Legitimising Mobile Money: Interoperability

Cash is ubiquitous, acceptance is universal, and it’s still preferred by both customer and merchant in emerging markets – there is no doubt the tide will eventually turn in favour of digital alternatives, the only question is time. It’s not a matter of quick fixes and big launches, it’s a path of trust-building with customers through security, consistency, and transparency. It’s a matter of servicing a customer’s basic financial needs – how accessible are their funds? How can they use them? Where can they send it, and what are the fees? In this blog series I’ll be looking at the most essential components for mobile money to succeed, along with recent features that cater to the wider market.

Interoperability despite international remittance representing such a large slice of mobile money transactions (around 74% globally), it’s still in a relatively disconnected and chaotic state. Companies like WorldRemit are doing a good job of shaking up the remittance industry by providing a cheaper, faster alternative to the old guard like Western Union & Travelex – but it still has to use traditional channels in the form of an issuing and acquiring bank. True interoperability, as it’s referred to in the context of mobile money, means there’s no need for traditional forex companies, nor do banking entities need to be involved in the transaction. With the right regulations in place, an MNO is able to receive a deposit from one country, and instantly deliver the funds to another party in the receiving country, handling the conversion and fees themselves. It sounds easy enough on paper, and it is – until you hit the stone wall of excessive regulation. WorldRemit has been successful because it plays on the same field as the established remittance services. Mobile money is the truly disruptive force that many industry players have vested interest in keeping locked down in regulatory red tape, on a level that isn’t equal to the involved risk. Most would agree that true interoperability is inevitable, but it’s likely going to take a critical mass of mobile money users for the free market to take its course – roll on 2017!

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