Where to begin to profit from mobile money
Operators have traditionally used a paper scratch card system. This gives the consumer a code number which can be typed into the phone to credit the phone with a number of minutes or a financial value. The code is hidden by a strip that has to be scratched off to reveal the number, hence the name. This mechanism for distributing phone credit allows non-phone outlets such as news vendors and drug stores to sell phone credit. The system is not without its drawbacks.
The benefits of replacing the scratch card with an electronic top-up system are huge for both the operator and the consumer. There is a significant reduction in fraud, no need to carry physical inventory and the amount of the top-up can be flexible unlike fixed denomination scratch cards. Some markets see an operational reduction by as much as 60%. This works particularly well in those markets where consumer funds or sales infrastructure are limited.
An electronic top-up system is effectively a business based on the wholesaling of minutes. These are sold on through a distribution chain, being broken into smaller and smaller packages until they reach the final distribution agents. Electronic top-up gives operators a significant reduction in logistical overhead; while giving them plenty of exposure and brand reach out on the streets.
Even more importantly it is the impetus of how we begin educating consumers how to turn money into minutes, and then how to use that interaction and facility to do more.
To begin with an operator must ensure that the investments are reused for other purposes. The mechanisms, processes, and control procedures, and existing infrastructure put in place from a transaction platform executing a recharge capability can be repurposed for more.
Plug in capabilities that allow for Peer to Peer airtime transfer, which allows subscribers to send minutes to each other. This is valuable in developing and developed markets, where, for example, a member of the family purchases for the household and distributes the minutes to their family members. Use that same peering mechanism and equate the value money rather than minutes and what the operator now has is the capability to provide P2P Money transfer, which allows money to be transferred in the same way as minutes – with the exception from bank accounts, or virtual wallets.
Using the same platform again bolt on an commerce and bill-payment options to allow the subscriber to pay for goods and pay bills, through the use of a virtual wallet in the phone (residing in the network), or interfacing directly to a bank account and utility company.
In my next post I’ll address mobile marketing. In the meantime, share your thoughts below.