EBS Seeks PF & FI Improved Collaborations for mPOS Growth

Guests at eNNovators Breakfast Series (EBS) believe that to deepen the adoption Mobile Point of Sale (mPOS) in the country, collaborative approach should be explored by Payment Facilitator (PF) and the Financial Institution (FI).

The PF & FI are the merchant acquirers who are supposed to extend the acquirer’s capabilities in a number of areas, all under the brand name of the Payment Facilitator.

Three thought leaders presented papers include ‘mPOS Local Opportunities’ by Emmanuel Agha, MD/CEO, Innovectives; ‘Profitability & mPOS Business Models For Acquirers, PSPS, MNOS by Uwagbae Uzebu, director, Acceptance Development, Non Traditional Channels, West Africa, MasterCard and ‘mPOS As A Part Of Wider Mnos Digital Business Strategy’ by Oluwaseun Omotosho, Manager, Mobile Financial Services, Etisalat Nigeria

The PF plays several critical roles, including market development, merchant of record, risk underwriting, and management.

The FI earns revenue through incremental purchase volumes generated by the partnership while the PF owns the customer relationship, providing processing services for its own merchants.

The MNOs possess large customer bases.

Resolutions reached at the conclusion of the deliberations include that the mPOS business in Nigeria represent the best opportunity for the financial services industry to correct all the mistakes made with the operations of the PoS scheme as the flagship of the Cashless Nigeria project championed by Central Bank of Nigeria (CBN).

The guests also agreed that the Payment Facilitator (PF) i.e the mPOS certified service providers should regularly meet with the regulator and NIBSS, the mPOS aggregators to address all issues that may inhibit the successful implementation of the scheme across the country.

They also believe that mPOS schemes can become a veritable tool for last mile banking in the country if the operators adopt the agency banking approach in the product engineering, deployment and management of the scheme.

“mPOS can help impact a business beyond the transaction through reporting, marketing and back-end operations. While the transaction is one of the most important components of small-business operations, back-end reporting that mPOS software provides is arguably just as critical to success. Analytics in the information age provide tangible business insight to merchants looking to better understand their customer base. Mobile point-of-sale systems are great for both marketing and reporting, as well as line-busting and creating a more flexible payment structure within a business.

“mPOS service providers should focus more on small businesses because of the value mPOS can bring to their businesses. The adoption of mPOS terminals over standard POS terminals will be 46 percent by 2017, most of which will be driven by the retail and restaurant industries, according to a statement by Mr. Sola Fanawopo, event director at EBS.

Key Observations
The issues observed at the June edition of EBS are, mPOS terminals are revolutionising the payment acceptance; infrastructure globally. Nigeria must not be left out. Not only are these terminals encouraging a new audience to embrace card payments [sole traders and small businesses] but larger merchants also recognise the value in taking the payment ‘desk’ to the customer.

“mPOS is effectively delivering customer convenience and proving to be a catalyst for change in the payment acceptance industry.

“mPOS enables a whole new market sector to offer card and mobile payments: sole traders and micro merchants and this includes taxi drivers, hairdressers, plumbers and salespeople. Traditional POS technology did not address this sector because of the significant costs involved in purchasing the terminals. As a result, these merchants relied on cash and cheque payments.

“mPOS shipments are expected to keep growing at a CAGR of 40% between 2013 and 2018 with an estimated 52.1 million units of mPOS to be shipped worldwide in 2018. These figures are not based on micro merchants only as studies revealed that a significant proportion of mPOS shipment growth will be driven by merchants bolting mPOS solutions onto their existing POS infrastructures.

“In general, specialist mPOS acquirers show positive earnings before interest, taxes, depreciation and amortization [EBITDA] margins compared to bank-led acquirers which are negative on EBITDA margins. Value added services and equipment rental are significant non-Merchant Discount Rate (MDR) revenues. Key VAS revenue driver is Dynamic Currency Conversion (DCC), bill pay, airtime top-up, Cash at mPOS  , monthly installments, analytics, loyalty gift cards, 3rd party solutions partnerships (e.g. accounting software + POS)