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What comes first? The chicken or the egg? A source of funds story.

One of the big dilemmas today for mobile payment solution providers is making mobile payments so user friendly for the poor that they could make every conceivable payment without even considering cash.

It’s not about coming up with use cases and enough functionality. There are tons of use cases – paying school fees, making internet payments, paying merchants, depositing money into a bank account and so many more. I have deliberately mentioned these use cases. P2P payments and bill payments seem to be easy enough. Mostly, functionality-wise these use cases are catered for easily enough. There is instant gratification. There is a no-hassle factor and no one is inconvenienced.

Can the same be said for merchant payments at small and medium merchants, those who do not have integrated PoS terminals? Let’s try this use case for size at a busy mom and pop shop. Let’s assume the shop owner has been converted as a mobile money merchant. The mobile money customer stands in a busy queue of cash customers. The queue is moving with relative ease until the mobile money customer requests payment to be made through the merchant payment functionality. The merchant finds his phone, initiates the transaction or waits for the customer to initiate the transaction. The amount has to be entered. In some designs it is also likely that an OTP is communicated to the customer. A pin has to be entered. The merchant has to wait for an acknowledgement and so forth. All of this whilst ten customers behind our mobile money customer are becoming more and more irate with the speed of the transaction or lack thereof.

In the world of the privileged banked it is a different story. Our source of funds are our bank accounts. Loads of different payment instruments are linked to our bank accounts. We use cards, mobile phones, the Internet, all at our fingertips to make payments wherever, whenever without having to be inconvenienced by cash. These transactions happen at supersonic speeds because we have a ecosystem that is completely wired to make it happen at the drop of a hat. The instances where we have to withdraw cash to make payments have almost become unheard of.

Back to the world of the poor. Mobile payment providers are asking them to convert their cash into electronic money. As I said before, there are ample use cases and functionality, but do they provide for seamless customer experiences? If the privileged banked can have a bank account as a source of funds with multiple payment instruments, then why can’t the poor have a mobile money account as a source of funds with multiple payment instruments.

By Barney De Jongh

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