Kathy Gibson reports from AfricaCom in Cape Town – Cash is still king in most African countries.
But is mobile money the game-changer, asks Vamsi Madhay, vice-president: mobile financial solutions at Mahindra?
“We all want it to be the game-changer. But, while 11,5% of African adults have a mobile money account, 94% of all transactions still happen in cash.”
There are events that may drive the market, though.
Madhay tells about the announcement in India last week, when the prime minister announced that large denomination notes had been immediately withdrawn from the market.
“While there is a lot of inconvenience to this move, the country as a whole has given it the thumbs up – because they perceive it as a push to mobile money.”
The withdrawal of notes prompted mobile money companies to make a big push to mobile money, aimed at both consumers and commercial players.
One company, Ola, has reported a 500% increase in recharges across 102 cities since the announcement. And it saw a growth of over five-times on Ola Money recharge in just 15 hours.
In Zimbabwe, mobile money is helping to ease the cash crisis. In fact, the shortage of cash is driving a spike in mobile money transfers, Madhay says.
“So government initiatives can do a lot of good propelling and expanding the network,” he says.
Of course, interoperability is key to mobile money success.
Madhay cites the example of Tanzania, which saw modest growth in the market until Vodacom entered the market. This initiated the network effect, and also drove interoperability which has benefited all the operators, as well as consumers.
In India, the Unified Payments Interface (UPI) is a payment infrastructure that allows mobile banking or wallet customers to transfer money to customers of any other bank or to pay merchants.
Other interoperability initiatives for mobile money can be seen in Jordan, Peru, Madagascar and Rwanda.
“Very clearly, one big pillar that will propel mobile money is not technology – but what industry and governments do.”
Once mobile money takes off, scale can be daunting, Madhay says.
“The question our customers keep asking is, how they can deal with it? If 90% of cash is going to be transferred to mobile money, quickly, we need to re-imagine the scale they need for their systems.”
Operators should look at what platforms scale today; and the digital giants that come to the fore.
“If we are looking to mobile money expanding, and trying to figure out how to deal with it, we have to invest in platforms that will allow that scale,” Madhay says.
These platforms are able to quickly accommodate changes, he adds. They need to be immensely scalable, reliable and trustworthy.
“And user experiences are getting re-imagined,” Madhay says.
This effectively describes a cloud infrastructure, he adds.