The Central Bank in Ecuador is trying to launch a national mobile payment scheme that is designed to handle B2B transactions (along with P2P, top-up, cash in and out, in-store purchases and electronic receipts), deliver a very low rate (a $50 charge costs four cents, a roughly 0.0008 rate) and does this all with no bank nor telco partners.
The effort, detailed in a report in Payments Views, will be called JoMoPay. “The central bank will be both the owner and the operator of the scheme. The plan is to link the mobile payment platform with the banking platform so that mobile accounts can receive funds from and send funds to bank accounts,” the story said. “The central bank doesn’t have a retail presence so it is inviting commercial entities with large networks to become “macro agents” in the distribution network. They will receive a fee for specific transaction activities.”
The lack of the traditional payments infrastructure partners in this mobile payment effort is intriguing.
“Some readers will note that I have mentioned neither the banks nor the telcos so far. Most mobile payment schemes have either a telco or a bank, sometimes as partners, as the scheme owners. In Ecuador, however, mobile payments will be carrier agnostic,” the story said. “The central bank is purchasing airtime from the three networks in order to process the USSD-based text messages employed by the mobile payment platform. The smaller cooperative banks seem to be open to acting in the macro agent role but I’m not aware that any bank has signed on. There isn’t a great deal of opportunity for either the mobile operators or banks in the new scheme. The carriers do not have a large retail footprint of their own, relying on affiliate agent networks to sell their air-time plans. And while the banks do have branches, the revenue and the cross-selling opportunities are barebones. Regulations also prohibit any other party from issuing e-money.”
The other aspect of the program that the report found attractive was the kind of pricing that American retailers would drool over.
“What’s truly impressive here is the cost structure for most payments. Sending a transfer below $10 will cost $0.02, and a transfer up to $50 only costs $0.04 (all figures are USD, the official currency in Ecuador). And as the only wallet in the country, all mobile payments are interoperable,” wrote analyst Elizabeth McQuerry. “This is pretty heady stuff. You’ve got national regulatory support for a mobile payment initiative that is truly affordable – even low income segments should feel comfortable paying dos centavos to make a payment that might otherwise have been made in cash. It should be easy to use and, because it’s interoperable, ubiquity should be reachable.”