Why I Oppose Telco Led Mobile Money

If you ask most of the proponents of ‘Telco led’ Mobile Money (Telcom operators having Mobile Money licenses) why they want the telecom operators in the Mobile Money game, their reason basically revolves around “it worked in 1Kenya”.

To be fair, that is a good argument. It is not a bad idea to try something that has worked before you start experimenting with something new.

However, what if there are anticipated 2downsides? Do you still move ahead?

Anyway, here are my simplistic reasons for opposing telco-led mobile money;

  1. They have not delivered on their primary responsibility of providing good voice and data services. Why give them more?
  2. They have refused to utilise what they have in the payment ecosystem. Telco billing.

There is no need to expand on point number one. They should swallow what is in their mouths first before looking for more to consume.

The second point is what is more interesting.

Money is entirely useless except it is spent. Quite a number of people transferring money do so because they, or someone else wants to buy something immediately.  Why don’t the telcos double down on the “I want to pay for something” segment of those that may use mobile money?

BlackBerry has already shown that telco billing is very possible at scale and can be rather seamless in using prepaid calling cards to pay for services. So why have prepaid third party services on telcos not grown beyond BIS, caller tunes and those spammy SMSs?


I am not sure about the Blackberry BIS revenue structure. However, telcos take between 45 -80% (yes 80%!) commission on stuff distributed and billed through them. Compare that to Apple’s albeit greedy 30% and Interswitch’s 1.5%.

As a result of greed induced friction, only an infinitely small range of products can commercially viably, be distributed via telcos. The math just can’t work when someone takes a commission of 80%!

Of course it is known that when you pay N100 for airtime, not all of it goes to the telco because of distribution costs and commission. However, about 90% does. Therefore, telcos can afford to give at 70 – 75% to the content/service providers vs. the 20%-55% they currently give.

Of course, a telco taking 30% off the top is still massive for a lot of businesses with lower profit margins, but there is a way out.

Postpaid subscribers.

Telcos in all probability take 100% of the money paid by postpaid subscribers as there is no distribution cost to the payment, so they can afford to give 90 -95% back to service/content providers for these category of subscribers.

Who knows? Ability to pay for services cheaply may even convert a lot of prepaid subscribers to postpaid.

So, anytime a pro telco-led Mobile Money person is around you, ask them “what they you done with what you have?”

For the record, I am in support of independent led mobile money implementation, ala Paga. Banks and Telcos should stay as unbiased infrastructure providers.



Some may ask, what about the free market? Let the market decide.

I am sorry to break it to you, free market economics does not exist in real life. Besides, the 4 telcos already have a monopoly position protected by the limited number of licenses available to provide telecom services.

How’s that for a free market?


1 Like I argued in my previous post, Kenya is a single data point with different circumstances so there’s no harm trying another way

2What downside is there to telco led mobile money? Telcos have an unfair monopoly advantage due to the fact they provide the infrastructure on which Mobile Money runs. Those who own the road/tollgate cannot be allowed to provide transportation services.


Thanks to Tija and Osahon for helping me spot a dozen typos and errors.

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