The importance of regulation for trust in the mobile money space
Mobile Money Services, powered by Nokia and Obopay (under the watchful eye of Yes Bank in India) have passed an important milestone – they’ve received approval from the RBI (the Reserve Bank of India, the country’s Central Bank) reports The Hindu Business Line.
Like any service that is involved with money, a certain amount of regulatory oversight in the operating territories is required. These regulations aren’t necessarily geared towards making it a straightforward route for new companies and services, but to make sure that the service is robust, carries a certain amount of standing and financial backup, and is trustworthy for the consumer.
While this might seem like just one more step for Nokia, or any company looking at Mobile Money to make, it is a vital one. There are very few service areas that require the customer to have an absolute trust in the companies they are dealing with, and they rely on the regulators to be the arbiter of quality – not everyone has enough of an economic background to make the judgments that are asked of the regulators.
In terms of start-ups, there is another vital effect. It acts as a brake on ambition outreaching more than ability. You can take some of the lessons learned in India into other territories, but until you can satisfy the authorities in a new country that you can launch without creating an almighty mess and headache, you’re not going anywhere.
They might cause a bit more paperwork, but unlike the latest social network where you just have to trust that it’s going to be on the level, the mobile money ecosystem has a built in advantage that anyone coming to the market has already proven themselves.
Contributed by Ewan Spence