The announcement that Econet will be launching EcoCash, a mobile payment solution, is good news for the country. This will bring new opportunities for technology entrepreneurs if the service takes off. We need to start thinking about businesses that will run on the platform. I will share some potential business ideas, using examples mostly from Kenya, where the M-Pesa mobile money service has been very successful. This is not an exhaustive list of all possible opportunities, but an overview to help the community prepare for the changes ahead.
Let’s start with a primer on how mobile payments work. Consumers register for the service and are given a mobile wallet – an application on their SIM card linked to their number. They then pay cash to an agent who loads e-money onto their e-wallet. Once the money is loaded, they can buy goods using e-money or transfer it to other consumers. To convert e-money back to cash, consumers simply return to the agent who will buy back the e-money for cash.
The service offers convenience and security through a ubiquitous platform. The high literacy levels in Zimbabwe and familiarity with SMS suggest that the service could succeed.
The most obvious opportunity is to become a mobile money agent. While the bulk of these agents might come from existing Econet retail partners and airtime vendors, one can always research underserved areas and open agencies there (universities and colleges, perhaps?). Mobile money has some important differences from airtime sales. Mobile money agents must carry a cash float for payouts to consumers. Mobile money commission is also usually lower than the gross profit on airtime. This means not all airtime vendors will sign up as mobile payment agents, and there may be gaps in the market for entrepreneurs who are prepared to invest.
Another opportunity lies in acting as an intermediary between Econet and its mobile money agents. Agents must actively manage liquidity to ensure they always have enough cash on hand for payouts. They also need sufficient e-float to sell to customers. This often requires them to cash out their e-float daily to manage cash flow. Therefore, we will likely see the emergence of intermediaries who buy e-float in bulk to distribute to agents in specific geographic regions, keeping the system running. These intermediaries must be highly capitalized, so it’s an opportunity best suited for businesses with financial strength. Those interested in this model could research the business model used by PEP Intermedius (http://www.pepintermedius.com/).
Our greatest hope is e-commerce. Two factors need to be addressed for e-commerce to be viable. First is trust. Consumers must trust that merchants will honor their commitments, and building this trust can take time. Second is the low maximum transaction value set for EcoCash. EcoCash currently accepts transactions up to $20. This maximum is usually set low to prevent money laundering. If these two factors are addressed, we could see e-commerce truly take off. Initially, we might see e-commerce shops selling low-value items. Will this low maximum amount offer enough convenience to consumers to drive wide adoption? I am not sure. However, we know that early adopters of new services are usually the youth and the technically savvy. Therefore, we might see the first e-commerce shops accepting mobile payments targeting the youth and selling technology products. Once this catches on, most retailers could also go online with e-commerce shops.
Kenya has a good number of e-commerce shops that accept mobile payments. One example is Rachel’s Bargain Corner, a Kenyan equivalent of Amazon.com. They sell books and accept mobile payments ([invalid URL removed]). The model works because book prices are usually within the maximum transaction limit, and they target a highly literate market segment. To bypass the low maximum limit, e-commerce shops could accept multiple payments for a single item.
If e-commerce powered by mobile payments takes off, web designers will need to develop solutions that allow their clients to accept mobile payments. Metrocomia (EA) Ltd (http://www.metrocomia.co.ke) is a web design company that develops mobile payment (M-Pesa) e-commerce solutions in Kenya. We might see demand for similar solutions here as well.
If EcoCash succeeds, it’s likely that other networks will launch mobile payment systems. This will lead to complexity, as retailers will need to integrate different e-money systems with their existing information systems. The Software as a Service (SaaS) model is emerging as an efficient way to integrate different systems with a retailer’s information infrastructure. An example is Kopo Kopo, a company incorporated in the USA but operating primarily out of Kenya (www.kopokopo.com). According to their website, Kopo Kopo enables enterprises to aggregate transaction data from multiple mobile money accounts, match that data to corresponding customer account information, and import or automatically post the reconciled data into their MIS.
It’s obvious that mobile money might take over the money transfer market between urban and rural areas because of the convenience it offers. That business will go to Econet and their agency network. However, I think an opportunity exists to enable money transfer from the diaspora. We could have a service that accepts credit card and PayPal payments from the diaspora and transfers the money to mobile wallets of recipients in Zimbabwe. The advantage is that such a service offers convenience to people in the diaspora, and it could be set up as a cashless operation without a huge capital outlay.
There is a wide range of micro-transaction services that could also be set up. Consider insurance. Small-scale farmers depend on rain for their harvests, and a drought can result in serious financial difficulties. A micro-insurance service can be set up to insure their crops. Payments could be accepted through EcoCash, so farmers don’t have to travel to town for insurance. They could also receive insurance payments through EcoCash. The Syngenta Foundation is offering such a service in Kenya (http://www.syngentafoundation.org/index.cfm?pageID=674).
NGOs can also play in this space. Concern Worldwide is using M-Pesa to fight malnutrition. Traditionally, malnutrition is treated through feeding centers where people go to get food, but this can be inconvenient and costly. Concern Worldwide has launched a service in which they send mobile money to people on a feeding program as a way of treating them in their homes. NGOs can also accept EcoCash donations as part of their fundraising efforts.
If EcoCash succeeds, there will also be consulting opportunities to help organizations integrate mobile payments into their operations and create new revenue streams.
This is only scratching the surface of what is possible. I am hoping we will see more technology businesses emerge through this new system. The success of M-Pesa has started a new scramble in Africa, and Zimbabwe needs to get in on the action. It’s never too early to start planning.
