How is mobile money in Africa different from money sending apps we have in Europe?
There are so many startups trying to change how we send money to each other; some of them are doing really good. One company/service that I know very good since I’m a Norwegian is VIPPS. This company have made it super simple to “send money” to other people using their mobile number. If you look at what they are really doing, they allow users to register their debit or credit card on their account together with their mobile number. Secondly, they are a PISP (Payment Initiator Service Provider), allowing them to use APIs to initiate a transaction directly from a user's banks account. The feature I see is, for now, only working on certain transactions. Furthermore, VIPPS also created some pretty neat checkout features, allowing the customer to pay online and in the App easily. I believe this recipe is common for many payment apps out there.
How is mobile money different?
When mobile money started, users were allowed to buy airtime and share that with other users. The airtime is usually bought in small kiosks, and the airtime is made available right away for you as the user. This industry employees thousands of people by making them into micro-entrepreneurs when they run an agent for one or more Mobile Network Operator. On most streets in Africa, you see many of these kiosks, allowing people to send money from almost wherever they are.
It started with airtime, but soon it became a real business for the Mobile Network Operators!
Mobile money is a straightforward service. It allows you to go to one of these agents, deposit money, and send it to other users. Usually, the other user withdraws that money right away. The Mobile Network Operator then charges various fees for allowing users to both withdraw money and send money. Instead of connecting the service to a card, bank account, or anything else, we consider it a service offered by the established financial industry; the Mobile Network Operators have built a simple mechanism that allows millions of people to access financial services.
Compliance
One thing that banks and other established financial institutions are struggling with is compliance. This might be related to KYC (Know Your Customer), AML (Anti Money Laundering) or other regulatory issues they need to comply with. The mobile money industry has been able to grow very fast without the same limitations. This is, however, changing, and they are these days experiencing increases regulatory oversight. So it’s a game with billions of dollars in play.
Conclusion
I believe we will see many of the established “money sending” apps trying to penetrate the African market. Some of them will integrate with the established Mobile Money Operators. Some of them will try to replace the success that is already there with mobile money, and year again, others will try to change the landscape altogether. It will be a fun ride to be a part of!
