[Paul Makin] Consult Hyperion are strong advocates of mobile money – we believe that not only does it offer the best route for financial inclusion, it also represents the next generation of financial services, unencumbered by legacy issues and constraints.

So we’re disappointed to note that, of the 191 services that are apparently live (according to the Mobile Money Tracker), very few of them have reached that milestone of 1 million customers – the level at which they can be viewed as a profitable, successful service. In fact, rather less than 10% have reached this point.

Why are so few reaching this milestone? We contend that in many cases it’s to do with relevance to most customers’ lives. Much of the industry is founded on watching M-PESA, and doing what they do: to paraphrase, “M-PESA is built on domestic remittances (P2P), and M-PESA is successful, so we must do the same”. But Kenya is different from many other countries in having such a strong culture of domestic migration. The consequence is that very few services have been able to build a base of regular and sustained P2P transactions. And since the profitability of mobile money services is largely determined by the number of transactions they carry out rather than the amount spent, they need to find other transactions beyond P2P if they are going to prosper.

Consider this. The large majority of the unbanked populations in emerging markets do not have access to refrigeration, so that they need to buy fresh food every day. Whether they buy the staples from a small shop or from a market trader, it is likely that this amounts to (say) one transaction a day, or 7 over the course of a week. In even the most optimistic scenario where a customer receives a P2P remittance from a relative once a week, these small retail transactions outnumber P2P by 7:1!

Addressing Retail

So if retail transactions are the answer, the question becomes “how?” Merchants are not going to be willing to sign up to multiple mobile money operators with the attendant inconvenience of using multiple MMO handsets with multiple transaction experiences and making multiple claims for settlement in order to accept payments, and so an interoperable solution is needed.

The conventional answer to this problem is the payment switch: someone – probably a bank or a large international payments organization – should be tasked with providing a switch, connecting all of the merchants, banks and mobile money operators, and giving customers a card. This familiar solution, the standard model in the so-called developed world, has evolved over five decades to overcome limitations such as the difficulty of communication, the limited availability and power of computers, and the reliance on paper for confirming contracts.

But emerging markets are coming to this need for interoperable payments with a blank sheet, to which none of these limitations apply: we have powerful mobile telecommunications, mobile phones which exceed the power of the fastest supercomputers of 30 years ago which can all interconnect via the mobile Internet, and an understanding of modern cryptography. Taken together, these factors give the emerging markets the potential to leapfrog the rest of the world and to adopt a truly modern approach to payments interoperability.


Consult Hyperion have developed such a solution. We call it WinguPay. It:

  • Allows complete interoperability for retail/merchant payments across participating mobile money operators and banks;
  • Uses a single merchant smartphone or POS terminal for all transactions;
  • Makes no assumptions about the capabilities of the customer’s mobile phone;
  • Does away with the need for a switch;
  • Does not require the retailer to have multiple accounts – his/her account can be at any participating mobile money operator or bank;
  • Uses public key cryptography to ensure the integrity and confidentiality of transactions;
  • Uses NFC technology to enable customer identification.

The details of WinguPay are too complex to set out in this blog post.  I’ve prepared a White Paper, which may be downloaded at:


Of course, adopting WinguPay is not sufficient. There also need to be changes in tariffs, of which more in another blog post.

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