Mobilising money

Services have potential to drive revenues for telcos and reduce churn
Mobile financial services, Mobile money


Mobile money services including transfers, payments and virtual wallet, are proving to be a big hit in many developing markets. These services not only have the ability to transform lives, but also offer a new revenue source for operators.

Ammar Hamadien, Director of Adjacent Businesses and VAS, Zain Group

Rajiv Bhatia, Head of Mobile Commerce Sales, Ericsson

Shaibu Haruna, General Manager for Sales and Distribution, MTN Uganda

Christelle Toureille, MEA marketing director, Gemalto

CommsMEA: What trends have there been in the mobile money space in 2013, particularly in the MEA region?

Hamadien: Many trends are shaping the mobile money industry worldwide. Mobile payments, local and international money remittance, mobile commerce are the major trends that have come to light during 2013.

In the Middle East and Africa we still continue to see growth in remittance both local and cross-border due to the demographics of the region. There have been many introductions of innovative services such as mobile savings, mobile insurance and most importantly micro-finance related services that help thousands improve their financial situations by assisting the poor to establish small businesses and elevate them from poverty.

Bhatia: We see some key trends in the Middle East and Africa (MEA) region emerging around mobile money.

Large MNOs are continuing their focus on promoting adoption of their mobile money services in the African markets where a large population of under-banked consumers exist. In other markets where mobile money adoption has reached a substantial level, the next areas of growth are around merchant payments and driving interoperability between services. In the Middle East region, we see strong interest to launch mobile money business now growing beyond few successful markets like Pakistan. There is wide-spread interest not only to address the financial inclusion agenda, but also to address the banked consumers in order to reduce use of cash and make payments go digital. In addition, we see a clear trend for regulators in the Middle East to be interested in creating a cashless society leveraging on mobile technology.

Toureille: MEA has seen many big mobile money projects in the past few years, mainly in the remote mobile payment arena. Etisalat announced it would be launching its mobile money services in no less than 15 countries, Qatar and Sudan are moving into it and many other mobile operators have already deployed or have projects in the pipe with launches in 2014. There are currently 150 million users of mobile money transfer solutions worldwide and figures are predicted to reach 400 million by 2018, a large portion of end users being located in the MEA region which is showing growth in the adoption of those technologies. The trends go towards mass adoption of remote payment and one of the novelties is on the proximity payment side. Indeed, whereas NFC contactless payment was until then mainly adopted in the USA, Europe and Japan, it is now reaching the Middle East. In the UAE, transport authority RTA announced for instance the launch of its contactless transit mobile ticketing solutions with mobile operators Du and Etisalat, enabling Dubai residents to gently tap their mobile at the gate to pay for their fare. Things are moving in Lebanon as well with upcoming launches and many operators have got projects in the pipe in the region.

CommsMEA: What level of growth has there been in this sector in the past year? Which countries have seen the strongest growth?

Bhatia: GSMA has reported that there are 208 live mobile money services in 83 countries as compared to 178 live services in 2012. Most of this growth has happened in Sub Saharan Africa. The GSMA findings also state that going forward the trend of new deployments points to growth of new service launches which is expected to happen outside Africa and in other regions. We continue to see traditional mobile money services like electronic pre-paid top-up and peer-to-peer money transfer growing, though few markets in East Africa have reached a level of strong penetration and hence interoperability will be important to drive the next level of growth.

Hamadien: The growth varies by region; we are seeing continuous growth in the levels of service adoption in Asia and some countries in Eastern Africa. According to the Mobile Money for the Unbanked (MMU), deployment of mobile money services have reached 208 with the highest deployments taking place in different regions of the African continent. India has also seen big growth in mobile money with 12 live services across the country. To date Nigeria, India and Pakistan have seen the strongest growth in 2013 respectively.

CommsMEA: Which type of services are seeing the strongest growth?

Toureille: In the MEA region, mobile peer to peer (P2P) payment services, cash in and cash out are the most commonly used mobile money services as those solutions clearly address the needs of the unbanked population. The high percentage of expats in the Middle East also spurge the need for mobile financial services.

Hamadien: In the MEA region, the strongest growth has been in mobile payments, whether person to person (P2P), person to business (P2B), business to person (B2P), or business to business (B2B). We are also seeing continuous and rapid growth in air time transfers and top ups both locally and internationally, especially from the GCC to South East Asia.

Bhatia: The most widely used services with mobile money have traditionally been telecoms pre-paid top-up and peer-to-peer (P2P) domestic money transfer. These have clearly been the main drivers of adoption in East Africa and in markets like Pakistan. In many other parts of MEA we have seen adoption of “bill payment” services as another growing use-case. I see a continued growth in most markets in establishing these basic use cases. In markets where adoption of these basic services has reached a good level, the next level of growth is coming from merchant and retail payments where consumers start to park money in their mobile wallets and use it to pay for different kinds of daily consumption.

CommsMEA: Do you think we will start to see mobile payments take off?

Bhatia: Mobile payments are already becoming fairly widespread in markets where traditional banking infrastructure has not been strong and people have adopted mobile money as a trustworthy and convenient way of transferring value. In mature markets, we will see the adoption of mobile payments will be driven more by the greater convenience and ease of use rather than out of necessity for basic access. Consumers will adopt mobile payments when they see an incentive either via a superior user experience or another value such as access to better deals, offers and discounts.

Hamadien: Mobile money related services are expected to grow to about $275 billion in the next four years with an expected CAGR of 80% over the same period. So yes there is a huge potential for all the elements of mobile money including mobile payments.

Toureille: Absolutely, mobile payment technology is not a hot trend which will disappear over time, it responds to a clear and real need from the end users for banking services; especially in Africa where in some countries up to 90% of the population is unbanked or underserved. With a high mobile phone penetration, the mobile device becomes the answer to many of the African challenges. On another side, we are living in a more and more connected society where the need to transact in a quick, secure and efficient way, anywhere anytime has become a necessity.

The mobile commerce revolution has started and is now entering into a more mature phase in the evolution of wallets that will attract not only mobile operators but new entrants from nearly every sector of commerce, including financial institutions. So far the market was not mature enough. Not that those end users were not ready to adopt NFC technologies, all the latest surveys showed great appetite for those convenient and secure payment means. The bottleneck was actually mainly coming from the infrastructure. To make the technology mainstream and profitable; you need a high smart phone penetration and most importantly a network of NFC point of sales terminals.

Fortunately the technology is overcoming those barriers and both mobile operators and banks are working on their mobile payment business strategy. In addition, many major events taking place in the Middle East, first the 2020 World Expo in Dubai then the football World cup in Qatar in 2022, will serve as powerful catalysts, will drive heavy investments in the region and boost fast deployment of such technology.

CommsMEA: Are operators ready to tap the mobile money opportunity?

Hamadien: Mobile operators should be at the forefront of innovation in mobile money. They must aggressively pursue the huge opportunity in that sector. Telcos have the customer base, the geographical coverage and the distribution systems and networks.

Bhatia: Operators are well positioned to tap into the mobile money opportunity, some MNOs have identified this as a key growth area for themselves and are investing in clear strategies to start entering this space or grow their existing business. Slowly but surely other players in the ecosystem are starting to see the opportunity to leverage on the vast infrastructure. The operators will need to consider launching mobile money services in a scalable and cost efficient manner. Operators are to tap into this interest in the market and create relationships and partnerships with the wider eco-system to build this business.

CommsMEA: What should operators do to tap the potential of this sector, and how should they get involved?

Haruna: It is common practice for mobile network operators to approach mobile money deployments as another value added service but they are quick to realise that mobile money is a far more demanding service that requires a completely new skill set, organisational design and route to market to make it meaningful.

The benefits of the mobile money services include a contribution to revenue of the operator, an impact on churn and ARPU, as well as an opportunity to leverage on the mobile money agent network, adding that deliberate investment is required from mobile operators, to realise such benefits.

Building a sustainable mobile money ecosystem requires sustained investment in the technology platform, agent network and consumer education. Key areas of investment include agent training, branding, trade incentive and support. The demands on above-the-line and below-the-line campaigns using foot soldiers have proven impactful but could be costly, especially in the short-run.

Agent network design, speed of product innovation, and ease of use will remain key to market leadership when it comes to mobile money.

Hamadien: Telecom operators must build the right partnership models with all the stakeholders, particularly the banking sector including the banking regulators. They must also build a flexible and scalable ecosystem in order to be able to meet and exceed the expectations of their customers. So, for operators to successfully pursue this opportunity there must be true partnership with commercial banks, distribution agents, technology providers, utility services providers and most importantly with the customer who is trusting them with their money.

Bhatia: Mobile money is a financially regulated business and based on the local regulations, operators can either seek licences to operate these services or partner with financial institutions. We have seen fairly successful models of both kinds in different markets across the MEA region. We see a good opportunity for operators to build relationships with the wider eco-system to grow scale on these services. These relationships would include partnerships with other mobile money providers to create interoperability, tie-ups with retail and merchant outlets to grow acceptance and interconnection with existing payment networks to leverage on the existing scale.

On the consumer and service offering side, operators can consider starting with few simple services and invest in educating consumers to build trust on the security and reliability of these mobile money services. Additionally operators have a huge opportunity to use mobile money services to impact their core telecoms business to create loyalty and reduce churn, we believe the ability to cross-bundle offers and marketing campaigns between telecom pre-paid and mobile money services will be a key differentiator for operators to incentivise consumers and drive activity on their mobile money services.

Toureille: Competition will be fierce, value-added services (VAS) are critical to the success of a mobile wallet and mobile operators will have to build and deliver VAS that consumers want most to distinguish themselves. We will see a ‘war of the wallet’ taking place, to the benefits of the end users, who will be offered attractive bunch of mobile services which go far beyond payment and will include, transit, eTicketing, contactless identity & access, loyalty programs with retailers, etc.

The first movers will take a crucial advantage as they will have been testing their digital wallets in the marketplace and will have, in the process, gained valuable insights about their customers’ preferences and use of the wallets. To lead the race, mobile operators will have to partner with key services providers to offer best in class attractive wallets with a bunch of enhanced and innovative services and there is a good chance that once again, the first movers get better positioned with services providers. On another aspect, and to ensure mass adoption, mobile operator will have to carefully select their technology supplier to take security seriously and build a trusted, secure and scalable back end platform to ensure their end users can transact with peace of mind. This is crucial to create adoption in a new technology and the comber stone of any successful and future proof deployment.

CommsMEA: Is there anything holding the industry back?

Bhatia: Clear global regulations and guidelines for launching mobile money services are a key ingredient for the industry to develop. Lack of relevant regulations has hampered the wider eco-system to co-operate together and create scale with mobile money services. I see a clear interest from regulators starting to seek best practices around success of mobile money to understand and plan for issuing guidelines which foster a healthy eco-system and launch of new and secure services for the consumer. Additionally, a lack of clear standards on implementing technology can lead of multiple closed-loop implementations which do not talk to each other. Working together as an industry to establish common standards will make it easier for mobile money providers to interconnect and launch more cost efficient services.

Hamadien: In the Middle East, the one thing that is significantly slowing the growth of the mobile money sector is the lack of a clear regulatory rule book that governs the operations of mobile money. This lack of cooperation on the part of central banks is putting the end-user at a great disadvantage. Mobile money is the only way to financial inclusion to many millions in the MEA region, and can bring significant benefits to emerging economies. So, governments should encourage telecom operators and work with them to grow the mobile money sector across the region.

Toureille: In some countries, the lack of regulations is holding back the deployment of mobile payment and NFC, but this is a working progress and regulators are working on defining a framework. One of the major bottlenecks in the deployment of NFC mobile contactless payment is the lack of infrastructure. To make the contactless payment mainstream, we need to build a Point of Sales network with compatible contactless terminals, which can be quite costy for the retailers and which would be holding back or at least slowing down mass adoption.

Fortunately, new solutions such as mPOS (Mobile POS) are now coming on the market to overcome those cumbersome. The mPOS solution is a unique and first of its kind combination of hardware, software and application which can be integrated into mobile devices, such as tablets and smartphones, to turn them into fully EMV compliant mPOS terminals able to operate payment transactions with any contactless card or NFC mobile device. As a result, it will ease and encourage adoption of mPOS by traditional and new retailers. Most of the mobile phones coming to the market are now NFC enabled, however, in countries where smart phone penetration is still low, solutions such as NFC stickers and MicroSD can operate as a technology bridge to enable any feature phones to turn into an NFC one.

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