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Protecting Mobile Money against Financial Crimes
those who are not registered users). In cases where the system is open (that is, when it is interoperable with those who are not registered users), retail outlets may not be as important. See box 1.1 for descriptions of the two system styles. How does a retail outlet’s role factor into the five functions outlined in the previous section? On the face of it, m-money systems handle retail outlets in the same way they do customers. The retail outlet has a mobile phone service through which it accesses the interface to give commands to (and receive receipts from) the system. The outlet even has accounts, just as other users. Transactions with retail outlets are much the same as transactions with anyone else in the system. However, the outlets do act as a type of customer interface for the system and, thus, are paid a fee for transactions they facilitate. Effectively, when a regular customer puts cash into the system, he or she brings it to a retail outlet. The retail outlet takes the cash and, in return, transfers money from its account to the customer’s account. If the account provider (AP) is a bank, the customer receives a deposit into his or her bank account from the bank account held by the retail outlet.
Box 1.1
Defining Closed and Open M-Money Systems New payment systems such as prepaid cards, Internet money transfer services, and m-money may be categorized as closed or open. Like a typical bank account, systems are considered open if they permit transactions to and from accounts that are not part of the system. Just as someone may send money from bank A to bank B, an open m-money system would allow a user to move funds directly from his or her m-money account to an account in another financial institution. This means that there are two APs involved—one to send the funds and one to receive them. Closed m-money systems are set up in a different manner. All transactions occur within the same system, so only one AP is involved. For a customer to move money to someone who does not have an m-money account, the sender must withdraw cash from the system and then use another provider to transfer it to the recipient’s account. Source: Zerzan 2009.