In late 2018, Orange and MTN Group announced a joint venture, Mowali, to enable payment interoperability across Africa. A look back at this sea change in the world of digital financial services.
We have been talking about interoperability for a long time now. The whole sector agreed on its utility very early on. In fact, a few years ago, the GSMA set up an interoperability working group involving the main mobile money service operators, including MTN Group and Orange. The operators agreed to work together to accelerate the implementation of interoperable mobile money services across Africa and the Middle East.
Thanks to, or because of the exponential growth in mobile money services and users in the past few years, the limitations in terms of usage have become more apparent. The current “closed loop” model no longer meets the demands of users, who want to send money to more people and pay for a wider variety of services through their own mobile network or another.
So, MTN Group and Orange decided to take proactive action, using the GSMA's work as a springboard to launch an innovative new service as quickly as possible. There was no longer any doubt that it was necessary, not only to secure the sector's future but also to satisfy consumer expectations.
Mowali was designed to provide technical intermediation for mobile money operators.
We aim to be an “enabler”, in other words to help them deliver new services to their users.
Our services are unconditionally open to all operators. Our platform and processes are standardised to facilitate integration and provide a seamless service.
Mowali is not in competition with mobile money operators. Like Visa/MasterCard, which are not in competition with banks, Mowali “only” facilitates financial flows between end users (customers, merchants, etc.), irrespective of the service provider, the country of origin or the country ofdestination.
The operators continue to be responsible for their positioning and differentiation strategies: it is up to them to create service offerings, a great customer experience and attractive prices to capture new users and increase usage.
Mowali is very relevant. Ultimately, the needs of both end users and companies are very similar from one country to another. So, we firmly believe that a global solution is the most appropriate for Africa.
Developing an interoperability platform is a complex and costly process.
Sharing and therefore optimising investments and operating costs will minimise the unit costs charged to users. That is the key to profitability. It will be harder for regional or local initiatives to handle the same transaction volumes, which will automatically affect unit costs.
Although mobile money services have existed for several years, most operators still give priority to acquiring new customers and increasing and diversifying usage.
An attractive service offering is still crucial to recruit new users and increase usage. However, the complexity of bilateral integration is hindering the launch of new services, as mobile money service providers must connect to the information system of each individual partner involved.
Furthermore, customised processes must be created for every partner.
With Mowali, we hope to overcome these obstacles by standardising procedures and enabling operators to access numerous partners via a single connection.
There are two use cases where demand for interoperability is the highest: person-to-person cash transfers and merchant payments.
Opening a new bilateral transfer corridor is generally very time consuming. With Mowali, all operators integrated with the platform will be able to instantly offer transfers to any other connected operator.
The same pretty much applies to merchant payments. In closed-loop systems, merchants must not only sign specific agreements, they must also establish processes with each mobile money operator.
This is all going to change now: once connected to Mowali, merchants will be able to accept payments from any connected operator. This will obviously generate more business opportunities in both the national and international markets.
Financial flows may also be arranged between companies and individuals, governments and citizens or companies, or even two companies. The possibilities are endless: payment of wages, supplier invoices, social security benefits, taxes, etc. The ball is now in the operators’ court. It is up to them to devise the services of tomorrow.
Interoperability will definitely put operators in a stronger position, as they will be able to provide their customers with new services. It will also ease interaction with banks, large retailers, fintechs, etc. In this respect, the advent of interoperability will force the digital financial services market to reorganise itself.
By connecting with mobile money operators, banks will be able to address new market segments for example.
Fintechs, which sometimes struggle to find trade opportunities, will have scores of new partnership opportunities.
Above all, the market is poised to grow massively thanks to new usages. Of course, the competitive pressure can only grow, but if the size and value of the market increase tenfold, everyone will be a winner!
Today, many operators offer only “traditional” mobile money services: cash-in, cash-out, peer-to-peer transfers, etc. What differentiates them most from each other is the size of their agent network and customer base.
Interoperability is going to “erase” these advantages to some extent. So, it is vital that operators develop innovative new services and an increasingly fluid digital experience. These new elements should underpin their positioning and their added value going forward.