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National Payment Platform

National Payment Platform — next leap for ‘Mobile Operators’

By Waqas Mirza

 

With the establishment of synergies between mobile operators and financial institutions in areas of branchless banking and mobile remittances, it’s time for mobile operators to take a leap forward.

Mobile operators have a unique proposition that is unparallel to all other service verticals. Their customer touch point is every handset that is consuming their network. Retail banks on the other hand are limited by their ability to extend customer touch points by scaling and extending their delivery channels to a certain volume that is proportional to their consumer base.

Before I state the concept of a National Payment Platform, let me walk you through a couple of cases that will help lay the foundation of this model. Imagine a mobile user being able to pay his utility bills through his mobile phone. The bill is paid by debiting his current account even though his bank does not offer this service on any delivery channel. Similarly, imagine being able to pay for movie tickets or your child’s school fee through your bank account from your handset, even though your bank does not offer this service.

Currently, a bank’s consumer is limited by the number of value-added payment services that are offered by his bank through different delivery channels, although this consumer would like to consume the cash sitting in his  account for a lot more services and purchases from the comfort of his home or office or even when he is commuting or travelling.

Referring back to one of my aforementioned examples, a National Payment Switch that is connected to a consumer’s electricity provider and also to his retail bank (through country switch) will enable the consumer to trigger a transaction that debits his bank account and credits the electricity company’s account. The transaction will originate from the consumer’s handset and will use the mobile operator’s network to intimate the National Payment Switch of the transaction details. I understand that most banks today offer utility bill payments through their delivery channels such as Internet Banking or ATM/CDMs but as I mentioned above, a consumer currently is limited by the number of services his bank offers.

With a National Payment Platform in place by a mobile operator, the value-added financial services can be endless.

When a mobile operator has a payment gateway in place that is able to tap and debit a customer’s bank account (in a safe and secure manner and in compliance with all central bank regulations), it is just a matter of simply hooking up with businesses, government agencies, and different retail institutions to provide consumers with numerous payment options to acquire or pay for goods or services through their handheld devices.

I am acutely aware of the many compliance requirements that such a platform will have to fulfill and I am also aware of the fact that such payment transactions cannot be facilitated through SMS-based message exchanges – as in the case of mobile remittances – and that the user or consumer end of such a platform will have to be comprehensive mobile applications that conform to some very stringent security standards.

But on the other hand, I firmly believe that mobile operators have the muscle, capital, technology, and resources to set up such nationwide payment solutions and also establish partnerships that are key to such mega nationwide platforms.

On the flip side, retail banks can leverage such a platform and connect with the national payment platform to extend their services to the bank’s customers through different delivery channels. Instead of numerous integrations with utility providers, billers, and retail organizations, banks will have to connect with a single payment platform and offer several payment options to their customers.

At the heart of a payment platform lies a robust message broker and a transaction processing engine that interfaces between retail banks (through a country switch) and goods/ services providers. While this platform will benefit mobile users the most, a nationwide internet portal could also be launched to extend these services to desktop and tablet users who fancy a more elaborate and rich user interface to use these services. Furthermore, extensions of such a platform could include credit card based transactions, in addition to current account debits to make payments.

 

 

In conclusion, with a national payment platform that is managed and regulated jointly by the financial institutions and mobile operators, millions of subscribers would have endless payment possibilities and options at their fingertips through their handheld devices and cell phones. At the same time, mobile operators and banks could generate and stimulate immense liquidity and revenues through service fee and cross/up-sales.

It is thus a matter of a mobile operator realizing the potential of such a platform and seizing the opportunity by availing the first mover advantage in this currently very open and unattended space.


Waqas Mirza, Managing Director (Avanza Solutions – MENA), heads Avanza’s operations in the Middle East and North Africa. He is a seasoned technology specialist with a strong business acumen. Waqas has successfully led technology ventures, business development strategies, and niche product development initiatives within Avanza during the past 12 years.

With his strong technical background and keen pulse on market dynamics, Waqas is considered a subject matter expert on payments solutions, transaction processing systems, CRM suites, and channel banking automation. Waqas is a computer science graduate from FAST-NU and an MBA from London Business School.

 

 

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