The Mobile money payment system was introduced in Nigeria in 2010. The Central Bank of Nigeria (CBN) gave 16 mobile payment companies the approval to operate and drive the adoption of mobile money in Nigeria.
Among the 16 companies to have gotten the provisional license by CBN include; FirstBank / FirstMonie, Fortis Mobile Money, UBA/Afripay, GTbank Mobile Money, Pagatech, e Tranzact, Monetise, Eartholeum, Paycom, FET, Ecobank and Kudi. The operating license allows the companies to provide products such as electronic payments through mobile phones.
What Is Mobile Money?
According to the Nigerian communications commission in a report released, mobile networks have been primarily used in providing telecommunications services to both individuals and corporate bodies, essentially through voice and data packages. The networks and services have however evolved over time culminating into the provision of Value Added Services (VAS) that enhances the optimal utilization of the network in favour of the network operators and their subscribers. Mobile payment systems are now being provided effectively on mobile networks as VAS.
Mobile payment has been described as an alternative payment method. Instead of paying with cash, cheque or credit cards, a consumer can use his mobile phone to pay for a wide range of services and hard goods. It also encompasses any payment where the mobile phone is involved in the initiation and/or confirmation of the payment.
A wide range of services, digital and hard goods can be paid for using mobile money include but not limited to;
- Music, ringtones, and Videos.
- Books and Magazines.
- Transportation fare and parking meters.
- Utility Bills.
How Does Mobile Money Work?
The payments are effected through the airtime of a mobile subscriber, mobile wallet, credit card details on a mobile handset, and access to the merchant’s platform via short codes.
The Reasons Why Mobile Money Is Struggling In Nigeria
According to the GSM Association (GSMA) June 2014 Mobile for Development (M4D) report on Nigeria, major growth of mobile money services has thus far been largely outside West Africa in general, such as Kenya, Tanzania and Democratic Republic of Congo where operators have used extensive distribution networks and brand to grow scale and catalyse development of other sectors through payments, transfers and insurance.
It noted that the inability of Nigeria’s regulatory authorities to allow telecom operators implement mobile money is slowing the rate of acceptance of the scheme.
Industry experts and Analysts have also opined that mobile money is struggling because the banks, mobile money operators and other players have failed to clearly define, articulate and communicate the benefits of using the service to prospective customers.
According to Master Strategist, Collins Bosah Okafor, 2 reasons why the mobile money scheme operators haven’t been able to breakeven include;
- Lack of effective cooperation among all the various stakeholders in the value chain. The stakeholders include Agents, CBN, and the service providers themselves.
- Lack of trust occasioned by lack of effective awareness.
The Executive Secretary of the Electronic Payment Association of Nigeria Mrs. Regha Onajite said the cause of the industry’s lack of growth may be due to lack of industry knowledge on the part of the licensees.
In her statement “We must realize that a lot of mobile money operators didn’t know that mobile money is capital intensive when they went to pick their licenses.
In an interview Nairametrics conducted with an IT staff of a bank who pleaded anonymity, she said listed two reasons in her opinion on why mobile money is struggling. One is the fact that people are not aware of its advantages and ease and in her words she added “ if I do mobile banking, I only get charged for the interbank transfer, but if it is mobile money, I might be charged for using the service (if I am using another Telco), and for the interbank transfer.