Despite the success of mobile money, there are still challenges the technology is facing. They are not definite show stoppers but are bottle-necking its growth. I will not only transparently outline these but will provide some solutions or ideas at the end of each problem.
Interoperability
Each network has its own mobile money network and money cannot be sent to another network user without a hustle and heavy network charges. In simple terms, mobile money is not cross-network. The end user should not be worried about what network they are using, they just want to keep and use their digital money when needed.
Solution:
- This problem can easily be solved by creating an independent, easy-to-use and unified API (Application Programming Interface) that end users or other systems can use. The API should be able to receive and send money regardless of network.
- Developing a network independent mobile wallet that allows for cross-network transactions using the API above and lowered transaction charges.
Heavy Transaction Charges
The high transaction costs have inadvertently forced the end users to use mobile money only when cash cannot work. In the ideal world, digital money offers better benefits than century old hard cash.
Solution:
- Adoption of mobile wallets that allow transfers at a lower cost. The end user incurs the network charges once when topping up from mobile money or when sending to mobile money only. Sending between users in a mobile wallet comes at almost zero cost.
Regulatory barriers to entry
If you have tried getting access to the mobile money API before then you will understand what i am saying. The process is more geared towards businesses requiring various company documents, waiting periods up to 3 months and the shortage of developers to implement integrations. Having said that, 90% of the casual traders and end users are cut out instantly. This is one of the main reason e-commerce is delaying to take off despite the existence of mobile money api.
Solution:
Unify the mobile money API using money money wallets. It is important to remember that Paypal become big because the process of getting the VISA API was hard for the casual user. In the end, mobile money wallets should be seen from the perspective that they can encourage use of mobile money rather than be competition.
Shortage of success stories
You would think mobile money networks would support the uptake or usage of mobile money by supporting startups (value additional service providers) but i beg to differ. Instead mobile money wallets or other platforms supporting the usage of mobile money are viewed as competition and are suppressed by mobile networks. I have seen many services come up and disappear but then the network copies their services and adds it to its services. This has led to a large monopoly, scaring any sort of creative startup that would take advantage of mobile money payments.
Solution:
Networks should provide support financial or technical to upcoming startups that provide value added services that are not core to the network.
Local transactions only
It is practically impossible to send mobile money from one country to another without very heavy transaction charges offered by mobile money agents. Almost every country in Africa and middle-east have their own spin-off of mobile money and this has prevented it from being used in international trade.
Solution:
Having a unified API for the different mobile money implementations. This API should also have an automatic forex exchange with the latest rates.
I could go on forever but for the sake of this article, i'll only state the main ones i have observed working in Fintech. Most of the problems facing mobile money can be solved with technology so, why are they not solved? well a lot has to do with the regulations imposed on digital currency by banks and the monopoly enforced by networks.
In short, mobile money is growing but risks to lose to competition offered by cryptocurrency like bitcoin that have no monopoly and are international. For a more detailed article please check out https://www.easypay.co.ug/kb/knowledge-base/problems-facing-mobile-money-uganda-challenges/