SMS and mobile money in Africa

Written by Liz Galpin Wednesday, 05 October 2011 17:40
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Hardly a day goes by that I don’t speak to someone about the way in which mobile technology, linked to a mobile money solution, can be used to resolve a problem in Africa. Problems are mainly related to taking cash out of the equation, but not always. Solutions nearly always involve providing a way of getting information to and from customers, and allowing field workers to transact while out and about.

At the moment PAYG has two handset solutions – at opposite ends of the spectrum. At the lower end, we use J2ME / SMS apps for communication and at the other end, iPhones on which to record customer details. We are constantly questioning our mobile strategy, in particular the use of GPRS or not. There is no doubt that an app using GPRS is easier to roll out (no need to integrate with in-country SMS services), and GPRS is for the main part, cheaper than SMS. But SMS remains the Lowest Common Denominator, is easy to track and handle. If no delivery acknowledgement has been received, then the transaction hasn’t completed, and needs to be redone. Nice and simple. Also – if you have any reception on your phone whatsoever, you can send a text. Once again, nice and simple. You also know exactly how much sending a text is going to cost you – no worries about possibly running out of credit.  So – this article I’ve just read comes as no surprise to me.

Nonetheless, we still continue to refine our J2ME / GPRS app, debate as to whether we should be developing android apps, and will set about to make our iPhone interface friendlier and more focussed.

No blog of mine would be quite complete without a reference to mobile money, so here goes with the thought for the day…… Handling cash is risky anywhere. Handling cash in developing markets is even riskier, and alleviating the need for customers, agents, delivery people, field officers etc to carry large amounts of cash on them, can only be a good thing. Whether the best approach is to roll out a mobile money solution, a prepaid card solution, or an Agency Banking solution – that remains to be seen. The underlying principles for all of those are the same – make available accessible outlets where customers can deposit their cash (i.e. no need to make a long journey to a Bank and then spend all day queuing and wasting valuable time), provide people with a means of paying bills easily (once again doing away with all those time-wasting queues), and allowing them to easily move their money from A to B.

Mobile money probably has the edge, mainly because the mobile phone is now becoming a necessity for most people in Africa, and it provides immediate feedback on account balances and transactions from the comfort of your own home. The rest of Africa appears to still have a long way to go to catch up to the success and penetration of M-PESA in Kenya. I for one so hope that we’ll see more success stories in the near future. PAYG solutions work fine on their own, but to really make an impact, they need to be linked into a payment system. Any payment system that has been adopted locally will work fine, thank you very much

Liz is the author of the recent report Will There Be Another M-PESA?

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