For over a decade, mobile money has been driving financial inclusion, opening access to digital transactions and giving people the tools to better manage their financial lives. Today, there are more than a billion registered mobile money accounts globally, spread across 290 mobile money deployments that are live in 95 countries.
In Africa over 50.7 million new registered mobile money accounts were opened in 2019-20 alone, taking the total number of registered accounts in the region to 481 million. The total transaction volume and value for mobile money accounts during this period was 24 billion and $461 billion (up by 20% and 27%) respectively.
The COVID-19 global pandemic has accelerated the need for mobile and digital technology on the African continent. This has created a platform for innovation. New companies are emerging with service offerings aligned to a new way of transacting, further unlocking employment opportunities but also highlighting a need for skills development as the world digitally transforms. Accelerating the mobile money industry on the African continent, is integral to this shift. The GSMA Inclusive Tech Lab which was launched in 2019, provides an industry collaboration ground to drive innovation in inclusive technologies for the underserved. This effort follows with the launch of the GSMA Mobile Money Interoperability Test Platform (ITP) in March 2020, which aims to help make transactions more seamless in emerging markets.
The need for Interoperability
Interoperability can help the mobile money industry shift to a higher gear, where customers can pay merchants and transfer money without having to consider which mobile money provider they are using. More so, end-to-end interoperability may provide more people with access to financial services and enable new services to address the needs of the most underserved user groups.
To achieve such scale, it is necessary to have a high degree of reliability between all systems involved in enabling those transactions, leading eventually to consumer trust in the financial system. Especially amongst underserved groups, reliability and trust in the financial system are critical for success and adoption.
However, understanding the new factors and variables in this complex interoperable scenario is challenging, and getting it to work even more so. To achieve that reliability and trust, testing plays a crucial role. Says GSMA’S Director of Inclusive Fintech for Mobile Money, Bart-Jan Pors, “The platform empowers both Third-Party Service Providers and Digital Financial Service Providers to test their software implementation in an end-to-end ecosystem. It solves complex testing scenarios through the simulation of the different ecosystem entities, the different APIs and different use cases.”
How the GSMA Interoperability Test Platform started
The GSMA Inclusive Tech Lab is guided by a global Advisory Group which comprises GoPay, IDEMIA, KaiOS, MTN, Telenor, the University of Washington, VEON, Vodafone, and The Bill & Melinda Gates Foundation. The role of this advisory group is to assess, prioritise and contribute towards potential project ideas that drive financial and digital inclusion for the underserved, including the openness and interoperability of payment systems, service accessibility for women and vulnerable user populations, digital identities for unregistered people, and more.
Under their guidance, it was found that this rapid rise in the need for digitisation has been accompanied by an increasing emphasis on the need for mobile money accounts to be able to work together across different networks, also known as account-to-account interoperability. “We are pleased to support the Interoperability Test Platform, as a shared industry resource to accelerate the design of digital payment systems that benefit the poor, including the 1.7 billion people, globally, who do not have access to formal financial services,” says Kosta Peric, Deputy Director, Financial Services for the Poor, Bill & Melinda Gates Foundation.
Interoperability as a case study
While several interoperability models exist, there is an increasing interest in centralised models in which financial service providers are interconnected through a central hub. Within that scenario, the Bill & Melinda Gates Foundation initiated Mojaloop, open-source software that can be used to create interoperable digital payment systems to increase financial inclusion for the poor.
Second, a truly interoperable, end-to-end ecosystem evidently also includes service providers. Enabling service providers to connect to mobile money platforms through easily accessible APIs allows them to build countless new services to address the needs of underserved user groups. The GSMA Mobile Money API initiative, an GSMA-led industry collaboration, facilitates seamlessly integrating service providers and provides a harmonised API specification for all the common mobile money use cases which is both easy to use and secure.
Says Max Cuvellier, Head of Mobile for Development, GSMA: “To truly transform the financial lives of all citizens, mobile money must become a primary monetisation mechanism, universally available across a greater range of digital transactions. By making mobile money more central to the financial lives of users, greater financial inclusion, economic empowerment and economic growth can be achieved.”