Mobile money interoperability in Bolivia – a case study in Latin America

April 4, 2018

Over the last years, the Mobile Money Programme has highlighted the growing relevance of bank-to-mobile integration and the multiple methods to achieve such interconnection. The 2017 State of the Industry Report highlighted that approximately 10% of mobile money transactions by value are between banks and wallets – a tenfold growth from 2012.

In Bolivia, Tigo has strategically pursued interoperability with the banking sector, choosing to connect through a switch, as this brings one single entry point with access to many banks. In 2017, we visited Bolivia to meet with the core stakeholders who have worked together to provide account-to-account transfers between Tigo Money and the majority of Bolivian banks using the private bank’s association switch.

Seamless transactions between bank account and mobile money accounts are needed to displace cash. Without these solutions, consumers are forced to convert digital money held at a bank to cash, followed by another conversion from cash to digital money on a mobile wallet. This de facto solution brings unnecessary cash handling costs all around and can discourage customers from using mobile money accounts.

While achieving interoperability with the banking sector using centralised switching infrastructure is one answer to the problem above, a number of factors need to come together for this to happen. In particular, the switch should have the architecture that can absorb high amounts of low-value, real time transactions. Agreements also need to be carved out among players, which initially perceive each other as competition. This usually means long lead times for implementation. Not many countries have one or more of these variables in place.

The experience in Bolivia is unique. This study aims to describe the areas of success and areas for improvement. We hope the scenario and lessons can serve other countries in the Latam region as a starting point for similar discussions at the right time.

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