This presentation describes the concept of mobile money interoperability, its use cases and the potential challenges hindering uptake

1. 1© Copyright Comviva Technologies Limited. 2015 1
WHAT IS MOBILE MONEY
INTEROPERABILITY

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In broad terms, interoperability is the interconnection of mobile money services with external
parties, with the aim to create value for both customers and commercial players. Viewed as a
“silver bullet” for greater financial inclusion, it is increasingly cited as a solution to increase
transaction volumes and extend the range of financial products offered through the mobile phone.
Opportunities for interoperability arise where interconnections with external parties can create
greater value for customers and service providers than a single mobile money service provider can
create alone. Once an opportunity for interoperability has been identified, it needs to be
strategically or financially compelling for all parties involved to jointly pursue it.

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To assess the opportunity, it is important to define what services fall within and adjacent to this
category. The universe of these services is expanding rapidly with the growing desire to
connect a pure mobile money network with other money transfer networks as boundaries blur
between payments. For mobile money transfer, it is important to view interoperability in two
ways:
Domestic interoperability – The ability to transfer money between two different mobile
money services. For example, in Tanzania, Mahindra Comviva enables Airtel Money
customers to send money directly to Tigo Pesa customers.
International remittance or International money transfer (IMT) – The remittance services
should not be limited to domestic money transfer and need to move beyond boundaries so
that migrants and expats can send money back to their relatives in their native country. To
enable international remittance, mobile money service providers can partner and integrate
seamlessly with major MTO’s such Western Union, WorldRemit and Moneygram.

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Another aspect of IMT is direct account-to-account money transfer between mobile money
services in neighbouring countries or countries within the same region. For example, Orange
facilitates money transfer between Orange Money customers in Cote d’Ivoire, Mali, and
Senegal. MTN Mobile Money customers in Cote d’Ivoire can transfer money to Airtel Money
customers in Burkina Faso
Another upcoming trend in mobile money interoperability is switches.

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Mobile money service providers are investing in switch-like infrastructure that will interlink
various mobile money services and third-party payment networks. For example, a multi-
country operator in Africa has implemented a switch that enables direct money transfer
between mobile money accounts of its customers in different countries.
There is also investment to interconnect with card networks to provide seamless
interoperability with heterogeneous systems and services, bringing in convenient and
integrated solutions to the consumers.
For merchants to capitalize on an uptake in payments and revenues, it is imperative to devise
solutions that enable the acceptance of payments from mobile money accounts. In turn this
puts emphasis on compelling consumers use mobile money for everyday payments.

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However, the merchant network of current mobile money services is limited. Customers can
pay only via mobile money to merchants who are registered with the mobile money service
provider. We have to move beyond the closed loop systems and embrace an open-loop
merchant payment approach. To enable open-loop payments mobile money providers are
integrating with global card networks like MasterCard and Visa to issue companion cards
(linked to mobile money account) which can be used for payment at any MasterCard and Visa
powered POS machine both nationally and internationally.
The open-loop approach exponentially increases the merchant acceptance network for
mobile money. Even virtual cards linked to mobile money account can be issued for making
online transactions.

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Disclaimer
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