The final panel of the MMU seminar at the NFC & Mobile Money Summit last month in New York was titled ‘Building a robust financial ecosystem’. MMU had invited Ahmed Dermish from Bankable Frontier Associates to moderate discussions between Paul Makin from Consult Hyperion, Michel Hanouch from CGAP and myself from GSMA’s MMU.
The session was kicked-off with a short presentation detailing developments earlier this year in Indonesia where three operators launched the functionality to make transfers directly between their three mobile money deployments in real-time.
A main theme of the discussion was that interoperability in mobile money can mean many different things, and in order to have a constructive conversation there is a need to distinguish the relevant use cases that interoperability between schemes can entail. After that you can rank them in terms of relevance based on market maturity and commercial interests of the involved players.
Michel Hanouch brought up the importance of finding the right pricing model when introducing interoperability between mobile money schemes, and he put forward two trends we’ve seen in the markets, and one model that we’re expecting to see, but perhaps are yet to do so. The first being the Indonesian model, where the customer pays a fee for an inter-scheme transaction and that fee is distributed between the two participating operators. A second model is being tested in Nigeria according to Michel, where there is no interchange between schemes for inter-scheme transactions, meaning no additional compensation. The third option, which perhaps would make most sense, would be that the terminating operator compensates the originating operator as the transaction can be viewed as a type of ‘cash-in’ on its platform.
The commercial model and pricing of any interoperable solution between mobile money schemes will be crucial for its success and uptake. Finding the right models for this will be one of the main challenges for the industry in the coming year as more operators are showing interest for interoperability.
Paul Makin questioned if P2P interoperability that was implemented in Indonesia represents the biggest opportunity to focus on for operators of mobile money schemes. He put forward the importance of having one single entity to handle salary and government payments across different schemes and banks. The idea of having a payments provider managing all payments regardless of which institution they end up in is an attractive proposal, and the service can be built and offered either by an MNOs, a bank or a third party service provider. A second area discussed where interoperability has potential to grow the business was in merchant payments. WinguPay (Wingu means cloud in Swahili), a concept launched by Makin earlier this year is an interoperable merchant payments solutions for mobile money schemes.
One aspect often discussed in the interoperability discussion is around sharing agents, and here the panel was less optimistic, particularly for younger markets. As agents play many more roles than only cash-in and cash-out (such as sales, education, building trust, performing registrations, first level of customer care etc.). Paul made the point that bank branches doesn’t have to serve customers of other banks, and Michel added that these areas are more complex to share than just a plain cash-in or cash-out functionality, particularly account opening. If the decision which service or scheme a new customer should register for comes down to the agent.
Ahmed closed the session with a few important questions – how do we measure success of interoperability? What can we learn and adopt from current payments systems, and what do we want to keep and what are we willing to cut away? If we are able to isolate components of older infrastructure that works, and combine that with new and innovative technology, we can bring together more efficient systems to support the growth of mobile money.