CBN May Allow Telcos to Drive MM Adoption

Central Bank of Nigeria (CBN) may rescind its decision and allow telecoms operators drive the mobile money payment scheme to give fresh impetus to the initiative which has crawled since introduction in 2011, Nigeria CommunicationsWeek has learnt.

Nigeria’s mobile money service is anchored on a bank-led model, which required that only financial institutions could carry mobile money licences.

What it also means is that all the telecoms companies are offering mobile money services in partnership with licence holders.

Nigeria CommunicationsWeek however gathered that the policy shift is in offing as the CBN and Nigeria Communications Commission (NCC) have begun talks to involve telecommunications operators as key drivers to increase the adoption of the system in the country.

Paul Mosimabale, head, product and business development, First Bank of Nigeria, gave hints of such talks and urged CBN and NCC to come up with a framework to increase awareness of the system among Nigerians.

Mosimabale, who stated this at NigeriaCom conference, held in Lagos last week added that the operators also noted that the involvement of telcos will help banks to leverage on the telcos dealers and customer care outlets as mobile money agent networks.

He explained that because of the low amount of commission involved in the transaction most agents are reluctant to accept mobile money transactions.

“Robust and strong Agent distribution is very key for any mobile money initiative to be successful.” the bank executive added.

Nigeria CommunicationsWeek gathered that as income; illiteracy; affordability; poor access channels; and  inadequate distribution or agency networks are major challenges affecting the emerging industry.

Mr. Emmanuel Okoegwale, principal associate, Mobile Money Africa said that mobile money was a mass market product that would require mass access channels to reach all market segments.

Nodding in agreement, Samson Isa, director West Africa, Clickatell, said that agent network is important in the adoption of mobile money and that banks could not leverage the agent network of telcos because they were excluded from the process.

He called for a synergy between banks and telcos to make the system successful.

Isa also identified cost of Unstructured Supplementary Service Data (USSD) platform of telecommunications networks that is use in the transaction process as being high.

Nigeria CommunicationsWeek learnt that some mobile network operators had refused to open up mass access channels like Subscriber Identification Module toolkit and USSD for mobile money providers.

Mobile money is the transfer of monetary value via the mobile phone. The system fundamentally rides on mobile networks.

According to Isa, if there is synergy between banks and telcos, USSD service could be free or reduced to short message service (SMS) rate.

Presently, telecommunications operators charge N10 for a N100 transaction on their USSD platform.

But despite the many roadblocks, mobile money transactions are on the rise as Nigeria CommunicationsWeek had reported a daily transactions value of N8million on the interoperability platform of mobile money services.

Interoperability is basically the ability of the user of one mobile money service to send money directly to the wallet of a user on any other service.

Without interoperability the difficult decision of which mobile money service to choose might be influenced by which members of the customer’s peer group are already using a given service.

Nigeria CommunicationsWeek gathered that transactions among mobile money schemes commenced in March this year after the expiration of the deadline of February 28 Central Bank of Nigeria (CBN) gave to operators to connect to National Central Switch (NCS) that is offering the handshake.

The daily transactions value of N8million is carried out over 200 transactions every day. These are specifically transactions from one mobile scheme wallet to another as well as from mobile scheme wallet to bank accounts.

Moreover, transactions within a mobile scheme are not recorded in this value and volume as their transactions are routed through NCS.

Okoegwale, said there are different levels to achieve interoperability. It could be platform, agency or even via other channels like merchants.

“Essentially interoperability enables the acceptance of e-money seamlessly across providers, agency network and event merchants. Interoperability for agent revolves around agents ability to meet the needs of subscribers across multiple providers for cash out and cash in service, same way ATMs don’t discriminate between cards of firms that had entered into interoperability agreements at National or even at international level. It significantly reduces the cost for ecosystem players across agency network,” he said.

He added that when interoperability is achieved in the system a subscriber of scheme provider A, can send mobile money from his wallet to subscriber that is enrolled in scheme provider B and the funds in the wallet can be spent directly at a merchant location or cash out at own agent locations.

It would be recalled that Central Bank of Nigeria (CBN) had issued licences to 16 companies to operator mobile money transactions.

The CBN had said that the MMOs were licensed to accelerate the transformation of the nation’s payment system which would emphasis use of mobile phones.