For a new mobile money network, which model is better—Visa-like or PayPal-like architecture?
Payments
Asked by Question Bot11/Nov/20151 answer
1 Answer
F
Faisal Khan
Answered 11/Nov/2015
This is a great question!
The school of thought on which avenue to pursue, is divided. Whilst attending the recent Mobile Money & Digital Payments (2014) Conference in Istanbul, this question was the topic heading for many of the presentations. (See my related post on: Take away thoughts from Mobile Money & Digital Payments Conference).
The pressing questions for many in the Mobile Financial Services (MFS) Market are as follows:
To answer your question, almost everyone that I met in the conference universally agreed that agnostic wallets are the way to go. They are bank agnostic, telco agnostic and mobile phone agnostic, i.e. go for Option # 1.
The aggregator model is inherently a very different approach. With interoperability, as a main driver, the aggregator models are more being implemented on a national switch level, the kind that say FasterPayments in the UK has or the 1Link in Pakistan, etc.
In your Option 1 and Option 2, you cite, PayPal as an aggregator, when in fact, on a broader scale, PayPal is simply a wallet provider, that has multiple product aggregation elements built in - it is by no means a true financial services aggregator. You would have more luck in success with an e-wallet, than a true regulator (which is much more difficult to deploy, because of agreements, national interest, central bank approval, regulatory hurdles, settlement bank selection, capital requirements, settlement times and technology, etc.)
An e-wallet or perhaps correctly stated, an e-money service provider that is able to implement stored value financial services has a higher business adoption rate than an aggregator.
In the event you're looking at innovation (which would be necessary) in all dimensions, I refer you to the innovation step-deck as modeled by Ericsson and now used by almost everyone in the industry as a baseline.
The general mix of your technology offering can change. That's simply the behavioral change within your consumer, but for the overall solution to be a sustainable formula, the above is what you need to consider.
The key to your product's success is needless to say frictionless manner in which payments can be made, within the ecosystem and across multiple ecosystems (hence the word interoperability). These elements are what will derive growth and adoption of your product.
The school of thought on which avenue to pursue, is divided. Whilst attending the recent Mobile Money & Digital Payments (2014) Conference in Istanbul, this question was the topic heading for many of the presentations. (See my related post on: Take away thoughts from Mobile Money & Digital Payments Conference).
The pressing questions for many in the Mobile Financial Services (MFS) Market are as follows:
- What would be the aggregator's role?
- Will mobile wallets themselves retain their ecosystem?
- How will interoperability with the current (banking) networks remain?
To answer your question, almost everyone that I met in the conference universally agreed that agnostic wallets are the way to go. They are bank agnostic, telco agnostic and mobile phone agnostic, i.e. go for Option # 1.
The aggregator model is inherently a very different approach. With interoperability, as a main driver, the aggregator models are more being implemented on a national switch level, the kind that say FasterPayments in the UK has or the 1Link in Pakistan, etc.
In your Option 1 and Option 2, you cite, PayPal as an aggregator, when in fact, on a broader scale, PayPal is simply a wallet provider, that has multiple product aggregation elements built in - it is by no means a true financial services aggregator. You would have more luck in success with an e-wallet, than a true regulator (which is much more difficult to deploy, because of agreements, national interest, central bank approval, regulatory hurdles, settlement bank selection, capital requirements, settlement times and technology, etc.)
An e-wallet or perhaps correctly stated, an e-money service provider that is able to implement stored value financial services has a higher business adoption rate than an aggregator.
In the event you're looking at innovation (which would be necessary) in all dimensions, I refer you to the innovation step-deck as modeled by Ericsson and now used by almost everyone in the industry as a baseline.
The general mix of your technology offering can change. That's simply the behavioral change within your consumer, but for the overall solution to be a sustainable formula, the above is what you need to consider.
The key to your product's success is needless to say frictionless manner in which payments can be made, within the ecosystem and across multiple ecosystems (hence the word interoperability). These elements are what will derive growth and adoption of your product.