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Mobile money - the Redknee approach

Our review of mobile money mentioned a project in Gabon where a key player was the Toronto-based Redknee. Michael Schwartz visited Redknee and met its Chief Technology Officer Bohdan Zabawskyj.

Redknee caters for both mature and fast-growing operator markets, and a summary of its mobile money offerings is therefore appropriate. Under the generic title Mobile Money Services, four primary services are tailored towards subscriber needs for what the company calls "secure, easy-to-use and cost-effective mobile money capabilities."

One of the four, Roaming Recharge, provides seamless topping-up for roaming subscribers by allowing them to purchase local vouchers to top-up their prepaid balance: by forming international "alliances" operators can save money and provide better roaming services to their subscribers. A borderless alliance is the result for the subscriber.

Voucherless Airtime Reseller is specifically geared to emerging markets. It is aimed at increasing pre-paid top-ups within developing regions precisely without the need for vouchers. Once mobile-to-mobile selling of minutes from reseller to subscriber is established, resellers can earn commission via an integrated commission structure.

One of the strengths of mobile banking is the transfer of money by means of mobile technology. Mobile Money Transfer is Redknee's offering here. Subscribers can transfer value (eg, airtime or currency) between subscriber accounts and between networks; via simple user interfaces, subscribers can safely transfer money across operator and international boundaries, thereby addressing the demand for national and international remittances. Subscribers can also send "free" requests to other subscribers for mobile-to-mobile top-up in order to stimulate the ongoing usage of mobile services via the requesting mobile account.

Finally, Mobile Wallet is oriented towards developing countries with poor banking infrastructure. It empowers a subscriber by enabling storage and transfers of money to and from accounts which are separate from the subscriber's traditional airtime account. More accessible than banks and more secure than cash, this also enables a new generation of mobile payment capabilities.

The CTO's view

Bohdan Zabawskyj has been with Redknee for almost a decade and has identified and solved many of the challenges that any company involved in mobile money must tackle. He relates a tale of growth: "Redknee has continued to grow and evolve its product offerings - progressing sequentially with the real-time monetisation of messaging, data, voice, content - and demonstrating the flexibility of our monetisation platform with respect to enabling the real-time transfer of value between accounts on an intra- and inter-operator basis as well as various third parties (eg, points of sale)". Developing Telecoms asked him some questions.

How did Redknee start in the mobile money sector?

"We realised that there would be a strong demand associated with real-time value transfer services in our initial Turnkey Converged Billing deployments in the Caribbean - specifically Digicel and TSTT.  The growth with even simple air-time transfer services surpassed the expectations of the network operators - demonstrating the inherent and latent value of simple and efficient value-transfer services - particularly within the under-banked demographic segments of high-growth markets. For example, it was observed that air-time transfer services resulted in certain "micro-economies" such as using air-time as a sort of virtual currency. The next logical step was to extend the air-time transfer service between operators - and to allow for a cash-in/out capability."

Where do you feel that mobile money in emerging markets differs from more mature markets?

"Mature markets have focused on value transfer capabilities associated with Near Field Communication (NFC) based technologies. I believe that the market response to various NFC trials has been relatively lukewarm as there is no clear distinct and obvious value proposition relative to other existing financial instruments such as credit cards, ATMs, cash etc. In the case of emerging markets however, the scope of deployed financial infrastructure has not met the needs of the under-banked. In this case, the mobile device becomes the de facto instrument for enabling or directly invoking financial transactions. In this context, Redknee has focused on a complementary set of value-transfer tools that collectively serve the needs for high-growth markets - while leveraging Redknee's real-time converged monetisation technologies."

Where do you feel mobile money is advantageous for developing markets?

"Mobile devices and existing messaging mechanisms provide an efficient and intuitive means to invoke and execute air-time or currency-based transfers. These efficiencies can be passed to the subscriber base where they can only be charged for a relatively small percentage and/or a fixed service charge per transaction.  These cost efficiencies also allows for the transfer of relatively small (eg, sub dollar) amounts which addresses the requirements of certain demographic subgroups."

Are there any changes in companies' economic models and business plans? 

"A number of operators are presently focussed on expanding from the baseline of transferring air-time as a "virtual currency" - to providing for a means of providing a "cash-in" and "cash-out" capability - typically via their existing kiosks and retail outlets. This is subject to regulatory oversight and approval. However, I believe that regulators will generally endorse mobile money solutions as long as the applicable government/regulatory agency is provided with sufficient visibility and control on the nature and scope of mobile money transactions for the purpose of taxation or to support international initiatives with respect to the prevention of money laundering." 
Are there any areas which you feel could progress more quickly?

"It has been proven that there are no technological barriers with respect to the deployment of real-time mobile value transfer solutions. Redknee has merely leveraged its existing set of adaptors and interfaces to pre-existing OSS/BSS systems (eg, SCPs, voucher management systems, SMS-Cs etc.) in concert with its real-time monetisation engine to provide for the entire set of noted mobile money capabilities. Regulatory approval, however, is a key potential barrier. It is essential to involve regulators as soon as possible. I believe that regulators generally have been caught off guard with respect to the tremendous growth for these services. However, controls can be easily implemented within the scope of the solution to provide regulators with the requisite visibility and control to meet taxation and/or to address money laundering concerns." 
Wireless or fixed?

"On the wireless/fixed line issue, the last five years have seen overwhelming growth towards wireless in high growth markets. In fact, for high-growth markets both fibre and copper line can be difficult in various terrains. Fixed land-line technologies may make sense in certain contexts such as dense urban environments but I suspect that the majority of a population's needs can be met by wireless technologies."

And any final comment? 

"Just to confirm the power of telecoms in stimulating a country's economic growth, it has been shown that a 10% growth in tele-density can boost a country's GDP by 1%. Via solutions such as Redknee's Turnkey Converged Billing solution and its complementary mobile money capabilities - we have demonstrated the ability to provide innovative and compelling solutions that meet the needs of high-growth markets today while providing a path forward to address the needs of evolving economies."

* As we publish this article we have been informed that Redknee Airtime Reseller is being deployed by VivaCell-MTS throughout Armenia. Resellers will be able to sell airtime via mobile handsets, eliminating the need for retail vouchers or physical top-up cards. VivaCell-MTS is an Armenian mobile operator providing a wide range of voice and data services since its launch in 2005.

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