Jul 03

The Internet of Mobile Money

TerraPay is a global B2B mobile switch.

Which sounds, perhaps, like a technological solution.

But our vision has always been that technology (while best in class) is necessary, but far from sufficient – because of the need to ensure compliance, transparency and user value. TerraPay has embraced this philosophy from its inception, by investing it its own regulatory footprint. Unusual for a two year old company.

Leveraging its ‘boots-on-the-ground’ approach, TerraPay seeks to be to mobile money payments, what MS-DOS was to the hardware era. A unifier. A driver of compatibility. Which is why we term our solution ‘Interoperability as a service’.

One crucial similarity, to further the MS-DOS analogy above, is that TerraPay seeks to be the market-elected solution (i.e. not one merely driven by legislative pronouncement) to unlock the value of the disparate closed-loop ecosystems. As such, TerraPay is keenly aligned, from the very get-go, to building a solution which is robust, scalable, and opex-driven.

One key point of departure from the MS-DOS analogy is that TerraPay’s solution was never intended to be a mere technological solution. The way we see it, mobile money interoperability (and the financial inclusion it drives) is acutely dependent on the institutional/legislative backbone in any given jurisdiction.

Having embraced this from its very inception, TerraPay has spent much of the last 24 months obtaining regulatory approvals and partnerships with various mobile wallets/accounts across the world.

Here’s what we’ve learned on our journey thus far:

Interoperability defined. Interoperability means different things in different contexts, and to different stakeholders. As a general matter, in TerraPay parlance, we use the term to convey the enablement of money transfer between customer accounts at different mobile money schemes, and between accounts at mobile money schemes and accounts at banks. Note that this is jurisdiction-agnostic – meaning the wallets could be in the same country, or not.  (We exclude the notion of interconnection, which speaks to the technical integration between networks).

Connecting the dots between interoperability and financial inclusion. Just like the uptake (and eventual ubiquity) of the PC enabled the computing revolution, interoperability will leverage the ever-dropping costs of communication to transform consumers, businesses and the economy. Hard-earned money will be deployable, regardless of ticket-size, by an end-user – just the way one doesn’t think about the physical location of the recipient of an SMS. In more developed/penetrated markets, interoperability will drive efficiencies through shared infrastructure and increasing transaction volumes (network effects and reduced transaction costs). A World Bank Payments Systems Group study (2008) study of interoperability in Latin America noted the example of Brazil being able to save 0.7 percent of its annual GDP (i.e. through reduced transaction costs, and increased efficiencies).

How is TerraPay uniquely poised to take on the challenge of interoperability? As a member of the Mahindra group, TerraPay is a unique marriage of technical and regulatory solutions. The former expertise has been garnered over several decades of developing and deploying mobile money architectures, with 71 global deployments of Mobiquity, an award winning mobile money platform serving 130+ clients (MMOs and banks) in 90 countries.

From a money-laundering/counter-financing of terrorism (AML/CFT) perspective, our culture of compliance is baked in to our solution from the outset, with end to end Regtech-driven discoverability, staffed by a multi-disciplinary team (risk, IT, ops, legal, treasury etc.) of industry veterans.

As such, we have both the technological know-how, and the regulatory infrastructure to enable an industry-driven model for interoperability. With this worldview, we are betting that diverse markets/schemes will converge onto an equilibrium (of rule sets, commercial terms, and technical standards), particularly as operators tend to cover multiple markets.

At TerraPay, we will usher in this new era: The Internet of Mobile Money.