Wednesday, October 20, 2010

Somali payment system attracts attention from a strange source

A recent statement released by a Somali rebel group, al-Shabab and carried by Reuters was reported on widely. (Read here and here, amongst others). According to the statement, al-Shabab states that the the local mobile payment system (referred to as Zaad) is a threat to the local economy and must be discontinued by the end of the year. This story was distributed widely by an eager western press. In the eyes of many, Somali is a country of pirates with an economy based on extortion. Nothing can be further from the truth.

The condemnation of the Somali government of the ban by the rebel group was not reported on at all. (Read here). In the press release the government shows much support for the mobile banking service, highlighting the huge benefits provided by the service to the population of Somalia. Furthermore, little gets reported on the strong economy of the country based on agriculture and diaspora all over the world remitting money back into the country. The economy is not performing optimally because of the instability created by rebel groups, but is reported to be growing at rates of 4% per year. Not too bad for any country. GDP per capita is about $330 which is only slightly lower than Kenya, but higher than Tanzania for instance.

What is a pity is that very little has been said about Zaad, the local mobile payment service under the spotlight. Zaad is a locally developed and managed service available all through the country and available on all mobile operators. According to all accounts and as far as I can ascertain, it is a very well designed service and one of the first to become operational on the continent. It utilise USSD as a carrier and security implementation seems to be well though out. It seems to be rich in features and can be compared with the best available. This seems to be a really good story that should have been reported on more widely. (Read the Zaad website here).

According to Wikipedia, al-Shabaab recently decreed that gold and silver dental fillings were un-Islamic, and dispatched patrols to yank them out of people's mouths. (Read here). It is a pity that a world-class service (like Zaad) be made known to the world in conjunction with a radical group like al-Shabaab.

Tuesday, October 12, 2010

What is needed for digital begging?

It is clear that the way that we pay and receive payments will change drastically in the next decade. Everything else changed as the digital revolution took hold of our world, so definitely, for sure money will change too.

I was thinking about how payment behaviour will change. The things that we are used to in a cash economy as things change into digital money. Would it be possible to beg for instance? I was convinced that this would be difficult, predominantly because I believed that we will put the control of payment back in the hands of the payer.

Then I saw that the guys at Zoompass implemented a mechanism to ask people for money (Read here). As a matter of fact, the new feature even allows you to ask a whole bunch of people at the same time for money. I see where they are coming from... it is now possible to get the club fees paid in one smooth step. No more phoning or pleading to get the team's subscription paid. But this is also a great tool for beggars I think. With the help of digitisation, a beggar is now not limited to one victim at a time - one can now target a whole crowd at the same time.

The complexity of mobile infrastructure influence on mobile payments

On the right is a screenshot of my iPhone. It is a text "conversation" that I was recently confronted with. The text message that I sent to the recipient was reportedly not delivered. After some time, the recipient responded as if he did receive the message and then kept on responding five times every twenty minutes.

We have all been exposed to such a situation and (although irritating), we understand that these networks are complex and things can go wrong. For us with a bit more technical back-ground, it is clear that although I was registered on the network, something went wrong with the data-entry on the networks SMS-C.

This is possibly acceptable, because no money was lost. I had to deal with a bit of inconvenience. However, if a financial transaction or instruction was carried on these "mis-behaving" messages, money may have been lost, or it would be possible that consumers would be extremely concerned. It is just not an option to deliver financial services on a platform with this behaviour.

Now for a moment consider how to build a system that sits on top of a platform with this kind of erratic behaviour (albeit infrequently). Difficult? Almost impossible? Hmmmm