A Majority of Ugandans Think Mobile Money is Too Expensive

At least 79 percent of Ugandans believe mobile money services have become too expensive and unaffordable during the past year, according to a recent survey. The figure compares to 32 percent in 2017. The survey, which assesses the banking, mobile money and tax implications of the services, found that the country’s new tax laws, especially those pertaining to mobile money, have pushed the service beyond the reach of the average person.

The Ugandan government last year introduced a 0.5 percent tax on mobile money and increased the excise tax on it from 10 to 15 per cent. The new taxes have brought about a spike in mobile money-related charges, and mobile operators have reported a drop in transactions. The survey, which sampled 1,344 mobile phone users, also indicated that 57 percent of mobile money subscribers have reduced the amount of money they transact on the platform, from 32 percent in last year’s survey.

Mobile money’s emergence as a global phenomenon has a great deal to do with its notable success in Africa, where it decisively changed life for the better for the vast number of consumers who had no access to traditional banking services or even cash—in fact, it could be said that in many cases it made consumers out of potential consumers. And while mobile money solutions have proliferated and become more diverse, serving many types of customers who could hardly be said to be “unbanked,” it is still most useful, indeed essential, to those who continue to live in remote areas and with few resources.

Uganda is a market in which such customers are numerous. Only 17 percent of Ugandans have a bank account, while 73 percent have a mobile money account. In addition, the growth in the mobile money sector, according to the survey, has caused at least 3 out of 10 Ugandans to be able to access credit services.

For the government to impose taxes that increase the price of mobile money imperils this key market sector and causes grave risk to legions of consumers. In order for mobile money platforms to retain their core utility and remain relevant, they must be affordable. From the point of view of mobile operators, which administer and, in many cases, own the services, or partner with banks to offers them, something needs to be done. If the Ugandan government will not repeal or lower these taxes, operators may well have to absorb the costs in one way or another, because if they simply transmit the costs to the users, the users may have no choice but to stop using mobile money. 

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 If you have any questions about this article, feel free to contact our Editor-in-chief John Dorfman at jdorfman@tarifica.com

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MTS Belarus Upgrades Mobile Money System

Mobile operator MTS Belarus has upgraded its payment system, MTS Money, with additional functions. The service now enables customers to receive SMS or push-messages about road-traffic fines, and the system will allows them to pay the fine in a single click. There is no limit to the number of cars can be attached to an account.

The new automatic payment option also enables customers to set a schedule and amount for certain payments to be made from the account, by default. Payments using QR codes have also become available through the system, as well as the ability to track income and expenses for a selected period chosen.

The updated MTS Money app is already available for iOS devices, and a version for Android is expected to be launched soon.

Mobile money under the aegis of mobile operators has experienced great success in many economies, originally developing ones with unbanked populations but increasingly in relatively developed ones, too. In such markets, where access to bank accounts and more traditional methods of payment is no uncommon, mobile money’s chief calling card is convenience.

From the mobile-operator point of view, one of the major elements of convenience they can offer is the ability to pay bills for the operator’ services through the proprietary app. And of course, there is simplicity of consolidating multiple payment in payment—the phone bill. Now, MTS Belarus is offering customers the ability to pay not just for ordinary purchases but for recurring bills, by setting prepay options in the app. Furthermore, the convenience of paying traffic tickets through the app is a value-added service that the operator has designed with forethought for crafting distinctive features with real-world appeal.

In short, by tailoring a mobile money application in order to specific uses that customers want, an operator such as MTS can make the system much more appealing and versatile than it was previously, and thereby increase subscription. By increasing subscription and usage volume, the operator will accrue more revenue from transaction fees and possibly even drive customer acquisition and retention.  

Tarifica is the global leader in monitoring and analyzing telecom pricing. Covering hundreds of operators in every region of the globe, Tarifica’s databases of mobile and fixed line data and voice tariffs are among the largest and most in-depth in the world. Tarifica is also a leading publisher of benchmark and other pricing reports, and its analysts are recognized authorities in the telecom industry, relied upon by operators and businesses worldwide for pricing insight and guidance.  If you have any questions about this article, feel free to contact our Editor-in-chief John Dorfman at jdorfman@tarifica.com

To learn more about Tarifica, please visit www.tarifica.com 

Orange Launches Mobile Money Service in France

France-based multinational operator Orange has launched a mobile money service in France, initially enabling money transfers to three countries in Africa as well as within mainland France. The move is part of Orange’s strategy to diversify and grow revenues by expanding in mobile payment and banking services. Recipients of Orange Money will be able to withdraw funds from over 30,000 points of sale in the three recipient countries. An Orange Money app will be available soon in France, and the operator plans to expand the money transfer offer from France to other countries over time. Run by Orange's subsidiary W-HA, which is authorized to issue and manage electronic money, Orange Money does not require customers to have a bank account, only a mobile number and ID. Orange aims to compete with traditional money transfer services by offering much lower fees. Within France, all money transfers cost just €0.50. For international destinations, the costs range from €3.00 for transferring up to €100.00 to €8.00 for over €250.00 to €400.00, the maximum for a single transfer. Deposits cost €0.50, and withdrawals cost €5.00.  Mobile money services originally took off in developing economies, especially in Africa, in which a large number of customers had mobile phones but not bank accounts. Lack of access to traditional financial services ceased to be an impediment to commerce once mobile operators allowed subscribers to pay each other using funds already applied to their mobile accounts. The huge success of services such as Safaricom’s M-Pesa has encouraged operators to establish similar mobile money arrangements in other markets, but uptake of such services in developed economies has been slower, mainly because banking services are already well established there. However, first-world mobile customers are using their mobile devices heavily to access banking services; this week Bank of America reported that 62 percent of American smartphone users use mobile or online as their preferred mode of banking, up 51 percent from last year. Orange is now trying to establish “unbanked” mobile money in a developed market, France, by using its Africa services as the thin end of the wedge: Orange Money already serves 18 million customers in 14 countries in Africa, and many Africans live in France and maintain financial relations with friends, family and associates back home. African expats in France who use Orange money for transactions back to Africa will likely also use it within France, and their use of the system may encourage French nationals to do the same. In this way, Orange may be able to establish itself as a mobile money provider in its home country.

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Ooredoo Launches Cash-Back Promotion for Money Transfers to Philippines

Qatari operator Ooredoo has announced that its mobile money service will give QAR 100.00 (US $24.25) cash back on international transfers to the Philippines for three consecutive months. The offer will run from 5 February to 5 July, and customers must start sending transactions by 5 May to be eligible, with the minimum per-transaction amount set at QAR 100.00 for the promotion. Once registered, customers can take advantage of the free QAR 100.00 cash back by sending money to the Philippines for collection at any local MoneyGram agents or by making a direct bank account transfer to any one of over 20 participating banks. When the three monthly international transfers have been completed, the QAR 100.00 will be instantly credited to the customer’s mobile wallet. Mobile Money is available for use on any mobile phone model and can be used to top-up Hala accounts with a 10 percent extra recharge, pay Ooredoo bills, send money locally to another mobile or Qatar National Bank (QNB) account, or transfer money overseas. Users can deposit money into their mobile wallet using any of over 200 Ooredoo Self-Service Machines available throughout Qatar. Deposits can also be made through Ooredoo Shops or direct transfer from any QNB Bank account through QNB Mobile Payment service. The Ooredoo Money app is also available now for Android and iOS.

Remittance is one of the most prevalent uses of mobile money, because many users work abroad and need to send money to family members in their home countries. Given the fact that many Filipinos work in Qatar, it makes sense for Ooredoo to target this demographic with a promotion aimed at adding Filipino subscribers to their services. The amount of money involved in the cash-back offer is substantial enough to be meaningful to the Filipino expatriates, and once in the account it will be used in transactions that take place via the mobile money service, so the promotion will stimulate Ooredoo’s mobile money business in two ways. We feel this is a win-win offer. 

The above item appeared in a recent issue of The Tarifica Alert, a weekly resource that analyzes noteworthy developments in the telecoms industry from around the world. To access all of the latest articles and issues or to speak with the research team: http://www.tarifica.com/contactus.aspx

Tanzanian MNOs Enable Cross- Network Mobile Money

In a joint press release, three Tanzanian MNOs announced that their mobile money services, Airtel Money, Tigo Pesa and EzyPesa (offered by Zantel), will be fully interoperable by the end of June. While there have been other examples outside the continent, notably in Sri Lanka, this announcement marks the first instance of mobile money interoperability in Africa. Hans-Holger Albrecht, president and CEO of Millicom (Tigo’s parent company), stated, “With this agreement we can help make Tanzania a global pioneer in digital financial inclusion. Interoperability will be a catalyst for growth in the mobile money sector and is long overdue.” Helping to facilitate the agreement were the Bank of Tanzania, the Bill and Melinda Gates Foundation and the International Finance Corporation (an arm of the World Bank). Notably absent from the deal was Vodafone’s Tanzanian subsidiary Vodacom. Regarding this absence, Diego Gutierrez, general manager for Tigo Tanzania, stated, “There has been a commitment at group level including Vodafone to pursue interoperability.” He continued, “The conversations with Airtel and Zantel have moved quite fast but I think eventually everyone is going to be integrated.”

The willingness of three MNOs to come together and make a deal on mobile money is likely driven, in part, by their observations of the mobile market in Kenya, Tanzania’s neighbor to the north. There, Safaricom Kenya (in which Vodafone owns a 40 percent stake, making Vodacom’s absence from the initial deal in Tanzania probably not coincidental) has achieved a dominant position in the mobile money marketplace. Safaricom’s M-Pesa system is used in 98 percent of mobile money transactions in Kenya, with nearly a third of the nation’s total GDP flowing through it. The system is used for school fees, utility bills, money transfers and sometimes even to pay salaries. The near-universal acceptance of M-Pesa has prevented other mobile money platforms from gaining traction, and Safaricom has leveraged this position to expand its market share for more traditional mobile services.

Clearly, Tanzanian operators have every incentive to prevent this situation from being replicated in their country, and we believe that this program is a strong move toward that goal. The success of mobile money is predominantly driven by two factors—ease of use and the number of businesses and individuals that accept it as a viable cash alternative. While this program removes the possibility that any of these operators will be able to achieve the degree of dominance (and all the associated benefits) that Safaricom has in Kenya, it will likely expand the reach of mobile money in Tanzania, thereby increasing revenues for all stakeholders.

The above item appeared in a recent issue of The Tarifica Alert, a weekly resource that analyzes noteworthy developments in the telecoms industry from around the world. To access all of the latest articles and issues:  http://www.tarifica.com/TarificaAlert.aspx

Mobile Money Poised to Reach Critical Mass

 Three recent developments signal that mobile money may be on the verge of crossing the size-and-scale threshold where it can provide both increased convenience and security from theft to the unbanked around the world and distinct and significant revenue streams for operators.

First, Bharti Airtel and MTN announced a deal allowing convenient and affordable money transfer between their customers in Ivory Coast and Burkina Faso. This is the first cross-border mobile-to-mobile remittance service in West Africa. MTN spokesman Pieter Verkade stated, “MTN has reached a great level of adoption of Mobile Money in Ivory Coast, and Airtel has done the same in Burkina Faso. With a sizable community of Bukinable  working in Ivory Coast and sending money back to their home country, the partnership will greatly enhance the Mobile Money service for both countries.” Global remittance payments—an area where mobile money has yet to take off—are estimated at US $534 billion per year; if mobile operators can tap into even a moderate proportion of that, it could prove a significant new source of revenue.

Second, French multinational operator Orange announced that its mobile money network had received its 10 millionth customer. Orange rolled out its mobile money service in 2008, and since then it has become available in 13 African and Middle Eastern countries. In 2013, over US $3 billion passed through the service. While it is not the largest mobile money network (MTN has 14.8 million users in 14 countries), this news demonstrates that mobile money is a focus point for large global operators, which have the ability to make it a truly functional payment form, in the way that users of VISA, MasterCard, or American Express have come to expect.

Third, Qatari operator Ooredoo announced that it joined the Groupe Speciale Mobile Association’s (GSMA) Mobile Money Interoperability program. This program focuses on helping operators launch and scale interoperable mobile money services through the sharing of best practices and provides regulatory support. Its members represent 582 million mobile connections across 48 Middle Eastern and African countries and include Bharti Airtel, Etisalat, Millicom, MTN, Orange, STC, Vodafone and Zain.

While none of these items by itself represents a major leap forward for mobile money, collectively they are signs that the platform is picking up the backers and scale needed to reach launch velocity in emerging markets—that is, the point at which it becomes so widespread that the conveniences of having and using mobile money outweigh any difficulties associated with it. There are still many challenges to the adoption and success of mobile money, but it appears to have momentum on its side.

 

The above item appeared in a recent issue of The Tarifica Alert, a weekly resource that analyzes noteworthy developments in the telecoms industry from around the world. To access all of the latest articles and issues:  http://www.tarifica.com/TarificaAlert.aspx