Mobile money is many different things. In our Executive Interview series, Srinivas Nidugondi, senior VP at m-money specialist Mahindra Comviva, talks to Tim Green about bringing mobile payments, savings and loans to Zimbabweans – while reinventing the ATM in mature markets…
Mahindra Comviva’s Srinivas Nidugondi has a Zimbabwean trillion-dollar note. When it was withdrawn in June 2015, you needed 250 of them to get one US dollar. The banknote is a poignant illustration of the chaos of the Zimbabwean economy, and its out-of-control inflation.
And yet Mahindra Comviva, a mobile money platform provider to banks and telcos, has shown great faith in the country. It announced a landmark deal with local MNO Econet Wireless in 2011 to launch the mobile EcoCash Wallet.
EcoCash has had a really positive impact on Zimbabweans. The way that all the stakeholders – consumers, merchants, Econet and Steward Bank – have committed to it is a great example of what can be achieved.
Of course, the product – based on Mahindra Comviva’s mobiquity Money platform – met a similar market need to other launches like M-Pesa, Tigo and Orange Money: it reduces dependence on cash, and thereby the risk of embezzlement and corruption, and also the need to travel long distances to make simple payments.
EcoCash started out by letting users pay each other with a simple text or USSD message. But in time, it acted as a springboard to more ‘conventional’ financial services.
In 2015, Mahindra Comviva worked with Econet and MasterCard to issue debit cards to users of the EcoCash Wallet. It was the largest rollout of secure EMV Chip and PIN payment cards in Zimbabwe, and the first time that MasterCard debit cards were made available to consumers using mobile money services in Africa.
The move brought unbanked consumers into the world of traditional financial services. That delivers multiple benefits. It lets them pay conveniently at POS terminals in-store, withdraw cash at ATMs and shop online.
EcoCash had five million users in 2015, according to a report from the telecoms regulator POTRAZ. In Econet’s 2015 financial report, EcoCash was recorded as having handled $5.5 billion worth of transactions.
Nidugondi, Senior VP and head of mobile financial solutions at Mahindra Comviva, says: “EcoCash has had a really positive impact on Zimbabweans. The way that all the stakeholders – consumers, merchants, Econet and Steward Bank – have committed to it is a great example of what can be achieved.”
What makes EcoCash arguably more interesting than any comparable m-money service is its macro-economic impact. When Zimbabwe abandoned its own currency and switched to the US dollar, it faced a ‘change’ issue. Basically, there was not enough cash to go around.
Making money mobile solved this problem. And now, the The Reserve Bank of Zimbabwe says it wants cashless transactions account for 80 per cent of all transactions by 2021. Currently, they represent 20 per cent of transactions.
While Ecocash has been successful, it’s also true that the impact of mobile money in growth markets has occasionally been exaggerated. The fact is, M-Pesa succeeded because Safaricom has such a dominant market share (67 per cent) and was relatively unencumbered by regulation.
But the same conditions do not exist elsewhere.
Nidugondi agrees. However, he believes it’s wrong to look only at payments as a measure of what can be achieved. “Mobile money transfers do depend on interoperability between different operator services. And, aside from a few countries like Tanzania, this has held back the market a little.
“But we’re now helping many operators to look beyond payment and launch into insurance, loans, savings and so on. You don’t need interoperability for these products to work. And users love these services because they drastically reduce paperwork, and are available to millions of people who would otherwise simply not be able to save or borrow.”
Thus Mahindra Comviva helped Econet build EcoCash Savings Club – and it won the Best Mobile Innovation prize at the Kalahari Awards 2016.
Today, Mahindra Comviva works helps over 65 telecom operators and banks process over 200 million financial transactions a month via the mobiquity platform.
But the company should not be defined as one that works exclusively with growth markets. In fact, just before Mobile World Congress, it announced a tie-up with Wincor Nixdorf on a scheme to let people withdraw cash at an ATM by scanning a QR code or tapping a NFC-enabled phone.
It seems a little odd to use a mobile phone to make it easier to get cash (when most mobile payment ideas are based around replacing notes and coins). Nidugondi explains: “We’ve seen that people are happy to make transfers by mobile wallet, so we thought we should look at how they can securely turn that money into cash at an ATM.”
‘Securely’ is the important word here. The ATM project is based around host card emulation (HCE) and tokens, ensuring that no sensitive data is sent over the air during the transaction.
And Mahindra Comviva is working on other projects that capitalise on its expertise here. For example, the company is currently testing a service that splits the secure element between an app and a SIM card.
To explain: when a bank wants to create an NFC payment wallet for a phone it has two choices: it can embed the sensitive payment credentials inside a locked-down area of the SIM card or it can locate these details in the cloud (via HCE). There former is highly secure, but it does concede a lot of control to the operator or handset maker.
Mahindra Comviva’s new experiment splits the security key so it can only authenticate the transaction using both parts. Combine this with a one time password generated by the telco and you have a very secure system.
Nidugondi says: “It’s very lightweight. The business model needs to be worked out, but the banks are willing to look at it. They see this as a setup that keeps them in control but does make the most of the security offered by the telcos.”