Numbers can be misleading. For example, with over 250 active mobile money projects around the world today, one could conclude there must be many success stories. However, my participation at last week’s 2015 Mobile Money & Digital Payments Americas event
in Mexico City leads me to question this conclusion. This blog shares my observations from this event and on the—still mostly nascent—state of mobile money.
The 2015 Mobile Money & Digital Payments Americas conference agenda included two full days of presentations and panel discussions
covering the varied issues facing financial institutions, acquirers, merchants, regulators and, of course, consumers within the emerging domain of mobile money and digital payments. My overall observations from this event are as follows:
1. Although there is much excitement for mobile money in Latin America, the industry is still searching for flexible multi-issuer/-acquirer platforms and innovative business models to enable mobile money interoperability.
Thus far, only four countries in the world—Tanzania, Indonesia, Pakistan and Sri Lanka—have worked through the business model issues and made the necessary commercial compromises to enable this critically important element of interoperability. Over time,
interoperability should help drive greater usage and enable positive network effects. (Reminder: M-Pesa in Kenya is unique because its Mobile Network Operator driver, Safaricom, has approximately 80% market share there.) Lastly, interoperability is
not a technical issue; rather it demands new and flexible business models, which has proven to be a very high hurdle for the 250+ mobile money initiatives around the world.
2. A large majority of mobile money implementations in Latin America and around the world have not met desired “ignition” expectations.
When you remove mobile phone air time top-ups as a transaction type, unfortunately, the overall mobile money story—aside from M-Pesa—has
not been good. This phenomena is described further in an article, entitled “Unbanked Mobile Money Still
Has Some Way to Go.” That said, it is still certainly “early days” for several initiatives, and more time is needed before success can be determined.
3. There is widespread agreement that a holistic ecosystem approach—combined with focused investments around consumer education—has the best chance of achieving successful ignition.
Mobile money projects which succeed typically require much more than a single company can provide. This is why partnerships are critical. Successful mobile money initiatives require a holistic ecosystem approach where multiple issuing banks, acquirers,
merchants, MNOs and consumers all derive new value. There is optimism about this ecosystem approach in Latin America; in Peru, the central bank and several key players across multiple industries have created
ASBANC, which may—over time—become a leading model for mobile money success.
In closing, numbers can be misleading, but true value cuts through the clutter. People will inherently gravitate toward solutions which provide new value to make their lives easier. To provide greater safety. To save time. To save money. Mobile
money has this opportunity, and a holistic ecosystem model enabling interoperability along with investments in consumer education is the best path for success. Let us know what you think.