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Interoperability in Mobile Financial Services


Smart Phone has been the most radical innovation of the world. It has substituted number of existing products such as radios, flashlights, iPods, Cameras, laptops etc. and with the increasing trend of apps, it will continue to cater the substitute services.  At present, mobile phone has also become the preferred IT device for banking and financial services. Statistics proves that there will be more smart phones than banked economy by 2016 (Analysts Mason Report).  One of the reason of this astonishing growth is the accessibility of inexpensive smart phones.  The identical replica of mobile phone introduced by leading manufacturer is already available in the market at very low price which is helping the banked v/s Smart Phone curve to go higher.

This rebellion growth in mobile phone users arouse financial institutions, telcos and vendor to deliver banking through this channel. Most of the persons across the world (specifically in Africa) are progressively using mobile payments for number of services starting from utility payments to remittances.  However the question is whether providing mobile financial services to unbanked economy through one bank or telco is adequate. Undoubtedly mobile phone is the preferred channel to provide the service to unbanked economy, however restricting consumers and unbanked economy to one financial institution or telco is not going to work, that is where interoperability steps in.

Consider the case where I am subscribed mobile wallet unbanked consumer and am willing to pay to merchant but merchant denies stating that he is not a merchant partner of your wallet provider.  Consider the case in remittance, where sender is using remitter A to remit money to a wallet but the beneficiary can only cash out the money at the payout agent of remitter A. Though there is several other payout agents yet beneficiary needs to go to a particular agent to cash out which eventually makes the system complicated. Our team has been providing mobile financial services in emerging nations and has also encountered the analogous difficulty to endorse mobile money.

Mobile money ecosystem involves number of significant entities (Financial Institution, Telco, Vendor, Merchant, Consumer) to function simultaneously. The failure in support by either entity brings in inadequacy. Therefore it is the accountability of every entity to encourage interoperability. If there is interoperability among financial institutions, telcos and merchants, I am sure there will be an exponentially growth in the number of mobile money users across the world. We understand that providing interoperability is not that easy, there are numerous challenges however commercial motivation among the entity could be an initial step.

I have witnessed a successful case study of introducing shared merchants and payout agents among financial institution in Nepal.  There is a mobile payment network ‘fonepay’, which accpet payments through mobile phone provided the mobile banking vendor should be the member of fonepay network. This could be a replica of Visa or Mastercard fundamentals in mobie money however the notion is to go interoperable and provide consumer with the uniform acceptance of mobile payments. Therefore, If we aspire to exploite the higher number of mobile penetration and equally high unbanked economy, The new strategies needs to be discussed to endorse mobile money because the customer acquisition isn’t the challenge, the challenge is to increase the volume of transaction.

Though we have countersigned numerous successful case studies from African region, however we are yet to hear a successful case studies on Interoperability. I really hope to encounter one.


Pankaj Kumar

Pankaj Kumar is the Chief Marketing Officer at F1Soft International and specializing in Strategic Partnership, International Marketing, Global Business Management and Mobile Payments.
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