By Simon Cavill, Mi-Pay
International mobile money transfers is a subset of the $300 billion market in Global Remittances. Mobile money transfers offers a whole new channel opening up mobility to fixed location services. The World is Mobile. It is however subject to a whole raft of complex international regulations at both the sending and receiving ends including rules on registering and identifying both sending and recipients using official documents such as passports or identity cards. These Know your Customer (KYC) rules are complex to implement in certain recipient countries where many individuals simply dont have these documents or may have a shared clan name with thousands of others and may not even know their date of birth with any certainty. Even where such official ID documents are available, many of them are created using guesstimated details or are completely false.
International pre-pay top-up on the other hand is simple, quick and effective, with the value arriving directly onto a recipients handset in a few minutes at most. In many areas of the World, pre-pay value is becoming an informal payment currency in its own right with people settling small debts by instantly transferring pre-pay balances between handsets due to limitations in the countries payments systems. International airtime transfer works at several levels either being used to simply ensure that the recipient always has sufficient balance to receive international calls, or as a means of rapidly transferring small sums that can be “cashed” as favours or to settle local debts. ?? Transactions are typically in the order of around $30USD or less and take place on a more regular basis through the month.
We at Mi-Pay already provide international and domestic airtime transfers to several recipient market operators in Europe, the Middle East and Africa on a white label basis through our GlobalTopup service ( www.globaltopup.com ) which is proving highly attractive to European based operators and MVNO’s wanting to address their specific market segments markets.
Countries such as India have tried to regulate inbound money transfers by only allowing inbound money to be sent to a registered bank account, but this approach simply cannot work for the vast majority of individuals across the developing world with no access to banks or bank accounts. The usual Anti-money laundering rules apply but International Airtime works across international boundaries reducing friction and offering a capability to handle low value payments economically something International Money transfers do not do
Moves by countries such as Kenya and others to have all pre-pay phone users register their personal details may go some way towards meeting sending countries KYC requirements, but there still remains a gap between typical banking grade KYC requirements and that achievable in many recipient countries. These complex processes and procedures will continue to make informal international money transfer channels such as Hawalla very attractive as they remain largely cheap and effective, if occasionally risky… ??
Most migrant workers and others send money overseas in a lump sum on a monthly basis usually just after they get paid. This means that many of the non-bank based money transfer networks such as Western Union, Moneygram etc are looking to provide other products and services to their customer base to encourage further consumer engagement outside of the single monthly visit to their premises.
International airtime offers a popular, efficient and effective service through providers such as Mi-Pay who offer a Client branded service where consumers can go into the money transfer outlet and purchase airtime for cash on behalf of family and friends overseas where the value is instantly transferred to the recipients pre-paid mobile phone. Airtime provide a much wider recipient base of family and friends of up to 2 billion people who can for example use the received airtime to make or receive calls with the sender.
International airtime transfers, unlike money transfers, are regulator lite i.e. they do not have any KYC requirements or other financial rules or regulations governing them and simply require that the local sending country VAT or equivalent sales tax is charged and paid as in all other consumer purchases. The fact that the recipient receives the recharge directly on their mobile phone in a matter of seconds with an accompanying text message greeting from the sender, makes this a much more personal service suitable for impulse purchases and is therefore increasingly being used by money transfer agents and others to bring potential customers into their outlets on a more regular basis as well as enabling them to receive a commission for every transaction.
In a few recipient countries, it is currently possible for consumers to redeem airtime into cash at some operator outlets. Its not particularly widespread as exchange rates on offer are not particularly competitive, but in many cases there is simply no alternative. Over time, official national mobile money schemes will replace this process by placing value into stored value accounts, but there will always remain some use of airtime transfers as a simple means of exchange small amounts of value between individuals.
Up until now, domestic airtime transfers usually work across a single operators service, but its clear that as the volume of money moving through international airtime transfers continue to grow, it could be seen as a potential means in some recipient countries of bypassing the current money transfer networks and associated KYC regulations. Indications from several central banks in Africa and elsewhere are that as long as the total amount of value being transferred to an individual each month is below a certain amount (values vary across different countries), they will in effect allow them as unregulated transfers.
Its important to note that unlike money transfers, its highly likely that the actual money paid for airtime transfers will probably remain outside the recipient country, being paid either to an aggregator, pre-paid distributor or recipient operators off-shore account. Its therefore hard to see how central banks in recipient countries will ultimately regulate inbound airtime transfers even if they want to.
Marketing the Service
Marketing International Airtime Transfers is actually relatively simple and inexpensive. Depending on the commercial nature of the deal with the operators in the sending and receiving countries, its relatively easy to run reports to identify those mobile phone numbers that regularly send or receive phone calls and text messages from the other country(s). The local operator then sends a text message to those phone owners promoting the international transfer of airtime and in some circumstances will enable the forwarding of that text to the international counterpart country for free. This process, typically led from the recipient country creates a strong pull factor that encourages the sender to either use a partner money transfer network for cash based airtime transfers or for more sophisticated consumers to access the operators branded version of the GlobalTopup web-site and create an account to regularly transfer top-up value to one or more recipient handsets on a weekly or monthly basis. Its exactly this type of service that Mi-Pay have already implemented for a major international operator group and whilst its early days the transaction volumes are growing fast, especially as the word spreads through social networking services.
Money transfer agents themselves are now also capturing senders mobile phone numbers as part of the overall KYC process. This enables them to create similar personalized marketing campaigns via SMS to customers to attract them into their stores on a more regular basis, or to promote add-on services such as international airtime.
Although the vast majority of the International airtime purchases are currently made in cash at money transfer agents, there is a growing interest to provide airtime transfer services through the senders mobile phone. Technically, this is very simple to achieve through a combination of SMS, USSD, IVR, applet or mobile web. But the sticking point is finding a simple way for the sender to pay using something other than cash, preferably through some kind of payment card or ultimately through some form of airtime to airtime transfer where a portion of the senders pre-paid or contract balance can be pushed directly onto the recipients mobile phone.
Given an initial target market of migrant workers, moving towards card based payments can be very difficult as they are unlikely to have access to payment cards or bank accounts. However, some countries in the Middle East are beginning to introduce regulations to introduce pre-paid debit cards on which the workers salary is paid. Even here, educating the target market to go online or through the phone to register such cards is not easy and this presents an opportunity for the money transfer companies to encourage suitable customers to register for mobile services when they visit the stores. Agent staff can provide short simple demos in the store showing consumers how to initiate airtime or money transfers from their phones using a simple PIN to authorize the transaction.
Once the consumer has registered a payment device with a service such as those operated by Mi-Pay, then a whole range of desirable add-on services can be provided. For example, for domestic top-up services, Mi-Pay provides an auto top-up service where the recipients phone account is automatically recharged with a pre-set amount when their phone balance falls below a certain amount. This auto-balance service for international airtime transfers along with pre-set regular top-ups on a weekly or monthly basis to a range of recipient mobile phones are proven models that drive up transaction volumes and are highly popular with consumers.
International airtime to airtime balance transfers are technically complicated to implement requiring tight integration with both sending and recipient operators as well as a complex exchange and settlement process between the two operators. This is the prime reason why such services outside of a single operator group such as Zain have not really taken off thus far.
For the time being, transaction volumes for international airtime transfers continue will to grow rapidly as the reach of the service expands across more destination countries as an example, Mi-Pay currently delivers airtime to over 60 countries containing around 2.4Bn potential recipients and is adding new operators on a monthly basis. Its also highly likely that additional channels to directly initiate airtime transfers will be developed with social networks such as FaceBook and possibly Twitter as they start to monetize their services.