Is there sufficient focus on merchant payments across developing and developed markets to make cashless economies a reality?
With over 1bn registered mobile money users in 95 countries, mobile money operators and MNO’s, have a substantial addressable market. Why is it then that cash is still king in these countries, and people with these wallets still prefer to cash out of their wallet, breaking the eMoney link and use cash at their local merchants?
Are these mobile money wallets failing, or do they not have the ability to cater to consumers’ and merchants’ growing needs?
In a study conducted by Youtap after years of working with MNO’s and eMoney wallet providers around the world, we have found:
- traditional mobile money wallets lack the sophistication to provide a seamless experience for both the consumer and the merchant when used to satisfy both use cases
- merchants want the flexibility to be able to handle all types of payments, cash, money, and debit and credit
- merchants do not want to spend time waiting for payment. They want an application experience that speeds up payment and does not slow it down, methods such as USSD push or swipe or chip are frowned on, while contactless payments QR and NFC are welcomed
- the majority of merchants surveyed operate on a 1 – 2.5% margin on sales and cannot afford the fees (often called interchange fees) associated with accepting electronic payment
- merchants want the ability to download an App, register it, and then accept payments. They want a limited cashbook to load their inventory and want to see what has been sold and who it has been sold too daily
- merchants want access to value-added services such as microloans and loyalty, with the flexibility to lend and repay when it suits them, and participate in centralized rewards programs enabling them to offer a range of vouchers and rewards to stimulate sales within their customer base
Traditional mobile money solutions do not provide this level of functionality or flexibility. Mobile Money operators subsequently choose to walk away from this opportunity, with many of them feeling it is too complicated and too difficult to acquire and maintain merchants. They opt-out and wait for a Visa or MasterCard or the banks and new entrants to come along.
Mobile money solutions don’t provide the API’s nor do they provide transaction throughput or aggregation and processing capabilities to connect to all the banks, MNO’s, eMoney providers, and payment service providers to enable a seamless experience within the merchant. Each mobile money solution provider opts to provide a merchant with their QR code or POS machine.
Experience has shown that the opportunity is genuine. Our experience in Indonesia with the acquisition of tens of thousands of merchants in 12 months has come down to 3 things:
- the merchant App and user experience – a purpose-built solution for all merchants
- support for all payment types including cash, cards, contactless NFC, and EMV compliant interoperable QR codes (don’t get caught out with non-interoperable QR code)
- interoperability with all eMoney, Scheme card, and bank delivered wallet and eMoney solutions with the capability to process large volumes of transactions per second
- the right strategy and team to execute on merchant acquisition, training, and go to market
Globally multiple initiatives to deliver merchant payment to developing and developed markets are underway. They tend to be proprietary or government / regulator-led, with each market experiencing a range of challenges. Those markets that are moving are the ones that have developed a standard and regulated the delivery of this standard across all payment service providers.
Youtap has been instrumental in driving standards centered around EMV compliance in Indonesia with the central bank.
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