Saturday, July 20Always On-point

Will Wallet-To-Wallet Transfers Really Change The Fortunes Of OneMoney And Telecash?

It is no secret that the government is not too chuffed about EcoCash’s dominance in Zimbabwe. The minister of ICT, Supa Mandiwanzira is on record multiple times saying as much. The fact that the government has two products of its own in direct competition with EcoCash and yet combine to command a pitiful 2% market share makes it harder to swallow.

EcoCash came out swinging and has an extensive agent and merchant network to show for it. Network effects then made it so that Netone’s OneMoney and Telecel’s telecash cannot compete. The government decided to use its unfettered powers to even the playing field.
How did OneMoney and telecash fall behind?
It is true that EcoCash is too dominant but that is because of the misplaced priorities and lack of foresight from the competition. We found out that the Econet group has invested $1.3 billion in infrastructure since dollarization in 2009. That was enough to own 80% of the telecommunications infrastructure in Zimbabwe.

It is that infrastructure which gives them a competitive advantage. The government is now looking to nullify that edge but what did NetOne and Telecel invest in during that time? They bought fleets of cars and constructed multi-storey buildings for their executive offices.

We are at a point where the government has to play referee in a game in which it is also a player, trying to get a fighting chance. How?

It is not easily defined but the following should work for our purposes here:

the ability of systems to provide services to and accept services from other systems, and to use the services so exchanged to enable them to operate effectively together

The government sees a scenario where a OneMoney customer receives money from an EcoCash user directly into their OneMoney wallet as interoperability. Wallet to wallet transfers across the three mobile money operators.

While noble reasons like, ‘to promote competition’ or ‘to make sure we do not end up with a monopoly’ are thrown around, the government is just looking to get a slice of the mobile money revenue. Interoperability is the government’s solution to get to tap into EcoCash’s agent and merchant network.

That, the government reasons, would make telecash and OneMoney more competitive and ‘protect the public from a potential devastating crash of the EcoCash platform.’ What a valid justification reason that is. If we have multiple meaningful players in the mobile money sector we won’t be as reliant on just one company. You can’t really argue with that logic.

Will interoperability achieve this?
It does not look like interoperability will have the effect the government hopes it will. There already is some considerable openness in the mobile money market:

Mobile money users can send money to any mobile number. It is not straight into mobile money wallets when it’s across networks but it remains, an EcoCash user can send money to a mobile number which is not registered on EcoCash’s platform for example.

Anyone can register for EcoCash regardless of the mobile network of their choice (this is still only limited to smartphone users at the moment.) It is funny that it is often said that EcoCash does not want to play ball with others and yet neither telecash nor OneMoney offer a similar service. It’s weird considering those two are the champions of interoperability.

The above openness still has not seen the masses flocking to OneMoney and telecash. What we have seen is EcoCash still piling on the subscribers. In the 12 months ending February 2018, 1.3 million subscribers were added bringing the total to 8 million.

The best of the rest, OneMoney, only celebrated reaching 1 million subscribers last week. This was impressive but was not the result of EcoCash being available for NetOne users. It was OneFusion which was responsible for the increase. How? People flocked to buy NetOne lines to be able to enjoy OneFusion, when they registered those lines they were asked to register for OneMoney as well.

Why getting those numbers doesn’t mean much?
The 1 million subscribers OneMoney celebrated are not the same as active subscribers. As we noted, most got NetOne lines (with OneMoney in tow) to get OneFusion. They do not actually use OneMoney. As a result, there were only 52,940 active OneMoney users in December 2017, just over 5 months before OneMoney celebrated the 1 million total subscribers milestone.

(Even for EcoCash, the 8 million figure is for total subscribers, the active subscriber figure is closer to the 4.5 million reported in the Potraz report for the quarter ended 31 December 2017.)

The 1 million OneMoney subscribers have Econet lines for their EcoCash needs. The government thinks if it was possible to send money from the EcoCash wallet straight into OneMoney/telecash wallets and vice versa, those 1 million OneMoney subscribers would no longer need the Econet lines in their Kambudzis (feature phones). That will not be the case.

Where the real battle is
The reason people prefer EcoCash, apart from familiarity, is the extensive merchant and to a lesser extent, agent networks. The reality for every Zimbabwean is that cash is too scarce to use for all payments, mobile money has taken on that role. What good is OneMoney if you cannot pay for anything with it?

The number of EcoCash merchants (those businesses that accept EcoCash as payment) grew from 27,000 in 2016-17 to 50,000 in February 2018. Until OneMoney and telecash have similar numbers we are going to have more of what we are used to.

If the government’s view of interoperability extends from wallet to wallet transfers to somehow making sure every EcoCash merchant accepts the other mobile money payment solutions then that could be something. This would mean OneMoney and telecash would not need to embark on massive merchant recruitments. Most importantly, NetOne and Telecel would not have to invest billions of their own.

That scenario would erase most of EcoCash’s competitive advantages and so we can count on EcoCash resisting it. In addition, that level of integration would be a nightmare for the technicians tasked with making it possible. In any case, the government has not indicated that they are looking for that kind of interoperability.

For the interoperability to work there would need to be no difference in charges for EcoCash to EcoCash and EcoCash to others.

What does this all mean?
The government may get the wallet to wallet interoperability they are seeking. EcoCash is apparently not too averse to such agreements, Orange Money users in Botswana can now transfer from their wallets straight into EcoCash wallets. EcoCash users cannot transfer to their Orange Money counterparts though, so it may be that EcoCash is only interested in that arrangement because it feeds money onto the EcoCash platform but doesn’t go the other way.

The EcoCash-Orange Money service is possible thanks to TransferTo’s network. Similar wallet to wallet services in Zimbabwe would require a network which allows for the cross-operator transfers. Who is going to do that?

Let’s say that is all sorted, it is unlikely that we would see a mass exodus of subscribers from EcoCash. If you recall, telecash offered free transfers to users within the telecash ecosystem. EcoCash users heard about it but only sought to convince EcoCash to do the same, EcoCash did not, and no exodus was seen. The EcoCash ecosystem was too valuable to leave just to get free transfers.

If people were not enticed by free transfers, wallet to wallet transfers are not going to do the job. The other factors like merchant network are just too essential for users to jump ship.

My advice to OneMoney and telecash would be to make it their number one goal to build their agent and merchant networks. If those networks are poor, nothing is going to change.–techzim

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