There are various misconceptions/myths about mobile money. The customers, agents, merchants, organizations and even mobile money providers have certain misconceptions. I believe as the owner of the business, MM provider need to first convince itself about the bright prospects of the mobile money business while carrying the spirit of financial inclusion and socioeconomic development. Should clear its misconceptions/doubts and then develop the education/awareness program to clear the doubts of its partners, agents, merchants and most importantly for end users ( customers ). Some of those misconceptions are –
1. Mobile Money is only for UNBANKED population and Emerging Countries
It is true that Mobile Money was invented to serve unbanked population by providing them some means to access basic financial services. But since then mobile money has evolved and the eco system has been developed to suit Developing and Developed countries as well. The implementation form of Mobile Money may differ (as per the market/economy nature), the services may also differ but the underlying Mobile Wallet technology remains the same.
In case of Emerging countries, the spirit of Mobile Money is “Financial Inclusion”. Mobile Money has some clear advantages over traditional banking, in terms of (a) availability of Agents (similar to Bank Branches) next door, (b) reduced cost, (c) the ability to scale and extend rapidly by adding more and more services which normally a Bank won’t do it.
In case of Developing countries, Mobile wallet is extending its reach by integrating with POS and Prepaid Cards where has in Developed world it is being integrated with NFC.
Mobile Money can appeal low income, medium income and high income segments. It is a different matter that for each segment, there will be specific services which will appeal more as oppose to other services.
So in summary, Mobile Money suits all kind of economies, countries and population segments. The need is to localize it as per the country dynamics and population needs.
2. Mobile Money is NOT a Profitable or sustainable business.
Mobile Money is sustainable and profitable business. There are lot of Mobile Money businesses are not doing well, not because the mobile money business cant be successful but because of various issues which are halting the business growth. Like any other business one need to have solid strategy, planning, implementation and management. In addition to that there are specific aspects related to Mobile Money (as its technology/product intensive business) which needs to be well taken care of. It is utmost important to minimize the capex and opex in the beginning itself to have a healthy business.
There is huge potential to have great returns in the mobile money business (Safaricom earns approx. 18% of the total business revenue from MPESA, it just shows the potential of the mobile money) but most of the MM businesses have failed to reach to an operating/sustainable level (let’s not talk about profitability to start with). A mobile money business may take 2-3-4 or even 5 years of break-even depending on how well you plan, how much proper attention to all the aspects ( specially distribution, technology and product) is paid and of course the hard work.
3. Only Telco’s or Only Banks should provide Mobile Money
There are mainly two models which are being adapted around the world for mobile money launch i.e. Telco led (mobile money giant MPESA and GCASH) and Bank led. Based on the success which MPESA and GCASH have received, it is being assumed that only Telco led models are successful as they have distinct advantage.
There is a section of experts who believe only Telco should provide mobile money and there is another section who believe Banks should be leading it.
Agreed that Telcos have large distribution network and huge penetration in the market but one cannot ignore the banking sector capabilities (especially in the auditing, accounting, settlements, AML-CFT, fraud prevention etc ) . At the same time Banks should not be given an unfair advantage by Regulators by completely ruling out Telcos from the MM Market. Banks and Telcos both should be given fair chances. If for some reasons Banks has to led mobile money, telcos can still be given a fair participation on top of their network usage as access channels.
It is the overall efforts (on all the aspects of MM – strategy, planning, product, technology, distribution, marketing, monitoring etc. ) and hard work which makes MM successful irrespective of which entity is leading it. One should not be biased or lobbying for either Telco or Bank , the efforts should be in place to make Mobile Money successful.
The most common question from an end user perspective be it Mobile Money User or Mobile Money Agent or Mobile Money partner, what happens if I lose my mobile phone ? Do I lose all my money which I have in the mobile money account?
The answers are pretty simple –
Fact1 – If you lose your phone, your mobile money account still remains active and your money is safe. Nobody else will be able to take out this money even if they have your phone, simply because to perform any transaction they will need to know your MPIN ( Mobile PIN ).
Fact2 – As you only know the MPIN, nobody else cant access your mobile money account , they will not even be able to know your balance. So in case when you lose mobile phone, you need to contact customer care of the Mobile Money provider, ask them to lock your account immediately and get another SIM card/Mobile , register again, and you can transfer your money into the new phone.
Fact3 – You can even withdraw all the money if you wish to and if you cannot get new mobile phone immediately.
5. Mobile Money can be misused for MONEY LAUNDERING
While Mobile Money products are not as sophisticated as full Banking products, they still have the ability to comply with AML and CFT by means of –
a) KYC based accounts opening, in fact the trend is now to store/retrieve the KYC electronically within the mobile money system.
b) Applying Limits and Rules on Transactions, Daily/Weekly/Monthly limit
c) Mobile Wallet ( Account ) Balance limits based on the KYC as detected by Regulator
d) Reporting where similar transactions can be operationally detected
It is agreed that as of now most of the mobile money products do not have automatic intelligence of detecting or flagging suspicious customers but above 3 mechanisms are helpful to determine those profiles. We expect over the period of time as products are evolving, Mobile Money products will build intelligence to automatically detect suspicious transactions and profiles.
6. Mobile Money agents can run away with the customer’s money
Mobile Money business is prepaid, which means its Agents have to provide real money to Mobile Money provider in order to get electronic balance in their own account using which they can server Mobile Money customers. Hence if they run away or shut down, there is no problem because they do not withhold any customer money.
Similarly a mobile money customer has a prepaid account, if one agent is shut down or run away, Mobile Money customer can go to any other agents to do transactions including withdraw money. Electronic money in customer mobile money account is guaranteed real money.
7. Mobile Money is prone to have FRAUDs.
Any business is prone to have FRAUDS, the probability of the FRAUDs and its impact on the business will depend on how much work has been done on Fraud Detection and Prevention.
While it is agreed that Mobile Money products are not as sophisticated as Banking products and they do not have the automatic intelligence to alarm such frauds, but there are means ( operational, procedural and technical ) which can be applied in mobile money industry in order to minimize frauds.
Operational frauds are something which should be looked at as any other business. By giving too much power or authority to someone who is not reliable or not under monitoring, increases the chances of frauds.
8. Mobile Money is All about Marketing
Mobile Money roll-out is an intensive and time consuming work. It can take 1-3 years to rollout mobile money depending on the regulations and country dynamics. The whole business setup can be divided into three phases – designing, implementing and managing.
There is a misconception that mobile money business success is heavily based on marketing. Because of this sometime management tend to not give much attention to designing and implementation phase . They tend to put lot of focus and budget on marketing assuming that rest things are standard.
While Marketing does play an important role in mobile money business but the overall success of the business is actually heavily dependent on the distribution, technology and product . A lot of attention needs to be paid on the designing and implmentaiton phase. Marketing can be effective when there is a solid technology platform, product is localized, configurations available to support various promotions and bonuses.
9. Mobile Money is same as MPESA
MPESA Kenya is the legend in Mobile Money industry. Many times people tend to think that MPESA model is the Mobile Money model.
MPESA success indicates how much successful a Mobile Money deployment could be , to the extent that it can contribute X% of GDP of an Emerging Country. Hence the reference to MPESA should always generate enthusiasm and passion to Mobile Money industry as a whole.
But then there is a need for every MM deployment to look at individually and locally , taking learning from MPESA and other successful deployments ( it should include both TODOs and possible improvements ) and transforming it locally.
10.Mobile Payments works only with Smart Phones or requires infrastructure changes
The access channel for Mobile Money is mostly USSD , though in some cases it is SMS/STK and other technologies are being emerged. It works from any phone ( any brand, any type ) e.g. in case of USSD , one just need to dial the short code ( or service code ) e.g. *123# or *555# .
Besides the USSD/SMSC/STK mechanism , mobile money providers do make Web and Smartphone Applications options available to the Agents ( and sometimes to Customers too ) to perform the transactions. There are additional channels.
Countries where Mobile Money ( or Mobile Wallet ) is integrated with NFC, it works on smart phones which are NFC enabled. There could be other means provided e.g. NFC stickers to make it work from any normal phone. But those are handful specific implementations.
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