Ben Lyon is Vice President of Business Development for Kopo Kopo, which offers a software-as-a-service platform for integrating mobile money systems with core banking and enterprise resource planning software.
AITEC Banking and Mobile Money COMESA brought together a host of mobile money players from across the globe. Whether software vendors from Bangalore, thought leaders from Seattle, or practitioners from Nairobi, everyone seemed to come together around three key themes: 1) Infrastructure, 2) Integration, and 3) Interoperability.
- Infrastructure: Before all else, it is critical that mobile money providers build the necessary infrastructure to make their services more convenient than cash. This entails building an extensive and professional agent network, educating prospective customers, marketing, and establishing key partnerships. Partnerships with groups like Top Image and PEP Intermedius in Kenya, for instance, have proven instrumental in expanding the reach and reliability of the Safaricom M-Pesa agent network.
- Integration: Once mobile money providers lay the necessary foundation, the next step is to begin integrating throughout the financial ecosystem. Even though mobile wallets are unique insofar as they are ‘stored value accounts’ and work outside of the banking system, customers want options. Those options may include integrations with ATMs and POS terminals, e-commerce sites, commercial banks, insurance providers, etc. In order to facilitate integrations and get more customers, mobile money providers should open their systems and offer application program interfaces (APIs).
- Interoperability: Few subjects in mobile money are more crucial and controversial than interoperability. Interoperability means the ability to seamlessly transfer funds from a mobile wallet on network X to a mobile wallet on network Y. Although customers want interoperability, mobile money providers have little or no incentive to offer it. Safaricom M-Pesa, for example, dominates the Kenyan mobile money market such that not having an M-Pesa account can be detrimental. Safaricom has benefited from reduced churn (e.g. customers are not leaving to other networks) and increased average revenue per user. If Safaricom opened M-Pesa in order to allow interoperability with Airtel, Orange, and yu, it would most likely lose market share because its customers could transfer to other networks without dropping M-Pesa. Since mobile operators are unlikely to offer interoperability until made to do so by regulators, services like MobiKash, Tangaza, Elma, Lipuka, and PesaPal have arisen to fill the gap.