Key stakeholders from the mobile money industry convened in Cape Town for the MMU Global Event on 5th November to discuss the challenges and opportunities within the mobile money industry. The day featured panels on a variety of topics, including:
- An update on the state of the industry for mobile financial services
- Mobile Money Interoperability – Speaking from experience
- Building the ecosystem: rationale, approach, challenges
- Moving to scale in a tough market
- Merchant Payments: Ready to scale?
- How will mobile innovation impact the future of mobile money?
The full agenda is available online, as well as presentation slides from the sessions.
New resources launched
MMU launched two new resources at the Global Event: GSMA’s Code of Conduct for Mobile Money Providers, and an online mobile money database on the GSMA Intelligence website.
This online database will publish all historic data collected on mobile money transactions, products, customers and agent distribution networks over time. The first set of data to be released shows the total number of mobile money registered accounts in East Africa for the period from 2000 to 2014. In coming months, MMU will add new sets of data covering countries all around the world, including further indicators for the period 2000-2014, as well as forecasts up to the year 2020.
Key takeaways from the day
- Adoption of mobile money keeps increasing, with a total number of registered mobile money accounts of 89.3 million at the end of Q3 in East Africa. Today, 47% of mobile connections in East Africa are linked to a mobile money account, representing a penetration of 49% of the adult population. More mobile money accounts will be opened over the next few years and the forecasted total number of accounts will almost double by 2020 to reach 166.3 million.
- Mobile insurance is gaining traction with over 17m policies already issued. 2014 saw an acceleration in the development of products beyond payments: today, there are 150 live mobile insurance, credit and savings services which help individuals to pay for essential services such as healthcare or micro-loans to help grow a small business.
—From ‘An update on the state of the industry for mobile financial services’
- Sharing lessons learned from launching interoperable mobile money services in their respective markets, Tigo Tanzania and Telenor Pakistan see interoperability as an opportunity to provide better service to their customers and increase mobile money transactions. The solution for how to enable this looked different in both Tanzania and Pakistan, illustrating that the way forward for markets wanting to become interoperable is to factor in specific market dynamics. In Pakistan the operators are joining a bank-owned switch to enable these transactions while in Tanzania the operators are connecting directly among themselves.
—From ‘Mobile Money Interoperability – Speaking from experience’
- Building the mobile money ecosystem is key for shifting away from costly cash-in networks, increasing the velocity of money within the system, and expanding outgoing transactions options. A mature, ecosystem-based deployment could have cash flows comparable to GSM core business. There are many players in the ecosystem, such as banks, insurance companies, governments and agriculture companies. Salary disbursements and G2P payments, as well as interoperability with banks, are ways to acquire customers and to load wallets, as is the case for Easypaisa in Pakistan. Customers may be generating further transactions: through international remittance as reported by Ooredoo in the Middle East, or by agriculture input (seeds) payments for farmers in Kenya and Tanzania, as highlighted by Vodacom.
- However, there is a need for greater consumer education, especially from agents, to reduce the number of immediate cash-outs by customers. In addition, understanding and integrating with these value chains can be highly complex, and this ecosystem journey will require greater levels of collaboration, including with third parties as sector experts, such as TechnoServe.
—From ‘Building the ecosystem: rationale, approach, challenges’
- The practicalities of delivering a mobile money service in a tough market has been a persistent challenge, often owing to weak physical and economic infrastructure. Despite this, it is important to focus on investing in opportunities, rather than challenges, to make mobile money work. Data, analytics and research are invaluable in these markets – in the DRC, Vodacom used its data to build the business case needed to achieve mobile money turnaround. Ensuring mobile money agents are profitable and providing support to them is also crucial – Orange says this led to their success in Mali. In tough markets, your consumer is more important than your product – in Zambia, this recognition allowed Zoona to narrow focus to quality, their customers and liquidity issues.
—From ‘Moving to scale in a tough market’
- While the industry has struggled to unlock the opportunity to enable face-to-face retail payments with mobile money, merchant payment offerings are now scaling in a few markets: in Somaliland, ZAAD’s merchant transaction volumes are growing and their merchant base is more than 12,000; in Kenya, Safaricom reported KSh 6.6bn of retail transactions on M-PESA for September 2014, including both “Lipa na M-PESA” proximity payments from 32,000 active merchants and cashless payments for nearly 700 distributors; Kopo Kopo is also seeing exponential transaction growth in Kenya based on its Safaricom partnership.
- However, every market is different in terms of customer and merchant pain points around using cash, and there are also strong differences between different customer and merchant segments. Value propositions, products, pricing models and POS experiences need to be tailored not only to different markets but also to specific target segments.
—From ‘Merchant Payments: Ready to scale?’
- Three potential trends and disruptions were addressed when exploring the future of the mobile money industry and the impact of innovation: first, service providers want mobile operators to collaborate, as technological exclusivity will prevent scale. Second, the distribution network will evolve through both a shift in power away from operators and through disruption by digitization, especially with the development of cryptocurrency. Finally, the future mobile money industry will see increased competition from banks to access customers via mobile channels, leading to increased price competition. Competitors will focus on one service and do it well, while operators can be enablers to third-party services.
—From ‘How will mobile innovation impact the future of mobile money?
Written with contributions from the MMU team.