Mobile Payments: Rethinking Partnership Strategies?
This note highlights the complexity of partnerships in mobile payment ventures and the opportunity for MFIs in engaging with carrier services.
Most MFIs view partnerships as an important way of improving the success of a mobile payment venture. Partnerships can cover different relationships with different degrees of leverage and power between participants. Joint ventures, minority alliances and contractual relationships are some types of partnerships. Achieving the right partnership is, however, difficult. Reasons include:
- Most MFIs lack the technical and managerial depth to negotiate with technology vendors and mobile network operators;
- Few MFIs have sufficient customer base to create a network effect to sustain a person-to-person payment model.
The paper proposes leveraging carrier services as a solution to this problem. Carrier services are those that are provided by a traditional bank account, a standard money transfer service, or a third party fund transfer company. These services would help MFIs reduce costs and improve operational efficiency. Finally, MFIs should negotiate bulk discounts with carrier service providers. They should also review how these services would cut their costs and change their core processes.
