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Mobile Money Interoperability

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Mobile money interoperability

Mobile money, also referred to as mobile payment, or mobile wallet generally refer to payment services operated and performed from a mobile device such as mobile phone, credit or debit cards and is further clarified as the intersection of both banking and telecommunications services (World Bank, 2010). While the term ‘Interoperability’ literally means the ability of systems to share data and operate reciprocally. Interoperability in the context of mobile money means ‘Mobile Money Operators (MMOs) providing the ability for customers to undertake money transfers between two accounts at different mobile money schemes, alongside the ability to transfer money between accounts at mobile money schemes and accounts at banks’(Malawi Vision 2020, page 1)

Interoperability in mobile money may create strong positive network effects; there is a wide body of research that investigates interoperability in payments systems and assesses the opportunity for participants that is created through network effects. Studies have found empirical evidence that demonstrates the positive network effects of interoperability between banks, which could also be applied for mobile money

The Governments recognizes financial inclusion as one of the means to uplift the living standards of the poor and disadvantaged hence a more inclusive financial system is critical to the development of the country’s social and economic development. Despite making significant improvements in areas related to profitability and competitiveness, banks in Malawi have not been able to reach and bring vast segment of the population into the basic banking services. The National Strategy for Financial Inclusion (2010-14) cites ‘lack of interconnectivity’ as one of the challenges hindering full achievement of financial inclusion in Malawi. Lack of interconnectivity between MMOs and players in the financial sector has also an effect on the nation payment system.



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