The core functionality for Mobile Payments are Cash-In/cash-Out, P2P money transfer, Voucher transfer, Buy Airtime for phone, Bill Payment (Utilities), Pay for goods in a store, Bank Transfers, and bulk disbursements such as salaries.

In order to support the above functionality, it is possible for banks to evolve into Mobile Virtual Network Operators (MVNO)’s and for Mobile Network Operators (MNO)’s to expand into the payments arena. There are both benefits and risks to both types of institutions if they follow this approach.

A collaborative approach would probably offer the best solution to retailers and consumers, but collaboration and an incentive to collaborate is required. Scale could provide an incentive as there are components of a mobile payment system that are expensive to support in smaller operations.

For example, with scale, the cost of components such as Fraud and Risk not limited to Dispute Resolution, Data Security, Audit, and for Reconciliation, disputes and reversals, as well as platforms/interfaces to common 3^rd parties would be reduced.

“More established mobile money providers have recognized the opportunity for interoperability and are already pursuing some form of interconnection with financial institutions and other external parties.”  GSMA – Mobile Money for the Unbanked – Annual Report

For true interoperability (Account to Account) the impact of interoperability in the areas below would need consideration:

• Platform -> The Core Mobile Money Platform interacting with 3^rd party mobile money platforms
• Cash-In/Cash-Out/Balance Enquiry -> At the agent of another service provider where the mobile service is connected directly to customer bank accounts, then the Cash–In/ Cash-Out functionality that an agent may provide would not always be required.
• Devices used by Customers, Retailers need access to the required platforms

Common interfaces with a service-oriented framework would provide for the interworking of various components. The incentive to provide this common approach is not clear cut. Interconnection would provide more transaction partners for customers, which should increase transaction volumes. However, interconnection could also have an impact on mobile operators’ core business; churn could increase as switching networks becomes easier for subscribers. But if common platforms can evolve, enhanced products can be offered such as loans and insurance and this could compensate for losses in other traditional areas.