Mobile Payment in Nigeria

Details: Category: Mobile Finance; 25 June 2009; 10585 views

Telcos in Nigeria are taking the battle to the next frontier in coming months: Mobile Money. Not to be left out of this race are banks and independent providers which had seen the clearly untapped potentials in an economy of only 20 million Bank accounts and 60 million mobile subscribers under an addressable market of 140 million people. No one wants to be left behind in the evolving ecosystems.

As the likes of MTN, Zain and NSDT provider, Tagattitude of France, are getting ready to commence mobile money transfer and payment in Africa's largest mobile market with over 62 million mobile subscribers, the banks are warming up to any provider that will deliver the best value in terms of returns and value. While Zain's partnership with Citi Bank has been widely reported in the media but it is still unclear which technology that they will be deploying. For now, no news is coming out from the second national operator, Globalcom on its Mobile Money roll out plans.

MTN will be using the USSD technology and will partner with banks for a national roll out in coming months. USSD, Unstructured Supplementary Service Data which is also a form of sending messages over a GSM network is not very similar in terms of processing the message from source to destination. USSD is comparable to when a subscriber is loading airtime to the phone using the x and # commands.

The major drawback for this technology is that users will require to remember the strings or codes to initiate a transaction, it is session oriented which means it terminates if the network situation is poor or congested, it does not store any transaction history and transactions must originate from the subscriber mobile Phone.

From the users point of view many semi literate folks might find it challenging to remember the strings or it is too long or not easy to recall and will also require some form of identification to receive remittance from the Banks or agents points of view.

Both operators, MTN and Zain will be adopting the operator - bank model. In this model, the mobile operator will provide the infrastructure while the banks will be cash in and cash out points. The main advantage for both parties are that existing goodwill and customers can be rapidly converted with lower cost of customer acquisitions and also the branch networks of the banks will serve as service points, most likely the service centres of mobile operators will join as agent points as significant transactions are already been undertaken at those points.

The major draw back of this model is that the customer will still require to physically visit the banks for remittance collections and it might be a challenge for those in the semi urban and rural areas where the spread of bank branch network is limited and no form of identification.

The Near sound Data Transfer technology provider, Tagattitude of France which had also won the Global Consumer Product Innovations Prize twice at the GSMA will be deploying the Bank - Independent Agent Model. They do not provision services to end users directly. The Banks will be at the fore front working with agents like micro finance banks, eateries, fuel stations, transport firms and even corner shops across the length and breath of Nigeria.

The Main advantage of their offering is that is 100 percent independent of the networks, easy to use as users will only require to make a simple call and immediately compatible with all mobile phones and networks, GSM, CDMA and even landlines. The language menu can be domesticated for major local languages in Nigeria or even Africa.

The major draw back for the service is that people with impaired hearings may not be able to use the service.

Unlike USSD, Near sound data transfer is a combination of services and transactions which can be initiated from diverse sources. It can be deployed for local and international remittance, person to person payment, Salaries and wages, ATM, POS, Local and International credit cards and online.

On the international remittance angle, established operators might lose out if they don't quickly implement a mobile strategy or they can either team with the likes of Tag whose technology is adoptable to suit their offerings and available across all networks and mobiles.

For the Operator promoted model, it immediately corners millions of existing subscribers already on their platform but the major draw back is that transaction can only be initiated by on-network subscribers. It could turn out in different ways as it may push up subscriber base and on the other hand, serve as a funnel syndrome to limit service availability non network subscribers.

The evolving ecosystems will be keenly contested and any model that offers better value will carry the day but for sure some upsets are in the offing from the likes of Tagattitude.

About the writer

Emmanuel Okoegwale is Executive Director of Tagattitude Nigeria and publisher/editor of about to be launched MobileMoneyAfrica.com. He can be contacted at This email address is being protected from spambots. You need JavaScript enabled to view it.