Benefits of mobile infrastructure sharing
Infrastructure sharing has been a subject of discussion among the telecommunications industry for quite a while now. In fact, this already exists whereby the industries share the broadband space resources by purchasing each other’s redundancy. Redundancy in this context is simply an alternative route for data and information transfer in the case of service outages due to different factors like fiber cables cut among others.
The payments space has also used the above like in the case of Visa, among the largest global payments technology company announced a project to establish an agent switching scheme involving six commercial banks which enabled a banking agent to offer services for all the signed up banks from a single device. It is much easier and cost effective in the sense of devices used, advertisement merchandise among others.
This however has to work in tandem with a behind-the-scene reconciliation framework, done by the owner of the device, determining who owes the other. Visa having settlement accounts with issuing banks makes it effortless to issue single devices for agents within the issuing ecosystem. This has been rumored as the future of infrastructure sharing in the agent banking system.
A similar set up can be emulated in the mobile financial services space where there has been a dominance issue that has refused to go away. According to a telecommunication competition market study in Kenya, Analysys Mason found out a significant market power in the mobile money retail market. Responding to this, the industry players adopted wallet-to-wallet interoperability. This essentially means users can send and receive money across both networks unconditionally in a seamless manner.
This however needs to be scaled higher by also allowing agent interoperability without necessarily opening up agents. This could be implemented in the following steps:
- Operators agreeing to the idea
- A single bank is appointed to act as the clearing agent to provide a centralized float system
- Rework their respective back offices in this manner:
- Reconfigure agent systems to capture off-net cash dispensing/receipt
- Agree on the clearance period
- Develop a daily/weekly/monthly agent reconciliation of off-net and on-net transactions that will determine who eventually owes the other through a series of netting off.
- The person owing is then debited and credited to the entity owed.
- Applicable fee is also loaded into the netting-off system since it’s a purely commercial arrangement.
Value could still be added to the agents in the sense that the clearing banks could have a centralized float system whereby they can recharge their floats from the same banks. This will ultimately place the customer at the center of the transactions thus better service.
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