The Case for Interoperability: Assessing the Value that the Interconnection of Mobile Money Services Would Create for Customers and Operators

This article analyzes whether there is a case for interconnecting mobile money services. It starts by evaluating the extent to which customers are likely to value the ability to transact across networks. The article states that estimates about new revenues from the proposed interconnectivity are unlikely to be large enough to justify the required investments. They are also not large enough to entice operators to divert their capital and attention from other critical projects. Other findings include:

• In many markets, few customers are willing to pay a premium for the ability to transact across networks;
• It is not obvious that a policy imposing interconnection would create welfare gains for customers;
• Imposing interconnection might have the opposite effect if mobile operators raise prices or curtail investment in other areas in order to implement interconnectivity.

The article concludes by citing a range of other less costly and simpler ways to allow customers to transact across networks that would still create significant value for consumers. A broader interconnection with financial institutions, other payment networks, and mobile money services in different countries would bring more benefits to consumers.