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A few weeks ago I published an article about the opportunities and challenges of Mobile Money (MM) in Nigeria and I received a lot of correspondence supporting many of my assertions and in some cases pointing to other challenges I did not include. The earlier article focused on four major issues, which I felt if addressed adequately would go a long way towards assuring the success of the MM initiative in Nigeria. In this current piece, some additional challenges are discussed and the role of the government is once again emphasized, since it has a direct influence on how successful mobile money services in Nigeria can be, especially given how it supports the cash management goals of the Central Bank of Nigeria (CBN).
One important issue concerns the branding of mobile money services and their use of exclusive independent agents. From an agency training or transaction processing perspective it makes sense to have exclusive MM agents who are only involved in relationships with single mobile money providers and their customers. However for the service to really take off and be used by a substantial mass of people it has to get beyond that to a type of shared services arrangement with non-exclusive agents who are free to serve multiple MM service providers. This will be similar to the role played by recharge card resellers, who typically sell cards for all major phone services.
Can you imagine a situation where a reseller only sold one Mobile Network Operator's (MNO) recharge cards? Restricting agents to only one MM service provider increases the cost of agent acquisition to the providers, reduces the reach of the services to customers, lengthens the time for educating consumers on the services, and generally increases the costs of acquiring each new customer.
From a customer standpoint non-exclusivity helps to make the services more competitive thereby driving better service and encouraging innovation. Agencies can also be bigger, employ more people, have bigger float and better security as their location dictates. This is similar to the service offered by 7-eleven stores in the U.S. and U.K., where they provide money transfer services via multiple companies at their locations. The fact is that success in Nigeria will be better assured when stakeholders share key learnings and collaborate more on important initiatives that reduce their costs and promote mobile money services in general.
Another important issue is that of the technology application utilized by the mobile money service providers. This I found through my actual real world tests of most of the MM services currently running in Nigeria. To my surprise I found that one of the more aggressive and particularly alluring MM service providers did not currently use either an STK (Sim Application Toolkit) or USSD (Unstructured Service Supplementary Data) application which are more reliably used for MM services, but rather used SMS and automated voice.
On this particular service, a nomadic person with money in their mobile wallet unfortunately cannot use it to recharge a phone that has zero call credits since an SMS cannot be initiated from the phone. This issue highlights the importance of involving the CBN and the Nigerian Communication Commission (NCC) in negotiations to ensure that the MM service providers get equal access at reasonable rates to Mobile Network Operators (MNO) systems. At this technology junction, it is unreasonable to expect any service not using STK or USSD applications to make any sustainable impact in the marketplace since those are the two most widely applicable mobile technologies that work on most phones, particularly the low-end units popular with unbanked customers.
A third concern is that of network reliability and interoperability, particularly as it pertains to the speed of money transfers across networks. This concern is directly tied to the fact that although the CBN framework does not provide for the MNOs to have a lead role in the provision of MM service and is explicit in not providing MNOs mobile money licenses, the impression viewers get when they watch some of the mobile money television commercials of a leading mobile network operator in Nigeria might suggest otherwise.
This issue directly concerns the other players in the ecosystem, who fear that their transactions may be given lower priority on the networks of MNOs actively promoting their own services, whether or not the service is within the CBN's operating framework. This issue has to be resolved to provide clarity since success in the open scheme practiced in Nigeria requires a reliable and consistent flow of transactions from one end to the other regardless of MM service provider.
The fourth issue is one of education about the safety and security of the mobile money service. It should be communicated very clearly to prospective users that strong controls are in place to prevent fraud and theft of money stored in mobile wallets. In addition, they should be clearly informed of the steps to take in the event their mobile handsets got lost or stolen. Recently published results of a survey conducted in Nigeria by Institute for Money, Technology and Financial Inclusion (IMTFI) indicated that respondents ranked concerns around fraud and theft much higher than fears of technology failure or ease of use.
This observation implies that MM providers should focus their education and promotion exercises on the security and safety of the service, rather than mainly on the conveniences MM services brings to consumers lives. The fact is it is easy to tell people what they can do with MM services, they can understand that rather quickly; the challenge is to prove to them that they can do all that safer and more securely than they are currently doing. Doing this well will make the difference between success and that, which is not.
Finally, the CBN needs to do a better job of promoting mobile money services. While it frequently talks about its cashless initiative, it appears to make little reference to the services that will help it achieve that end. Point-of-sale terminals are only useful to people using mobile money and card services for payments. It will serve them well if they made more frequent and explicit connections to the role MM and card services have to play for them to achieve their stated cash management goals.
Franklin Chidi, PhD is a telecommunications finance expert. He has been a senior management employee of AT&T Inc. in the USA for the last 12 years and prior to that was in commercial and investment banking organizations. Email at dr.fchidi@gmail.com
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