Will Wallet-To-Wallet Transfers Really Change The Fortunes Of OneMoney And Telecash?

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It is no secret that the government is not too chuffed about EcoCash’s dominance in Zimbabwe. The minister of ICT, Supa Mandiwanzira is on record multiple times saying as much. The fact that the government has two products of its own in direct competition with EcoCash and yet combine to command a pitiful 2% market share makes it harder to swallow.

EcoCash came out swinging and has an extensive agent and merchant network to show for it. Network effects then made it so that Netone’s OneMoney and Telecel’s telecash cannot compete. The government decided to use its unfettered powers to even the playing field.

 

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How did OneMoney and telecash fall behind?

It is true that EcoCash is too dominant but that is because of the misplaced priorities and lack of foresight from the competition. We found out that the Econet group has invested $1.3 billion in infrastructure since dollarization in 2009. That was enough to own 80% of the telecommunications infrastructure in Zimbabwe.

It is that infrastructure which gives them a competitive advantage. The government is now looking to nullify that edge but what did NetOne and Telecel invest in during that time? They bought fleets of cars and constructed multi-storey buildings for their executive offices.

We are at a point where the government has to play referee in a game in which it is also a player, trying to get a fighting chance. How?

 

Interoperability

It is not easily defined but the following should work for our purposes here:

the ability of systems to provide services to and accept services from other systems, and to use the services so exchanged to enable them to operate effectively together

The government sees a scenario where a OneMoney customer receives money from an EcoCash user directly into their OneMoney wallet as interoperability. Wallet to wallet transfers across the three mobile money operators.

While noble reasons like, ‘to promote competition’ or ‘to make sure we do not end up with a monopoly’ are thrown around, the government is just looking to get a slice of the mobile money revenue. Interoperability is the government’s solution to get to tap into EcoCash’s agent and merchant network.

That, the government reasons, would make telecash and OneMoney more competitive and ‘protect the public from a potential devastating crash of the EcoCash platform.’ What a valid justification reason that is. If we have multiple meaningful players in the mobile money sector we won’t be as reliant on just one company. You can’t really argue with that logic.

 

Will interoperability achieve this?

It does not look like interoperability will have the effect the government hopes it will. There already is some considerable openness in the mobile money market:

Mobile money users can send money to any mobile number. It is not straight into mobile money wallets when it’s across networks but it remains, an EcoCash user can send money to a mobile number which is not registered on EcoCash’s platform for example.

Anyone can register for EcoCash regardless of the mobile network of their choice (this is still only limited to smartphone users at the moment.) It is funny that it is often said that EcoCash does not want to play ball with others and yet neither telecash nor OneMoney offer a similar service. It’s weird considering those two are the champions of interoperability.

The above openness still has not seen the masses flocking to OneMoney and telecash. What we have seen is EcoCash still piling on the subscribers. In the 12 months ending February 2018, 1.3 million subscribers were added bringing the total to 8 million.

The best of the rest, OneMoney, only celebrated reaching 1 million subscribers last week. This was impressive but was not the result of EcoCash being available for NetOne users. It was OneFusion which was responsible for the increase. How? People flocked to buy NetOne lines to be able to enjoy OneFusion, when they registered those lines they were asked to register for OneMoney as well.

 

Why getting those numbers doesn’t mean much?

The 1 million subscribers OneMoney celebrated are not the same as active subscribers. As we noted, most got NetOne lines (with OneMoney in tow) to get OneFusion. They do not actually use OneMoney. As a result, there were only 52,940 active OneMoney users in December 2017, just over 5 months before OneMoney celebrated the 1 million total subscribers milestone.

(Even for EcoCash, the 8 million figure is for total subscribers, the active subscriber figure is closer to the 4.5 million reported in the Potraz report for the quarter ended 31 December 2017.)

The 1 million OneMoney subscribers have Econet lines for their EcoCash needs. The government thinks if it was possible to send money from the EcoCash wallet straight into OneMoney/telecash wallets and vice versa, those 1 million OneMoney subscribers would no longer need the Econet lines in their Kambudzis (feature phones). That will not be the case.

 

Where the real battle is

The reason people prefer EcoCash, apart from familiarity, is the extensive merchant and to a lesser extent, agent networks. The reality for every Zimbabwean is that cash is too scarce to use for all payments, mobile money has taken on that role. What good is OneMoney if you cannot pay for anything with it?

The number of EcoCash merchants (those businesses that accept EcoCash as payment) grew from 27,000 in 2016-17 to 50,000 in February 2018. Until OneMoney and telecash have similar numbers we are going to have more of what we are used to.

If the government’s view of interoperability extends from wallet to wallet transfers to somehow making sure every EcoCash merchant accepts the other mobile money payment solutions then that could be something. This would mean OneMoney and telecash would not need to embark on massive merchant recruitments. Most importantly, NetOne and Telecel would not have to invest billions of their own.

That scenario would erase most of EcoCash’s competitive advantages and so we can count on EcoCash resisting it. In addition, that level of integration would be a nightmare for the technicians tasked with making it possible. In any case, the government has not indicated that they are looking for that kind of interoperability.

For the interoperability to work there would need to be no difference in charges for EcoCash to EcoCash and EcoCash to others.

 

What does this all mean?

The government may get the wallet to wallet interoperability they are seeking. EcoCash is apparently not too averse to such agreements,  Orange Money users in Botswana can now transfer from their wallets straight into EcoCash wallets. EcoCash users cannot transfer to their Orange Money counterparts though, so it may be that EcoCash is only interested in that arrangement because it feeds money onto the EcoCash platform but doesn’t go the other way.

The EcoCash-Orange Money service is possible thanks to TransferTo’s network. Similar wallet to wallet services in Zimbabwe would require a network which allows for the cross-operator transfers. Who is going to do that?

Let’s say that is all sorted, it is unlikely that we would see a mass exodus of subscribers from EcoCash. If you recall, telecash offered free transfers to users within the telecash ecosystem. EcoCash users heard about it but only sought to convince EcoCash to do the same, EcoCash did not, and no exodus was seen. The EcoCash ecosystem was too valuable to leave just to get free transfers.

If people were not enticed by free transfers, wallet to wallet transfers are not going to do the job. The other factors like merchant network are just too essential for users to jump ship.

My advice to OneMoney and telecash would be to make it their number one goal to build their agent and merchant networks. If those networks are poor, nothing is going to change.

EcoCashOneMoneyTelecash

EcoCash is a mobile money transfer facility which is run by Econet Wireless Zimbabwe. The facility has grown in leaps and bounds since its inception and is arguably the largest mobile money transfer agent considering the huge sums of transactions that the platform is said... Read More About EcoCash

OneMoney formerly known as OneWallet is a money transfer facility which is operated by a government telecoms company NetOne Zimbabwe. The facility runs on NetOne lines only and offers services such as Zimswitch-enabled debit card, money payments, mobile banking and airtime top-up. Read More About OneMoney

Telecash is a mobile money transfer facility that is provided by mobile network phone operator, Telecel Zimbabwe. The product offers great convenience to customers by allowing them to send money across all networks and make payments. When the product was launched, it was said that... Read More About Telecash

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17 Comments

  1. Moses Ziyambi says:

    Thank you TechZim for your insightful analysis on mobile money as well as on anything technological in Zimbabwe. We need more innovative publications as this.

    1. Leonard Sengere says:

      Thank you Moses. Your support helps us continue to improve.

  2. TheHeist says:

    “My advice to OneMoney and telecash would be to make it their number one goal to build their agent and merchant networks”

    They have already lost this battle.
    Maybe not the war, but NetOne is moving into SMEs – the largely unbanked and bringing them to their card, service + access to Gvt financing. I hope it all works well in the end.

    1. Leonard Sengere says:

      I agree that the first battle was won by EcoCash, resoundingly. However, if the competition were in the least bit interested in competing, we would see it in the way they choose to spend their money.

      The NetOne SME move is something but at the same time they are sponsoring the 3 biggest football teams in Zimbabwe right now. Whilst we appreciate companies supporting our sports teams, we can’t help but notice a trend when it comes to NetOne in particular. Investment into the boring things that will make their businesses more competitive is hardly ever a priority.

      They have to realise just how the mobile money race is lost or won at some point and make adjustments accordingly.

  3. Imi Vanhu Musadaro says:

    Your piece shows bias towards Econet without being objective.

    Now, suppose you send money to a non-Econet number via EcoCash, how does the recipient get their money out? By paying a premium to an agent, supposing the agent does have money to begin with. That is very inconvenient!

    Interoperability would mean if the recipient was on Telecash, the money would just be added to their Telecash wallet balance. It’s no different to how the banking system works, you can transfer (send) money from one bank to another regardless of it’s size, customer share or whatever benefits over the other. That’s what interoperability is about, making consumers lives easier. Imagine what life would be like if someone did a transfer to you and you could only collect it from the sending banks branches (if you didn’t bank with them)? It would actually result in the most people banking with the “popular” bank, so they don’t have to have hassles receiving transfers most of the time.

    Interoperability is everywhere, even on the Internet. You can access websites hosted by ZOL from a Dandemutande connection, with data passing from CISCO to Huawei routers and vice-versa. ZOL could easily block traffic from other providers if they wanted. CISCO could make routers that don’t work with non-CISCO hardware. It’s all about consumer convenience.

    Anyway, if EcoCash has such a BIG advantage and is such a GIANT they can never be matched, what are they scared of?

    1. Leonard Sengere says:

      What I’m saying is that it won’t mean anything to people to be able to send directly to wallet accounts. Here’s why:

      1. Agents (EcoCash has 26,247, OneMoney has 1,753, telecash has 884)
      Both telecash and OneMoney have shamefully low numbers of agents. If a telecash user received money from an EcoCash user directly into their account, they would have to locate a telecash agent to withdraw that cash. The transaction charges could be lower in this case but there would be increased inconvenience on the part of the recipient. It could be more expensive if they have to locate an EcoCash agent but it would be easier as well.
      You can imagine how many people are nowhere near a telecash agent (884 in all of Zimbabwe). It is this kind of thing which will make it hard for telecash and OneMoney to gain any traction whether wallet to wallet interoperability comes or not.

      2. Merchants: Very few merchants accept OneMoney or telecash. You know how severe the cash crisis is, so if someone has money they have in their OneMoney wallet but none of the merchants (tuckshops and the like) in their neighbourhood accept it, what then? You cannot locate a OneMoney agent (they don’t have cash in any case) and you cannot pay a merchant with it.
      The government’s interoperability covers P2P transfers and unfortunately does not cover P2B (merchants.)
      These things will limit the growth OneMoney and telecash can enjoy.

      Get me right my guy, interoperability is a win for us the customers. I’m not bashing it. What I’m saying is that it won’t have the desired outcome because there still is a lot OneMoney and telecash have to do to be competitive (growing their agent and merchant networks should be top of the agenda). Until that is done interoperability will be useless.

      1. Imi Vanhu Musadaro says:

        You have missed the point. Agent and merchant network sizes have NOTHING to do with interoperability. NOTHING! Again I’ll use the bank analogy, the number of branches, or customers, a bank has no bearing on them using RTGS or ZIPIT. Even tiny banks can RTGS.

        1. Leonard Sengere says:

          And you have missed my point. You do acknoweldge though that even if we get interoperability like the government wants, you won’t magically be able to pay 50,000 merchants using OneMoney and telecash like EcoCash users can. So that makes this case different from the bank analogy where any bank on the same national switch as others allows customers to pay anywhere were Zimswitch cards are accepted or ZIPIT.

          But let’s look at your bank analogy. What I’m saying is that the tiny bank with one branch in Shamva will not see customers flocking from CBZ just because they allow customers to RTGS. That little bank has to invest in some infrastructure for it to compete. Simply being able to ZIPIT is not the sole factor when choosing a bank.

  4. Imi Vanhu Musadaro says:

    If interoperability is such bad thing why was EcoCash trying to get banks to allow clients to move their money into EcoCash from their bank accounts directly. EcoCash wants to have closed system, that’s only is only opened up when it suits their needs. Many articles have been published here blasting banks for not integrating with EcoCash, championing consumer convenience. All of a sudden consumer convenience has been forgotten.

    1. Leonard Sengere says:

      Again my guy, interoperability is NOT a bad thing, it brings convenience for the public. We are pro-consumer convenience. What we were examining is whether interoperability will achieve the intended goals: increased competition. Interoperability will not magically fix all the deficiencies OneMoney and telecash have, it can only go so far. We are actually calling on these guys to invest in their products so that interoperability will benefit them. Nobody wants this scenario where one player has all the power.

      1. Imi Vanhu Musadaro says:

        Interoperability will not fix the highlighted deficiencies as they have nothing to do with interoperability. It will improve the flow of mobile cash and hence revenue, for all involved parties. You can’t deny that.

        1. Leonard Sengere says:

          Improve the flow? p2p is not the same as P2B.

          My guy, few are going to want to receive money into their OneMoney or telecash wallets if they are not able to pay for basic goods and services with it. If you, Musadaro, had money in your telecash wallet and none of the small shops were you shop are telecash merchants (there are few of these), you would be forced to transfer the money to an EcoCash wallet (there are more EcoCash merchants than Zimswitch POS machines out there). The transfer would introduce aditional costs and if it happens a few times you would abandon your telecash account.

  5. The man says:

    The more you try to explain the more it proves you are bias when it comes to econet just allow the money to be transfered into any wallet and since Telecash and Onewallet are already on ZIPIT there is no harm in Econet being on ZIPIT then we can all make transferes to any bank and number

    1. Leonard Sengere says:

      We all agree that we stand to gain from interoperability. That’s given, that’s not up for debate. However, let us not be naive and think that interoperability will somehow make up for questionable decision making over at NetOne and Telecel. I’ll say it again, interoperability will not magically fix all the deficiencies OneMoney and telecash have. For our sakes, we hope they improve so that we get the competition we have craved for so long.

  6. Commrade says:

    Techzim should just be renamed Econet PR,this is totally a biased piece I guess you are on their payroll because they way you defend them you to great lengths ma comrades ku techzim uko.

    1. Brian says:

      be fair on Techzim. Techzim has been labeled as being biased against anyone every time.

      1. Commrade says:

        Truth be told lately I havent seen an article where techzim writes good things about Netone,Telecel,telone maybe there is nothing good to write about,but I strongly believe they are on econet payroll

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