The incorporation of mobile money and electronic payments (e-payments) into programs and operations has become key in remaining competitive in the international development world, especially now that USAID has made the use of e-payments mandatory for all new contracts and agreements.
But working with mobile network operators (MNOs) can be costly and cumbersome, and it’s not the only option. As markets mature, partnering up with value-added service (VAS) providers to the mobile market has emerged as a viable (and often attractive) alternative. These third-party organizations often offer complementary products that build upon core MNO services such as voice, SMS, data and, in some markets, mobile money services. These VAS providers have often catalyzed the creation and success of mobile products designed for down market customers.
This trending truth is supported in the recent GSMA “Role of VAS Vendors in M4D” report, which outlines how leveraging mobile VAS providers’ expertise and services can help overcome some of the barriers organizations experience when working with MNOs and trying to leverage mobile technology to enhance their development outcomes.
In a webinar earlier this month, we dove into an exploration of some of the advantages and disadvantages of partnering with a VAS provider for mobile money. The conversation was led by a Beyonic, a Uganda-based mobile money aggregator and bulk payment provider, who demoed Airtel Money’s bulk payment platform and the Beyonic system to highlight the differences in using an MNO bulk payment platform versus leaning on a VAS provider product for support.
“There’s about 30 billion dollars wasted each year simply because there aren’t any good alternatives to using cash,” shared Dan Kleinbaum, Beyonic COO.
New research from NetHope highlights development organizations’ increasing desire to move away from the use of cash to digital payment products like mobile money for similar reasons. Beyonic’s mission is to eliminate the use of cash by building products that make it easy for organizations to use mobile money. They’ve built a mobile money bulk payment product that streamlines the process and provides organizations with access to multiple MNO mobile money wallets. They're about to launch this platform in Kenya as well as an API that'll let others build on M-Pesa. NetHope member customers include Mercy Corps and Save the Children.
Aside from allowing bulk payers to avoid direct contact with multiple MNOs, VAS systems can be less time consuming than less user-friendly MNO platforms. They’re more streamlined and provide enhanced product functionality (like better transaction reports and built-in contact verification and authorization) – and offer a level of transparency not offered by MNO platforms.
Pros of greater flexibility, functionality and ease do come at a slightly higher cost to the senders using their platform. Another potential disadvantage is most VAS provider products lack control over mobile money agent networks, making liquidity an issue at times. VAS providers don’t always have enough access to an MNO system, and payers may have to advance funds to the provider in order to load the payment wallet; sometimes funds can take up to 48 hours to be available to send out to recipients, and this lag time requires a strong trusting working relationship to account for the risk.
“When you’re looking at Beyonic versus an Airtel system, it’s a choice between cost and auditability and ease of us. It’s certainly a decision that can be made –and a very easy one to make– but if cost is a higher priority than auditability it’s important to know that it puts a burden of process development on operations and finance teams,” said Dan.
Ultimately, organizations can choose whether they want to partner with a VAS provider like Beyonic, work directly with an MNO, or build their own VAS when implementing mobile money or e-payments; the right choice depends on the organization’s unique capacities.