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The worrying high velocity of mobile wallets
Simon Aderinlola
Head of Service Delivery - Interswitch Financial Inclusion Services Ltd
I have come across a number of articles that describe a nagging problem with mobile wallets - that cash is still King and so wallets just seem to be conduit pipes, not really holders of digital stored value.
Two questions from 1st principles help our approach to this seeming problem..
- What transactional purpose does cash presently serve? A medium of exchange for something of perceived value.
- When you travel without a card, (i) why do you change your currency to that of the destination country and (ii) what determines how much you either change at first or later top-up with? Truth is, you identify and go after what you value. So the more things you value in that eco-system, the more you position yourself to conveniently transact in and maybe leave/save money in that ‘wallet’ for future use.
So what do we do? The simplicity of the following two options appeals to me:
Rather than bicker, build products that recognize and feed on this velocity attribute - yes, not easy :)
Make the wallet ecosystem uniquely experiential, so wallet savings become a by-product of a convenience habit - but we're usually in too much of a hurry to groom what we need to build upon :(
An apt analogy for this second point is why Cameron’s Jake Sully continually craved his Avatar life-form - a-lesson-from-avatar-speaking to students - it held a constantly fulfilled promise of a unique experience.
Until Mobile-money deployments zero-in on this eco-system build challenge, quick fixes won't be sustainable. The page 44 overview of the GSMA SOTIR 2015 shows the global conduit pipe scenario of digital platform inflow-outflow scenarios: $6.8 Bn entering and $6.7 Bn leaving the eco-system.
Solutions have been postulated, for example, mandating that low value payment beneficiaries receive disbursements or wages in wallets rather than as physical cash or bank transfers. Problem is, while we eventually might pay wages into mobile wallets, that won't address the velocity issue as there's no incentive to keep transacting in that space. Reason: Most beneficiaries will simply grimace, feeling you have for no good reason placed their monies farther from usual reach. When they sign up for a wallet sequel to this experience, it’s only to open the tap at the other end - via Cash-out.
I recommend that eco-systems be painstakingly and patiently built, adding lifestyle-relevant features, with wow experiences and fine-tuning iterations – see the video the active 5-year wait. Unfortunately, the corporates who build mobile wallet eco-systems are driven by targets, as well as short-term and unforgiving shareholder expectations.
Theories and postulations abound, but this question of high throttling really requests that we both ask the right questions and seek unique, need-filling digital experiences.
In the immediate, I am privileged to be part of a team saddled with the exciting prospect of building out a national network of active mobile payment agents. We shall test our assumptions in a scowling Nigerian market of headwinds and tailwinds - a ride that promises much learning.
You're welcome to watch this space.
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