Money on the move

Zain and STC’s Viva have become the latest operators to launch mobile remittance schemes when they announced the introduction of banking solutions in Kenya, Tanzania and Uganda; and Kuwait respectively last month. They join a growing number of operators forging a path to integrate mobile remittance schemes into a core part of their customer acquisition and retention strategy. Gavin Krugel, the director of the GSM Association’s (GSMA) mobile money transfer (MMT) initiative, explains how the organisation intends to streamline the rollout of such schemes across the globe while ensuring interoperability between transfer systems

The GSMA is looking for additional providers of international remittance to complement its existing partnership with Western Union. It is hoped this will allow more cross-border transfers through the interconnection of mobile remittance systems between different operators in different countries, and increase the number of ways in which individuals can send or receive money. Last December Western Union teamed up with Safaricom’s hugely successful M-Pesa programme to allow customers in the UK to transfer cash to M-Pesa users in Kenya. Gavin Krugel says that it is imperative that systems become interoperable, and this is a key area the GSMA is promoting.

“As the mobile money transfer (MMT) market matures and services become more widespread, interoperability will become increasingly important. Markets such as South Africa and the Philippines – where there are multiple services available to consumers and use of mobile money is widespread – are ready to begin looking at interoperability as the next logical step to drive further usage and adoption of services,” Krugel states. “The GSMA is in discussions with the players in these markets about beginning trials.”

Other goals of the MMT programme include expanding the accessibility of remittances to the world’s unbanked population and to advocate for the lowering of transaction fees, while still enhancing the value to mobile operators through a share of fees, SMS traffic and customer loyalty. The initiative also seeks to address the distribution and regulatory issues operators may face, and to streamline deployments through developing standards for the industry.

“The number of mobile wallet software providers increased from 30 to more than 60 in the past 18 months,” Krugel comments. “There are however, half a dozen providers that are emerging as leaders in terms of sales and deployments worldwide. This will assist in developing a standard or benchmark for the technologies.”

The GSMA recently issued a request for information to identify an appropriate accreditation authority to work as a partner for the Mobile Money Vendor Certification Programme, in order to assist in certifying the technology providers. The concept is strongly supported by both the operator and vendor communities, which are mindful that if there is a failure in a single mobile money vendor, then this could significantly impact the development and growth of this promising market.

While the telecoms industry like many others prepares for a challenging year ahead in the face of worsening economic conditions, Krugel does not expect the financial crisis to significantly impact the demand for MMT services.

“We are not seeing a slowdown in the number of mobile money deployments, particularly in developing markets. In our discussions with our members, which are actively deploying services, the general consensus is that demand should increase as consumers look for a safe place to keep their money, and as the demand rises for funds transferred from working relatives in foreign markets or business centres to rural areas,” he asserts.

The GSMA estimates there is a direct market revenue opportunity in this service of more than US$100 million by the end of 2010. The association also supports an MMT operator working group, which is led by a steering committee consisting of Bharti Airtel, MTN, Orange, Orascom, Telenor, Smart and VimpelCom, with regional operators Etisalat, Du and Zain also members.