Airtel Money and M-Pesa agents’ shops on Nairobi’s Banda Street. FILE PHOTO | NMG
The rapid evolution of technology in the last decade has spawned
innovative services like mobile money, paving the way for the emergence
of a digital economy.
Mobile money is no longer just
about the traditional cash-in and cash-out transactions. It has grown to
include paying bills, saving money, lending and enabling cross-border
remittances.
Whereas Kenya and Africa lead the mobile
money transformation, the story is promising globally. The GSMA 2017
State of the Industry Report on Mobile Money underlines the remarkable
growth of mobile financial services.
About $1 billion
is now transacted via mobile money daily, backed by an estimated 690
million registered users worldwide. An estimated 66 per cent of the
combined population of adults in Rwanda, Tanzania, Uganda and Kenya are
active mobile money users.
Mobile money has had an immense positive influence on the global
push for financial inclusion. It is also a facilitator of the digital
economy, the latter described as the economic activity resulting from
online transactions facilitated by devices like mobile phones and
computers.
Mobile money is also a driver of financial inclusion, defined as access to financial services meeting one’s needs.
Financial
inclusion has been identified as a critical factor in the realisation
of Sustainable Development Goals (SDGs) to build prosperous and
inclusive communities.
Mobile financial services have
been identified as an enabler of SDGs, for instance, through creation of
economic opportunities for women, affordable access to essential
services like health and education, and poverty alleviation through
increased uptake of financial services.
Lack of a
seamless mobile money platform has, however, been touted as a major
challenge to expansion of mobile financial services in Kenya.
The
so-called wallet-to-wallet interoperability entails creating a platform
for seamless money transactions via mobile phones — a critical
ingredient in unlocking the transformative potential of the digital
economy.
Fortunately, here in Kenya, wallet-to-wallet interoperability is becoming a reality.
Safaricom
and Airtel have recently begun implementation after conducting a
successful pilot run for wallet-to-wallet interoperability; Telkom Kenya
is expected to join in due course. This marks a pivotal milestone in
the country’s quest for financial inclusion.
Interoperability,
fully implemented, will also enhance market competitiveness and deliver
value for consumers by way of lower cross-network money transfers. The
government has strongly signalled support for the project.
Moreover,
a market review report by consulting firm Analysys Mason flagging
wallet-to-wallet interoperability as a key pre-requisite to enhanced
competitiveness of mobile money services in Kenya appears to have been
well-received by the ICT ministry.
But to achieve its
purpose of delivering convenience and affordability to consumers,
interoperability needs to rope in third parties like agents and
merchants who play an instrumental role in the mobile money value chain.
The GSMA report reveals that agency fees account for more than half of the total revenues of the service provider.
Besides
establishing the one-agent model, lowering agency-related costs will
significantly help in growing the mobile money footprint.
Additionally, consumers stand to benefit from the lower cost of transactions.
Service
providers’ margins will improve, hence providing incentives for
investment in existing and new mobile money infrastructure and
products.
The idea of a pre-funded account to settle inter-change fees has been mooted.
This,
however, requires deeper interrogation to ensure that the final cost of
having such an arrangement in place is not passed on to the consumer.
Otherwise, this would defeat the essence of affordable and accessible
digital financial services.
All in all,
wallet-to-wallet interoperability will lead to the transformation of
millions of lives in Kenya while also saving consumers the hassle of
hopping from provider to provider.
The market is certainly ripe for a seamless mobile money platform going by the rapid uptake of mobile money services in Kenya.
I
hope the Communications Authority of Kenya will prioritise this
particular aspect when it makes public its final decision on the market
review study by Analysys Mason later this month.
Choto is a lawyer and public affairs specialist.
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