Are Operators The Next Banks?

[Muhammad Bilal Khalid]

Are Operators The Next Banks?

The GSMA anticipates that 2008 will be a seminal year for mobile payments and that by 2015, 1.4 billion people will benefit from mobile financial services. 

A partnership with Western Union has seen the GSMA spearheading the deployment of mobile money transfer services with the likes of Bharti Airtel in India and Globe and Smart in the Philippines.   Mobile payment provider Mi-Pay sees the mobile phone operators in recipient countries as being the potential key to enabling mobile-driven money transfers on a truly global basis.  The critical factor here is that unlike almost any other service, mobile operators and their distributors have outlets everywhere selling pre-pay phone vouchers.  These outlets take cash from consumers and feed it back up a well-established supply chain to the operator.

Mi-Pay can enable this pre-pay network to seamlessly distribute cash - the only payment means that is known and trusted by a large percentage of emerging markets - whilst at the same time putting mobile operators in control.    It is relatively simple to enable the mobile operator or their distributor to also act as a cash remittance service. The operator can offset the local balance of pre-pay top-ups held on their behalf by vendors and distributors against their actual foreign exchange market requirements and keep the balance offshore in a hard currency account.  The distributor and vendor can double their commission income and the consumer can retrieve their remittance from their local vendor at their convenience without having to travel.   Operators can therefore, unlike Western Union, transfer cash autonomously whilst reducing transaction costs to consumers.  What is more, because these networks are privately owned, they are not always subject to the same regulation that threatens the success of other mobile remittance techniques.  

Mobile operators are already recognisable and trusted brands in each of their respective countries (more so than many banks), which makes the transition to financial services a great deal easier.

By becoming a trusted financial partner, mobile operators have the potential to dramatically increase their profitability whilst at the same time creating a platform that can be used to introduce all kinds of financial services to their subscribers. It's a situation where everyone benefits.

 

 

 

Muhammad Bilal Khalid