Interoperability: The Next Phase Of Mobile Money

14 December 2018

Money Transfer

Mobile money continues to revolutionise financial services in emerging economies. Across Africa, there are large numbers of subscribers that use various mobile payments platforms to access a range of financial services, including peer-to-peer money transfers, airtime and electricity purchases, bill payment, retail transactions, and even credit, saving, and insurance services.

As mobile money has evolved it has become an important provider of financial services across Africa. What began as a way to enable peer-to-peer money transfers has become a viable alternative to formal banking services, with a range of products and services that cover a variety of banking and payment needs.

If mobile money transactions want to achieve the same growth and ubiquity as card payments, it must move to the next phase of its existence and embrace interoperability. Most mobile money platforms are still operating on a closed loop system, where account holders can only transact with people on the same network.

As we saw when we looked at the history of cards, a key success factor to creating a digital payments ecosystem is creating an open-loop system that relies on cooperation for the seamless transfer of funds across different accounts.

By cooperating with each other, even while they were in competition, the card schemes were able to create a system where their payment method was almost universally accepted. It is not the card itself but the interoperability of the ecosystem within which it works that made it ultimately successful.

Mobile money interoperability would, therefore, require that anyone can transact with anyone else with an account, regardless of their service provider. This immediately makes mobile money more convenient for consumers as there are fewer restrictions on usage. Read more on Tech Financials here.