the developed world is hastening to emulate. Thats an original Legend.

This fact underscored the jubilant atmosphere as various players in the Mobile Money value chain met at a MM Congress .The audience reminded me of a trying to make sense out of a Jackson Pollock painting.. people from telcos , banks , vendors , NGO’s , Government in a swirl of activity each making their prescence felt like vapour trails hurling around a spinning star : aahh attracts humans like no other element on this planet !!

Yours truly moderated a spirited Inter Operability Panel which elicited valuable insights from the vendor , telco , guru panellist. Now why is this Inter Operability things so important ?? As you know most mobile money services are proprietary platforms and electronic money can only be transferred between customers on the same scheme. But for mobile money to become an ubiquitous digital payment solution,it needs to offer users the same level of acceptance as cash or card. Through interoperability,the industry can enjoy increased transactional revenues ;increased addressable market and growth in number of businesses which accept and use mobile money.

This year GSMA launched the Mobile Money Interoperability programme (MMI).The goal of this initiative is to implement Account to Account 9 A2A) interoperability in a select number of reference markets, and demonstrate significant growth in transactions where interoperability is live. The GSMA believes that A2A interoperability in mobile money may create strong positive network effects; there is a wide body of research that investigates interoperability in payments systems and assesses the opportunity for participants that is created through network effects. Studies have found empirical evidence that demonstrates the positive network effects of A2A interoperability between banks, which could be expected to apply also for mobile money. Is there must be some reason for GSMA to vigorously promote Interoperability between Banks and Telcos ??

Well think about this:recently the CEO of American Express predicted that there will be only five platforms that matter to the future of payments : Apple, Amazon, Facebook, Google, and Alibaba > NO TELCOS NO BANKS

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Seems the OTT players are getting ready to eat up everything especially the huge pie called retail transactions M Commerce and POS. Sure we need a Bank to receive / store our salary , issue a card…but that is all…i can make purchases via Retailers ,Facebook, Google and co…you get my drift !!

Have you heard of BLE ( blue tooth low energy ) and I beacon ?? Well if you ask Apple they think they can cut out the Telcos completely using the aforementioned radio technologies when it comes to retail transactions. Google’s espousal of HCE ( host card emulation enables software running on the host CPU itself to emulate an NFC card and directly communicate with the NFC reader )threatens to utterly uproot Telcos from the shaky ground they have come to occupy in the ongoing mobile payments turf war.

The Telcos have been moaning for years that OTT players have gobbled up the data revenues …and now the Banks will might join them in crying foul that the same clever raiders ( OTT ) are now eating up the m commerce cake !! Traditionally banks have been highly revered institutions but today’s consumer is as likely to trust Apple, Google, or Amazon ( OTT players ) – the masters of the connected experience. This rapport is making it easier for many business’s to move into the payment space and beyond, threatening the consumer relationship with traditional financial institutions.

Think about this : About 85% of the $1.1B that Tencent’s WeChat app will earn this year will come from online gaming, estimates The Economist. The rest will come from stickers, services like sponsored accounts, and the fast-growing area of m-commerce. Already merchants are selling goods via WeChat as diverse as fruits, smartphones (150K Xiaomi phone in 10 minutes), movie tickets, taxi rides and insurance against malignant tumors. You can pay at vending machines with the app. Entire books have been written about how to do marketing on WeChat.

All hope is not lost since some some telcos and banks like the ones in Indonesia saw the light !! On May 15, 2013, Indonesia’s three major mobile operators—Telkomsel, Indosat and XL—went live with a ground-breaking initiative that enabled their mobile money customers to send and receive money across each other’s networks. This was a milestone in the mobile money industry. for the first time, mobile money platforms run by mobile operators could talk to each other—account to account, or “wallet to- wallet”—in real time.

By 2012, each of the three operators had established payments systems on their own, but in a geographically dispersed country like Indonesia, isolated payments schemes are unlikely to have enough reach to drive significant usage. With a new and more enabling regulation connecting their platforms would allow them to capitalise on the potential of the payments market, strengthen the value proposition for their customers, and become more competitive overall in the payments market.

With respective CEO sponsorship the heads of departments for mobile money at each operator were then tasked to deliver and implement the project. Weekly meetings with the heads of mobile money were set up, and soon more meetings between their teams and relevant departments within each organisation were also occurring frequently.Despite the fact that all three deployments operated different mobile money platforms, the technical development to enable the platforms to talk to each other took only four months. Both Telkomsel and XL developed their platforms in-house, while Indosat bought their core platform from a mobile money vendor.

The technical teams from the three operators jointly defined the functionality of the inter-scheme collaboration and how information could be exchanged between them. They decided to describe the agreed functions using WSDL and communicate using a secure protocol, SOAP over HTTPS. This solution was chosen for its simplicity, affordability, and flexibility. Defining the features of inter-scheme communication from scratch allowed the operators to add certain functionality, such as displaying the name of the recipient when sending money to another scheme in order to reduce the likelihood of sending money to the wrong person – a feature that would not have been available using existing payments switches or an automated clearing house (ACH). Circumventing a commercial payments processor enabled them to not introduce any additional costs from a third party.

What operators in Indonesia have shown is that industry collaboration and interoperability is possible and can be technically implemented in a safe and timely manner without jeopardising the business model for mobile money. Still, several challenges lie ahead for the mobile money industry in Indonesia if it is to achieve its full potential. Interoperability was achieved in Indonesia thanks to CEO commitment, strong technical teams collaborating across operators, and mobile money managers designing robust SOPs to address customer service and risk management. There have been bold predictions that 52 million mobile money users will conduct transaction volumes of US$42 bn and generate service revenues of almost $2bn by 2017 !!

So what is the next step to kick start the Inter Operability offensive in Africa ? Getting competing companies to work together successfully is like herding a group of cats : it requires effective organisation, and getting these collaborations to deliver tangible results requires effective leadership and governance. One of the most common and effective means of achieving this is via dedicated industry groups (often referred to as steering boards or task forces) that are charged with agreeing and implementing policies.

The objectives of the Task Force would be to provide a forum for discussion and investigation relating to the development and deployment of interoperable MMO payment schemes; facilitate cooperative activity relating to the development of interoperable mobile e-money, including: interoperable specifications;service delivery processes; enable resolution of all non-competitive issues that may lead to an increase in risk; Identify and engage with external stakeholders (such as banks) in the development of interoperable MMO payments; promote interoperability of technology and service delivery across MMO scheme implementations etc etc

Mpayments will continue to flourish as trust and confidence grows – firstly for traditional transactions, such as bill payment, and then eventually facilitating mobile unique applications such as transfers using mobile phone numbers or NFC proximity payments. As Mobile Money matures, m commerce services will rapidly transform the consumer experience through seamless ecosystems delivering new levels of service, convenience and satisfaction.

The consumer revolution and increasing competition fuels the growth of Mobile Money from complementary channel to strategic keystone, delivering connected, contextual services that were once unimaginable but now highly in demand. In the digital smartphone world the breadth and complexity of Mobile Money increases in-line with the demands of richer services requiring greater simplicity, expanding ecosystems, and deeper integration


Sadiq Malik ( Telco Strategist )


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