04/19/23

SMS Exchange: Mobile credits as an electronic

payment channel. Case of RWANDA

Jean Pierre NSHIMIYIMANARwanda Utilities Regulatory Agency

&Independent Researcher

piero425@gmail.com

ITU Workshop on “ICT Innovations for Developing Countries”

(Tunis, Tunisia, 20 June 2012)

OUTLINE

Overview on RwandaMobile Transaction status and StatisticsChallenges for these systemsSMS Exchange SystemConclusion and Recommendations

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RWANDA

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Capital Kigali

Area 26,338 km2

Population 10,718,379

Number of Households 2,187,500

Mobile Penetration 42% (April 2012)

GDP 502 USD

Rural Population (2009) 81.4%

Urban Population (2009) 18.6%

Electricity 16% (2012) and 70% (2017)

Terrain Uplands and hills

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Photo: Internet

Mobile Transaction Systems Status

Eg. To buy electricityPrerequisites:

To be a Bank customerTo be registered for this system

To have depositThe money is deducted from user’s bank account directly.

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1. Mobile Banking (for Banks)

Mobile Banking (Cont.)

Statistics

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10,718,379

951,500 (9% ) 155,986

(16% )

Feb. 2012

Population

Bank customers

Mobile Money subscribers

Mobile Transaction Systems Status (Cont.)

Prerequisites:To be a Telecom customerTo be registered and to have a mobile money account

To have depositThe money is deducted from user’s Mobile Money account directly.

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2. Mobile Money (for Telecom)

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Mobile Money (Cont.)

Statistics

10,718,379

42% (4,508,666)

6 % (639,673)

Feb. 2012

Population

Mobile Subscribers

Mobile money users

These systems are very

FLEXIBLE & AVAILABLE

and technically working well,

But…

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?

CHALLENGES

The GDP is 502 USD per yearThe little revenue becomes “First Aid”!There is no need to go for deposit because tomorrow it shall be needed!The effort to go for deposit = the effort to buy this utility!

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1. Low Revenue

CHALLENGE (Cont.)

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2.Geography

Because people are scattered in the village far from the cities, it becomes difficulty and costly to make a registration and deposit (as prerequisites for these systems).(For Many) The use of these systems cannot justify the cost to be done

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With this situation,

the purchasing of some services

becomes more

DIFFICULT

and involves a lot of

THIRD PARTY COST

like transport and time consuming

(especially in remote areas).04/19/23

SMS EXCHANGE!!

IntroductionStatusFunctionalityComparison AdvantageousChallenges

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INTRODUCTION

Through a question asked in ICT Forum in Kigali last year, How can people in the village can have access to the Mobile systems, A commitment came to make a research for a solution, hence the SMS Exchange System. As these people are having cash, the key prayer was to find an exchange object, which should so popular to that be accessed by every mobile user.

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That exchange point is mobile Credits: the mobile penetration is 42% (4,508,666) of the whole population, ie each household has almost two mobile phones. This penetration also has a great impact of Credits availability (almost at each door)

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INTRODUCTION (CONT.)

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SMS EXCHANGE STATUS

The system is in the process of being patentedIt also being implemented in one of Mobile Operators in Rwanda (MTN Rwanda)

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FUNCTIONALITY

The system is a USSD Application and Value- Added Service (VAS) to Mobile Network;It is connected directly to the Intelligence Network (Billing system);It uses the credits a mobile user has in his phone to buy/pay some services.

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FUNCTIONALITY (Cont.)

USE CASE DIAGRAM

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FUNCTIONALITY (Cont.)

DATA FLOW DIAGRAM

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COMPARISON

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Mobile Banking (Banks)

Mobile Money (Telecom)

SMS Exchange

Users Only bank customers re glistered for it

Only Mobile subscribers registered for it.

All Mobile users

Prerequisites To be registered and activated for this serviceTo have deposit

To be registered for this serviceTo have Deposit

To have units on the mobile number

Sources of Funds

Deposits Deposits The units on mobile phone

COMPARISON (CONT.)

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Mobile Banking (Banks)

Mobile Money (Telecom)

SMS Exchange

Observations

Limited to specific bank customers registered for this serviceThe Activation period takes timeRegistration may be tiresome for some usersDeposit takes time (queue) and may involve third party costs (like transport)

Limited to specific mobile subscribers registered for this serviceRegistration may be tiresome for some subscribers Deposit may take time (queue) and may times involve third party costs (like transport)

Easy to get airtime vouchers ( they are available almost in whole country as well as the mobile network coverage)Only services charge (for USSD session)

ADVANTAGEOUS

Environmental impact

Economic hardship applicable

Social Impact

The system is economically and environmentally successful because it is paperless.

  

The system is very cost effective because the mobile communication sector is very competitive and it will save all the third party costs (like transport)

The fact that the system is environmental and economical efficient, automatically, its social impact is remarkable.

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CHALLENGES

The system requires many interconnections of different players' System (Operators, Utility Providers), It requires also an important budget (for financial reconciliation at a period)It has not been easy to convince:

It’s new (always this question: Show where else it has been implemented??)A big WORRY: It is touching the “HEART” (billing system).

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CONCLUSIONS & RECOMMENDATIONS

To Telecom (especially in developing country):

To promote such systems as they can help a lot of people (especially in remote areas)

To Government & ICT Regulators:To promote the spirit of research so that many innovations should come up and ICT continue to go beyond core communication (Voice, SMS and Internet) but also impact the whole life even to people in the heart of villages

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To ITU: to continue such workshops to help an innovation in one place to spread an to every one as the globe has become one home.

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CONCLUSIONS & RECOMMENDATIONS (Cont.)

Merci!Thank You!

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