M-Pesa may have begun to change the face of domestic African payments but one of the missing pieces has been allowing m-money customers to make international payments as easily. Russell Southwood spoke to MMIT's COO Kim Fraser on how it's starting to "connect the dots".
The company was started by Nigerian Jide Akindele. His idea was to take a look at how to overcome some of the challenges for people with credit cards wanting to make international payments: "International merchants see credit cards (from Sub-Saharan Africa) and there's a hesitancy to follow through because of the high risk of fraud. So we wanted to try and answer the question: how do we put a trusted payment mechanism in place?"
Akindele met Kim Fraser when the latter was the MD a small ISP called Monacom and he employed him to do business development. Fraser had been in Nigeria since 2000 and before Monacom had worked as a wireless network planner.
The two of the left Monacom in 2012 and Jide then asked him to become the COO of the new company. He understood the idea immediately because when he first came to Nigeria he found himself leaving credit cards behind and reverting to cash.
The company decide that the best initial approach would be either a mobile wallet or the voucher method:"So we partner with Ukash in the UK, primarily for micro remittances and this is integrated into some of the financial institutions' mobile wallet platforms.
We also bring in international relationships through Bango, which enables them to purchase digital content and increasingly, physical goods, with places like Target and Macy's in the USA and M & S in the UK."
"For example, Stanbic has a payment option for this type of international transaction so when the customer uses it, we pick up the transaction at the back end and validate that there are enough funds in the wallet. If there are, the merchant gets the thumbs up from us and do the transaction from the wallet to a settlement account and pay it across to the international company."
"We want o connect the dots so that companies with mobile wallets have a payment option connected into their system as will the merchants. We've also built in a comfort factor for the merchant. We'll do 72 hour payment cycles rather than the 30 days you get with Visa and Mastercard."
It's just moving into the public implementation phase with Nigeria's largest bank, First Bank and Stanbic and in the soft launch phase with Mobipay in Kenya.
"Our first customers will be banks with mobile payment systems rather than mobile operators but we'll also be looking at m-money operators as well. There's a small segment of the population with credit cards who can pay online if the merchant accepts them. Voucher or wallet options means there's no need to have a credit card."
The voucher option works like having a one time credit card with a specific amount of validated money on it:"We will be working with a company in Nigeria called Cityserve to implement this. For example, you'll be able to go and buy a N5,000 voucher and use that voucher to make a payment. It has 30,000 POS's in places like bigger supermarkets and restaurants and you'll buy your voucher there."
Fraser reckons that there are around 32 million potential customers in Nigeria but the market will expand if they start doing micro-transactions at the lower end of the market:"We want to be a useful service to people like Paga rather than compete with them and make it easier for people to be able to shop internationally."
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