Dialog Axiata Sri Lanka launched eZ Cash in 2012 just after a new and enabling e-money regulation was put in place. Earlier last year we presented an infographic showing the results of eZ Cash and how lifting the regulatory barriers enabled investments that have led to improvements in financial access in the country.

Dialog recently announced their next step for eZ Cash, which is to invite other operators to offer eZ Cash and be responsible for marketing and managing the product to their customers. Etisalat will be the first operator in the industry to enter this type of relationship. This is different from the operator-agnostic models like we have seen previously, as both Etisalat and Dialog are joining forces to drive an existing brand and product together.

For the customer, the eZ Cash experience will be mostly the same, regardless of whether it is offered by Dialog or another operator. The cost of eZ Cash to the customer will be the same, and customers will be able to access the eZ Cash agent network the same way. The USSD menu will look the same and have the same functionality, regardless of which operator is offering the service. Dialog remains responsible for managing and building the eZ Cash agent network, although they will take requests from the new operators to incorporate their respective customer service centres and directly managed stores into the existing agent network. Registration is done through self-registration in Sri Lanka, so account opening is not tied to the agent network in Sri Lanka as it is in most other markets. Dialog, through eZ Cash, will also be responsible for all customer care issues that will arise, and the joining operators will be required to manage customer due diligence for the customers they bring on board.

There will be a revenue share agreement between the other member operators sharing their transaction revenues from eZ Cash with Dialog for using (i) the agent network that is built and managed by Dialog, (ii) the platform developed by Dialog, and (iii) using the eZ Cash brand established and so far marketed only by Dialog.

For Dialog, the benefit with this system is that eZ Cash growth would no longer be restricted to their GSM customer base and they will be assisted by other players’ efforts to drive awareness and adoption among new customers. For other operators joining eZ Cash eZ Cash enables them to offer mobile money directly to their customers but at a much lower cost than if they were to roll out their own mobile money scheme.

This is a fascinating development to follow in the industry as there are now 225 mobile money deployments live and an additional that are 100 planned but not yet launched. Already there are over 50 markets with two or more deployments, demonstrating that mobile money is becoming a mainstream service. However, many deployments are still struggling to drive adoption of their services with customers. This is due to various reasons such as regulatory barriers, under-investment or the need for a clearer value proposition for customers of mobile money in some markets. For some of these reasons, certain operators are likely to look at alternatives to running and operating nationwide payments schemes themselves, and Dialog’s model in Sri Lanka may be tempting for others to consider going forward.

This model is also interesting as it creates greater specialization across the value chain. One company, Dialog in this case, can focus on the investment-heavy task of setting up the distribution network while the operators joining eZ Cash focus on getting their customers to transact. This is not too dissimilar to the issuer-and-acquirer model we see in card payments schemes. What is now left to the operators is to define and refine the operational agreements as certain complexity is introduced in terms of settlement, transaction reversals and customer data.

Similar developments are already happening elsewhere. In Peru, the bankers association, ASBANC, is developing a joint infrastructure for mobile money, and we previously wrote on this blog about two initiatives in Nepal with a similar setup.