Mobile Money Interoperability
February 6th, 2015 - Posted by John Doornbusch
Mobile Money services have boomed over the last several years in developing nations and have provided much needed financial services to the poor and unbanked populations of these countries. There is no doubt that the success of Mobile Money services is dependant on having a strong and diverse ecosystem – a good mix of agents, merchants, banks, and service organisations that all actively participate and benefit from the Mobile Money service. However, in many of these countries, there are multiple Mobile Money service providers (typically each mobile phone operator offers their Mobile Money service), each with a closed-loop ecosystem with no interoperability with other Mobile Money service providers and ecosystems.
This means, for example, that if I have a Mobile Money account with mobile operator X, then I cannot use Mobile Money to send money to my brother or friend (or pay a merchant) who has a Mobile Money account with mobile operator Y. In some countries, there are as many as three or more different Mobile Money service providers (mobile operators), and these closed-loop systems result in significant market fragmentation and reduced service levels for the customer.
Clearly, all participants in the ecosystem can benefit if the total addressable market is increased, and this can occur if the Mobile Money systems can interoperate to create an open-loop system that is available to all users.
The GSMA has a Mobile Money Interoperability Programme to promote Mobile Money interoperability and assist service providers with the commercial and technical issues involved. The financial regulatory authorities in some countries have already mandated interoperability of varying degrees for their jurisdictions, to provide better services for users.
Novatti strongly supports interoperability between Mobile Money services. We think that it is inevitable and will accelerate financial inclusion by providing better services to the customers’ that most need it.