Mobile Money Meets Roadblock after Hype

Poor merchant acceptability and other factors have conspired to hobble the uptake of mobile money, which involves the transfer of money from one mobile phone to another without any need for a bank account, Nigeria CommunicationsWeek findings have shown.

Touted as a game changer, the growth today is however slower than expected when compared to the pre-licensing hype in 2011.

Nigeria was expected to be at the fore front in mobile financial services uptake with projections estimated to dampen the East African success stories.

And what could be responsible for this low uptake?

Nigeria CommunicationsWeek investigations found that different countries approached the mobile money scheme bearing in mind the strong compelling needs of their citizens and how mobile money can be used as an intervention to drive processes.

In most countries where mobile money is working, person to person transfer seems to be the game changer.

In Nigeria however, the industry is still in the woods to clearly position killer services that will be a must use for the teaming masses that do not have access to basic financial services and yet own a mobile phone.

According to the Efina survey of 2012, less than 30 million Nigerians are currently banked and yet millions more, own a mobile device.

Experts knowledgeable in areas of mobile financial services said that inadequate distribution and agency network constitute strong road block to the system.

Killian Clifford, director at MobileMoney Consulting UK,  said that “it is critical for consumers to see benefits of switching from cash to mobile money at merchants locations. If they cannot see the benefits, they will not use mobile money at those locations”

Nigeria CommunicationsWeek gathered that from the issuance of the first store and charge cards through to the development of credit cards, the business model has been ‘acceptance-led’.

That is, it was the merchant’s willingness to accept card payments that drove customer demand rather than the other way around.

Merchants were happy to accept these payment as they generally denoted a more credit-worthy and higher-value spend customer.

Once card payments (and their associated loyalty bonuses) were more widely accepted, consumers were in turn happy to use them and thus demand was stimulated.

Emmanuel Okoegwale, principal associate, Mobile Money Africa took another route with his perspective of technology and interoperability.

Merchants enabled for mobile money transactions is still a novel in Nigeria and still a growing sector worldwide.

“It is existing but limited in spread and if the process does not integrate into existing POS systems, it becomes increasingly difficult for merchants to process mobile payment transactions at the store front” Okoegwale said.

Nigeria CommunicationsWeek gathered that e-payment is strongly backed by evidence and that is what POS enabled mobilemoney brings to the table.

The system has to be proven to have and even better what we have with current POS systems for merchants to make switch from cash or card to mobile money.

According to Okoegwale, inter operability might also pose a challenge where merchants are locked into a particular scheme and may not be able to accept payments from different service providers.

But that might be an issue of the past if Nigeria Inter-Bank Settlement System Plc (NIBSS) is able to implement the February deadline for all mobile payment providers to connect to the central switching systems that is mandatory for all providers.

Okoegwale however argued that if the merchant will not access his sales by close of business or latest the following day, It might be a disincentive to accept mobile payment at the store level since most merchants keep low inventory and restock on a daily or on-going basis which will require liquidity that will be hampered by the delays.

There are however hope at the end of the tunnel thanks to some  big time merchants  which are already accepting mobile money  such as the StanbicIBTC / Shoprite and Paga / Interswitch.

Okoegwale said that over time, other merchants will join the fray and mobile money will be main stream payment channel at merchant locations.