Analysis of the Mobile Money Transaction Flow
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From the AP’s point of view, the retail outlet is nearly the same as any other customer. In many programs, a regular user could imitate the function of a retail outlet by taking cash and crediting accounts. However, the different limits put on retail outlet accounts and customer accounts make retail outlet imitation difficult. Although retail outlet activity in the system is quite similar to that of regular customers (albeit with more transaction frequency and greater account balances), the way in which a retail outlet inputs or withdraws funds from its m-money account can be very different from the way in which customers do so. Retail outlets are almost always required to have accounts in some traditional financial institution (that is, a bank). They cannot exist in the system without such an account, no matter how the program functions. This is because, at some point, retail outlets will want to convert their credit in the system into cash, and vice versa. Customers use retail outlets to do this, but what does the retail outlet do? The amounts retail outlets deal with are much greater than those of regular customers. So how does all the cash that retail outlets receive from customers get deposited into the pooled account? In closed systems, retail outlets typically will have a bank account in the same settling bank as the AP. If the retail outlet has too much cash on hand at the end of the week or month, it will deposit that cash into this bank account and transfer some or all of it into the pooled account. This transfer will credit the outlet’s virtual account. If the retail outlet has too little cash on hand, it makes a cash-out request to the AP. Cashing out moves money from the pooled account to the retail outlet’s bank account. The example of Mobile Transactions Zambia Limited (MTZL)7 illustrates the process (figure 1.4). Customers of MTZL must have their own mobile phone access, but they need nothing more. When they have opened an account, they may deposit money through a local retail outlet. The retail outlet has its own account on the MTZL system—an account that is essentially the same as the customer’s account, but with higher amount and frequency limits. The customer gives his or her cash deposit to the retail outlet, the outlet then transfers credit from its account to the recipient customer’s account (minus a fee). The customer side is complete; but if the retail outlet wishes to recredit its own MTZL account with cash or other funds, it must deposit the cash given by the sender to its (the retail outlet’s) MTZL bank account and then transfer it to an MTZL pooled account. The system then credits that amount to the retail outlet’s MTZL account (figure 1.5).