We are at the Zimswitch Digital Payment Conference in Victoria Falls and the conference will be covering many areas to do with ‘cashless’ solutions and how these can be optimized to offer more efficient solutions.
Mr Saul Chin’anga, a certified Electronic Banking Specialist and the Head of Electronic Banking and Card Services at CBZ Bank, presented on the state of interoperability in the finance industry. It was an interesting presentation and made clear what is currently possible in our country when it comes to financial services which work together seamlessly.
Who are the players?
- Banks, Building Societies and MFIs, Development Institutions, Money Transfer Organizations.
- MNOS – Telecash, EcoCash, One Wallet
- TPPSP (Third-Party Payment Systems) – there appears to be some activity in this space.
Interoperability among Banks
Among banks, the interoperability situation is in a good state. They seem to have most angles covered and they have made strides on making their services work together seamlessly.
What is possible:
- Purchases through shared POS infrastructure.
- Deposit collection, school fees and other deposits, where the other banks are not represented.
- Funds transfer through ZIPIT
- Cash withdrawals through ATMs.
- Cash withdrawal in branches
What is not possible:
- Non-financial transactions
Interoperability among Banks and MNOs
The state of interoperability between banks and MNOs is not as seamless as that among banks, but this is a result of the fragmentation of the interoperability in mobile money solutions: a situation we have talked about.
What is Possible
- Banking Services through pull transactions
- Wallet to POS (purchases)
- Agency banking services such as account opening.
What is not possible
- Wallet-to-Wallet transfers
- Making payment direct from bank account to merchant code or vice versa.
Interoperability among MNOs
The interoperability issue among MNOs is one that has been has been causing a stir recently: and the government recently ordered the involved MNOs to make their mobile money services work together seamlessly. By interoperability, we are simply looking at a situation where a user of OneMoney can send money from their mobile wallet directly to an EcoCash wallet.
Mr Chin’anga started by looking at what’s not possible because in terms of MNOs not much is actually possible. There is a lack of flexibility and this is a huge stumbling block.
What is not possible
- Wallet to wallet e-value transfers
- Wallet services to another MNO wallet e.g. airtime purchase etc.
- Paying other MNO merchant with other wallet
- Cash in/out from agent
- Money transfers between International MTOs and Local Banks, MNOs
- Card Services between Banks and International Card Schemes.
Mr Chin’anga also made it clear that EcoCash opening their doors to subscribers from other networks is not interoperability and this is something we’ve talked about before. Other MNOs have also welcomed the idea of ‘real’ interoperability.
Benefits of Interoperability
Mr Chin’anga then touched on the benefits of Interoperability and here are the thoughts he shared:
- Increase financial inclusion of the marginalised economies and the unbanked.
- Provides ease of doing business and minimises sunk costs for new players.
- Reduces costs of reaching the most outlying parts of the population through the agent network
- Reduces the complexity of originators and recipients of transfers having to visit multiple agents to make transactions different networks which is subject to more fees.
- It helps to establish standards, rules and ease dispute resolution mechanism.
- To agents, it reduces the riskiness of cash flows and costs of holding enough cash through shared cash in/out points
- Increase viability of Agents in poorest regions by thump sacking/ bundling transactions
- Brings about safe and efficient access to banks, no financial institutions and emerging service providers through expanded retail payments systems open to clearing houses
What we need to do to increase interoperability
- We need to limit barriers to entry for new technology. It takes long for players to introduce new technology as the value chain appears to be lethargic.
- The industry objective should override individual interests. It is necessary for players to know that the growth of the industry provides a better and bigger space for all players.
- Avoid fragmented payment ecosystems and strive for one payment ecosystem.
- MNOs need to take note that horizontal interoperability provides the strength needed for vertical integration.
- The cell phone handset has ceased to be a communication gadget, rather it has become a payment gadget. So when we talk of more than 100% cell phone penetration, that must translate to banked ratio.
- How can we achieve a situation where schemes can work together for the development of the market. Zimswitch, Visa, MasterCard and CUP coming together to create a ubiquitous platform.
- How best can the industry promote and accommodate new players offering payment gateways so as to enhance competition and efficiencies.
In his conclusion, Saul noted that our digital transactions (in Zim) are increasing due to the liquidity crunch in the country. Small retailers are accepting digital payments because that is the only way for them to stay in business.
He also felt we should take the advantage to ensure that we now have full interoperability which will allow us to develop more financial products and services tailored to meet the requirements of our segmented customers.
Join the Livestream…
The event is ongoing and if you are interested in following it LIVE you can click on this link and enjoy the livestream.
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