Critical requirements for driving successful mobile money ecosystem initiatives

This blog was co-written by Nicolas Vonthron and Chris Williamson.

In our last post, we discussed the unique opportunities to digitise transactions and solve the “cash pain” experienced by customers and businesses across the developing world by building a mature mobile money ecosystem. However, to date, these ecosystem initiatives have struggled to gain traction.

Based on our experience of working closely with mobile money operators, and in light of the trends outlined in the 2014 State of the Industry report, this post will discuss the three critical requirements for mobile money operators to drive successful ecosystem initiatives: strong foundations, a B2B mindset and capabilities, and a collaborative approach.

1. Strong foundations

Robust distribution networks, bank-to-wallet integrations and APIs are critical foundations for ecosystem initiatives; enabling customers and businesses to move funds from informal cash storage or bank accounts into and out of mobile money accounts with minimal friction.

A mobile money agent is a customer’s gateway between e-money and cash; until payment chains are fully digitised (by customers, businesses and other organisations receiving, storing and spending money digitally), agent networks remain critical. Without a well-trained, well-located, well-incentivised and liquid agent network, customers can’t easily deposit or withdraw cash from their mobile money accounts – a fundamental requirement for most ecosystem use cases. Additionally, agents educate customers and build trust in the service, both of which are vital to capture transactions of increasing economic significance in people’s daily lives.

Without strengthening their distribution network in advance of launching an ecosystem product, operators run the risk of liquidity and reputational issues, as was the case in the DRC. Mobile operators had agreed to partner with banks to help disburse government salaries to one million civil servants [1] – with the aim of resolving security problems and preventing fund embezzlement by intermediaries. While this represented an exciting and unique opportunity at the time, the majority of these disbursements were for customers in remote and often insecure areas, where mobile money agents were sparse and lacked the liquidity to handle sudden huge peaks in demand for cash outs. In the end, the initiative was a costly mistake for the operators, who had to work hard to resolve liquidity and reputational issues.

While agents provide the nexus between cash and mobile money, bank-to-wallet integrations provide an equally critical gateway for businesses to transfer their funds or pay suppliers, and for high-end customers to load their mobile wallet. For example, according to Dylan Higgins, CEO of Kopo Kopo, Safaricom’s numerous bank integrations enabled the early adoption of mobile money for merchant payments in Kenya: “If I’m in a bar and I want to pay with Lipa na M-Pesa because I’m out of cash, I can make an instant transfer from my bank account to my mobile wallet.”

Application Programming Interfaces (APIs) are also an important prerequisite for efficiently on-boarding businesses and other organisations into the mobile money ecosystem. As described in a previous blog post, APIs allow different software applications to integrate so that third parties can incorporate mobile money payments into their services or products.  APIs can remove the need for bilateral agreements or to allocate dedicated resources for technical integration, and can enable a wider range of use cases that put mobile money accounts at the centre of a digital ecosystem.

2. B2B mindset and the willingness to build capability

For operators with strong foundations in place and a good base of customers who trust and actively use their service, the timing is right to focus on ecosystem initiatives. However, packaging mobile money as a B2B offering presents new challenges for operators. A different set of commercial, operational and technical capabilities is required to effectively target and onboard small and large businesses and organisations into the mobile money ecosystem:

A value chain digitisation approach, not a payment digitisation approach: For new verticals to switch from cash to mobile money, operators must look across entire chains of payments to remove existing pain points without creating new ones.

For example, Safaricom has addressed Kenya’s retail vertical with a combined C2B and B2B approach. Customers can pay merchants through Lipa na M-Pesa (which is more secure for both parties than using cash), and merchants can use this e-money to pay their distributors, who also benefit from reduced cash handling costs. Safaricom now has over 24,000 active merchants and 158 cashless distributors (including companies like Coca-Cola, Unilever and East African Breweries) using Lipa na M-Pesa. [2]

A bespoke solutions approach, not a scattergun approach: When approaching any vertical, operators need to take the time to understand, segment and target the different types of businesses and customers involved. They must identify their complete requirements around payments, and the pain points associated with using cash, to develop targeted bespoke solutions. This may involve building new mobile money capabilities, such as B2B marketing and pre-sales teams.

For example, UBL Omni in Pakistan has been a trailblazer in developing a mobile money G2P business. Beyond working hard on its foundations – carefully selecting the right agents and monitoring them and doing mystery shopping to ensure strong liquidity and quality metrics – UBL also created a dedicated B2B sales approach for G2P payments. UBL has a team of 500 people engaging with clients, distributed regionally to handle provincial projects. This team is responsible for managing relationships with customers, and for agent management; part of this team is focused purely on G2P sales. UBL also has a dedicated team that works on proposals and solution development for G2P and other ecosystem projects. This team ensures seamless coordination from sales through to technical implementation.

3. Collaborative approach

Following the industry collaboration we are seeing with domestic account-to-account (A2A) interoperability, mature mobile money operators are increasingly aware of the need to collaborate in order to reach new ecosystem verticals.

While there are now a number of examples of successful ecosystem initiatives (beyond C2B bill payments), these have almost always been driven by scaled operators with a substantial share of mobile money accounts in their market. There are also some use cases, for example G2P payments, which require a universal, “operator agnostic” value proposition in order to scale at all.

Interoperability is the most obvious starting point for collaboration, whether enabled through bilateral agreements among operators and banks, or indirectly through processors or aggregators. Collaboration could also mean creating more aligned customer and business propositions that drive mass market adoption, such as common Point of Sale (POS) experience for retail and transport payments. However, collaboration does not need to limit competition; operators could agree to collaborate on some aspects of their ecosystem business models (e.g. interoperability and POS experience) but compete fiercely on others (e.g. target segments, product features, pricing).

Within a market, operator collaboration offers three key benefits that could unlock new mobile money ecosystem verticals:

  1. Enabling a universal value proposition to match the requirements of certain segments (such as utilities or governments) and the requirements of end users.
  2. Enhancing network effects to increase the business opportunity by enlarging the addressable customer base.
  3. Increasing speed to scale by overcoming the cost and complexity of on-boarding new segments (e.g. removing the need for separate POS infrastructure).

For example, in Cote d’Ivoire, Orange, MTN, Moov and Celpaid have enabled their customers to pay tuition fees through mobile money, via a payment portal. This operation is driving a sustainable, seasonal use case for the operators, as students register digitally. In 2014, nearly 1.5 million students registered for private and public schools using mobile money, which is 99% of the total student base. [3] The minister of education congratulated the mobile operators for their collaboration, and underlined the convenience of the service, which allows parents to avoid the insecurity associated with carrying cash while registering their children for school, and removes time burdens. For school administrators, the benefits are also clear: creating more reliable databases and removing cash handling costs. At the local level, school efficiency improved with staff no longer needing to manage the registration and payment process. Furthermore, digitization has allowed the education system to increase the transparency of the registration process. [4]

This collaboration evolved in a few steps: in 2011, Celpaid was the exclusive payment provider. This generated some complaints from customers; Celpaid agents suffered from large queues and the sudden demand load on the GSM network meant some customers were unable to get receipts. [5] This proved the need for a universal service. In 2012, tuition fee payment was offered by all mobile money services, but the situation wasn’t ideal, primarily because universities didn’t accept SMS receipts as proof of registration. This required all stakeholders to come together and collaborate to enable a relevant service through mobile money; since then transaction volumes have scaled rapidly, highlighting the network effects offered by a collaborative approach.

We are also seeing a promising collaborative approach in the Philippines, where Smart and Globe are part of a consortium to replace the Manila Metro Rail Transit line’s old ticketing system with contactless-based smart card technology.


While the potential for the mobile money ecosystem is massive, with tremendous opportunities for digitising payments and solving cash pain points for customers, this potential has yet to be realised. Strong foundations, including a robust agent network, bank-to-wallet interoperability and APIs, are a must-have, but these are not the only requirements. Digitising value chains within specific ecosystem verticals requires a strong focus, a B2B commercial mind-set and the willingness to invest in new capabilities. Finally, a collaborative approach between operators will be critical in order to unlock and accelerate new ecosystem verticals to scale.



[2] Cited from Safaricom’s 2014 Annual Report: