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Why Mobile Money Interoperability Is Important

FinTech

Why Mobile Money Interoperability Is Important

Mention the word interoperability in mobile money circles and watch people react in very different ways. For some, the word means something positive effective services and lower prices for consumers. For others, it means something destructive more costs, threats to competitive advantage and less profitability. For others, the word means a reality that is expected but far in the distant future. Some don’t want you to say the word at all.

The government in March announced that it will, if the interoperability status quo prevails, directly intervene in the local telecoms sector.

“We have noted with concern that whilst it is possible to send money to an unregistered customer on another network, the Unstructured Supplementary Service Data (USSD) platforms for operators are not yet fully integrated hence wallet to wallet funds transfer have not yet been integrated. The lack of interoperability of the mobile money platforms of the networks is a major barrier to effective competition and stalls further progress in the development of mobile money services.

“In the event that there is not interoperability across all networks by the set date of 1 April 2018, the Government will take the appropriate measures to enhance compliance,” said the Ministry of Information and Communication Technology and Cybersecurity.

Prior to the Wallet to Wallet interoperability, mobile money platforms in Zimbabwe largely operated as ‘walled gardens’ wherein users of one platform could not directly transfer money to users operating on a second platform.

For instance, transfers from Ecocash to One Money would be regarded as a transfer to an unregistered user from Ecocash’s end. Additionally, the recipient of the same would only be able to withdraw the transferred amount from an agent of the transferring platform.

This resulted in cross-platform mobile money transfers being unreasonably tedious, as well as financially strenuous, due to the increased charges of transferring to ‘unregistered users’.

However, this is could have been a problem of the past if the April 1 ultimate had been enforced. Resultant of interoperability, users of one platform can now seamlessly send money to users of a second platform. Further, the cost borne by the user on cross-platform transfers has been reduced to the same level as that borne on transfers within the same platform.

How long should regulators wait and how can they enforce it if the market keeps dragging its feet?

In general, the government is struggling to understand a regulatory approach that will balance the interest of customers with those of market players. They do not always effectively consider the state of the market or fully understand the implications of their tactics.

Businesses typically expect to interoperate their systems eventually but don’t want to do it without recouping the substantial investments they have made into developing services and related infrastructure.

In future articles we will look at Three frameworks for interoperability and related issues :

  1. Platform-level interconnection. If mobile money platforms are interconnected, a customer with an account with one service provider can send or receive money to or from the account of a customer with a different service provider. Today, no market has interconnected mobile money platforms.
  2. Agent-level exclusivity. Agent exclusivity revolves around the ability of a customer of one provider to use the agent of another provider for cash-in/cash-out services related to that customer’s account. Agent interoperability is possible even when there is agent exclusivity, as long as platforms are interconnected (such as with interoperable ATM networks).
  3. Customer-level interoperability. This term is used to describe two interoperability scenarios related to the mobile handset: a customer’s ability to (i) access her account using any phone with a SIM card on the same network; or (ii) to access multiple accounts on one SIM.

Pardon has been a technology enthusiast his entire life and has spent the better part of last decades in information technology and security, and he writes with an aim to remove some of the "mysticism" from the cyber world. He’s the Editor at Techunzipped. Away from the keyboard, you're likely to find him playing with the latest gadgets or the latest Game.

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