Forming a joint venture to run single platform is the way to go for players.
A joint venture mechanism will be able to deliver the best commercial split as well as commit every skin into the game.
An air of discontentment greeted revelations that the wallet-to-wallet mobile money inter-operability initiative by the telecommunications sector stakeholders is not cobbled together with agent interoperability.
Indeed, wallet-to-wallet inter-operability itself is already a reality, with Safaricom #ticker:SCOM and Airtel debuting the offering this week.
However, consumers will still sweat at the fact that pushing money out of their mobile money wallets will still be restricted to respective agents.
Well, achieving agent interoperability, in my assessments, should not be a difficult task; after all, we are talking about technology companies (the telcos). All it will require is for the telcos to establish a switch, through a joint venture mechanism.
Commercial banks did a wonderful job on this when they established a wholly-owned subsidiary, Integrated Payment Services Limited (IPSL), to run a switching platform.
A switch is basically an automated platform (could be a computer) that settles transactions of similar types completed on heterogeneous infrastructure. In the course of business, commercial banks end up owing each other money.
Customers of one bank can issue several payment requests with the bank into accounts domiciled in others either via cheques or electronic means. Recipient accounts receive funds via electronic means—that is to say, there is no physical cash movement.
Another example is automatic cash dispensers (or ATMs). A Trust Bank customer is still able to use her debit card to withdraw cash at an AfriBank cash dispenser, albeit at a slightly premiumised rate, since the issuing bank (Trust Bank) has to pay for using the latter’s infrastructure.
Of course.
At the end the day, cash needs to be moved and sometimes the amounts involved run into trillions of shillings. And due to the voluminous nature of moving trillions of banknotes, the two banks sit down and net off the liabilities owed to each other—via card scheme(s) in the case of card transactions (either Visa or Mastercard) or via the central bank in the case of cheque or electronic payments.
The same scenario plays out in mobile banking, where payment requests are effected via mobile phones.
However, instead of sitting down in a clearing house to settle the movements or going through a scheme, a computer automatically effects the reconciliation. Such a computer is then designated as a switch. It’s the same case with mobile money.
A Safaricom customer would want to withdraw money from an Airtel mobile money agent. However, given that the Airtel agent doesn’t hold Safaricom float, such a transaction will be inconceivable. But conceptually, it should be possible to achieve agent interoperability.
Just like commercial banks, the telcos only need to establish a switch; which they can easily achieve by forming a joint venture to run such a platform on a purely commercial basis.
The transaction chain remains the same. A Safaricom customer gets cash from an Airtel agent. But since the latter doesn’t hold the former’s float, the two, at the close of each trading day, will need to have a means of settling outstanding floats dispensed on behalf of each other.
Being technology companies, establishing a switching platform shouldn’t be such an uphill task.
Because it comes with some embedded commercial considerations, a joint venture mechanism will be able to deliver the best commercial split as well as commit every skin into the game.
Further, it’s an arrangement that will hand the ultimate bottom-line to the consumer. Just like they continue to share a podium when it comes to wallet-to-wallet deals, they can do the same on agent interoperability.
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Note: The results are not exact but very close to the actual.
