What is of critical importance in making mobile wallets work in emerging markets is making sure that the wallets are properly funded. Getting money into these wallets is a big challenge, especially considering the predominantly cash economies. The boundary between cash and digital currency is often difficult to navigate.Cash-in strategies at agents, retailers and bank branches (a kind of cash deposit feature) are the most frequently used approach to get money into wallets. Some solutions utilising scratch cards and/or "top-up PIN's" have been implemented with limited success.
Other mechanisms to fund wallets are providing tools to pay salaries or wages directly into the wallets and the distribution of aid or grants. Using wallets to perform these functions are not only cost effective, but also provides the basis to drive secondary transactions. Another source of funds (of course) is remittance flows. While it is often customary to accept remittances as cash payments, it is far better, more secure and cost effective to fund nominated wallets with the remittance amount. This then also could lead to secondary transactions.
It is often those operators that deploy the most effective funding strategies that show the biggest usage.
3 comments:
Another option is by disbursement of micro-loans to individuals. What's interesting about this approach (and likewise for individuals receiving remittances) is that the mobile money system 'liquidity' is originating in individuals rather than merchant or agents wallets accounts (as is often the case).
I beg to differ on this. I think if cash-ins are equal to cash-outs in a predominantly cash based economy and in the end the wallet serves no other purpose except as a temporary container to store funds, I would not consider the wallets very useful. If that is the sole purpose then there will be other more efficient mechanisms and wallets will not be ubiquitous.
Neil Ahlsten of Google Africa once wisely said that the biggest fight in payments in Africa is against cash and this fight is not only being fought by mobile payments alone. Cards, other EFT mechanisms etc have been in the same battle and have not succeeded for one fundamental reason - The Ecosystem
There needs to be different types of wallets for different purposes and transactions have to be between those wallets for the fight by mobile payments to gain a foothold. There also needs to be a mechanism where the mobile wallet can be funded by other payment mechanisms as Owen has illustrated as well as transact with other 3rd party mechanisms as well. Even if the individual has personal liquidity and that liquidity can only be used for transactions as cash then why does he/she need a wallet?
I look at Kenya and Uganda and compare them to Tanzania or Ghana and from what I see the Ecosystem makes all the difference.
Mobile Payments in Africa has a huge advantage over cash payments because of ubiquity and versatility but the ecosystem has to be built along with each initiative to ensure long term sustainability. If I was not convinced of that fact before after years in the industry, this article by ICTWorks makes it even clearer: http://www.ictworks.org/news/2011/12/21/mobile-money-better-cash-bottom-pyramid#comment-1304
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