Liquidity Enhancement Strategies for Mobile Money Agents

Mobile money is now the preferred digital payment method in Ghana.

The simplicity of mobile money services is one of the reasons for its popularity. Anyone with any type of phone can consume mobile money services by registering a mobile wallet, which serves as a store of value. Mobile money users can also send and receive money, make payments and use a myriad of services including insurance, pensions and loans from the mobile phone.

The mobile money service is organized around several actors, namely the money phone provider, usually mobile network operators (MNOs) who are licensed as electronic money issuers (EMIs) by the Bank of Ghana. MTN Ghana, Airtel Tigo and Vodafone Ghana are all MNOs offering mobile money services. Additionally, Ghana Pay is offered by a consortium of banks in Ghana, while G-money is a service of GCB Bank and Zeepay, a Fintech company. These six companies serve more than 27 million registered mobile money accounts, with MTN holding the title of market leader.

Mobile money agents are another important element of the mobile money service architecture; they play a crucial role as an intermediary between EMIs and mobile money users, especially when exchanging cash. The prominent role played by mobile money agents makes them the face of mobile money.

Although mobile money agents provide many services, one of the most popular services they offer is called cash-out and cash-out. This service allows a mobile money user who wants to withdraw money from a mobile money wallet to execute what is called a withdrawal by following the prompts to authorize the mobile money agent to debit a determined amount of money from the user’s mobile money wallet. Once authorized, depending on the availability of funds and security checks, mobile money agents will release the said amount to the customer in cash. Essentially, the mobile money agent serves as a “human ATM” that dispenses money to users. For mobile money agents to perform this function, they must have sufficient liquidity.

If for some reason they don’t have that money in the cash register, the collection service doesn’t work. On the other hand, if a customer wishes to deposit funds to their mobile money wallet or send funds to a third party, the mobile money agent must perform a collection function. In this sense, the mobile money agent will accept physical money from customers and, in return, credit the customers’ mobile money wallet with said amount or transfer funds to a third party on behalf of the customer. The mobile money agent can perform this collection function only if it has enough e-money on the wallets of its mobile money agents, called an e-float. If for some reason there are no funds on the electronic float, the mobile money agent cannot provide cash-out functionality.

The liquidity problem of mobile money agents occurs when they do not have enough cash to provide cashout service or enough funds in their e-fleet to offer cashout services. Unfortunately, many mobile money users encounter this challenge when visiting mobile money agents to transact. Mobile money agents earn their income through transaction fees, if they cannot transact due to lack of physical money or funds in their e-wallet, it means less income for them , which in the long term has a negative impact on their business.

There are no simple answers to solving mobile money agent liquidity problems. Low operating capital means that some mobile money agents do not have physical money or funds on their e-fleet to serve their customers. Second, some mobile money agents lack the skills and knowledge to correctly predict the optimal amount of physical money or e-fleet they need to maintain in order to serve customers comfortably. Also, the high number of thieves targeting mobile money agents makes it a risky business.

Several solutions are proposed to solve the quagmire of this mobile money agent. First, NDEs, through super agents; agents that are more expansive and resourced can support agents with physical cash and on-demand e-fleet top-ups based on agreed business agreements. Second, mobile money agent operations must have built-in technology to properly record their transactions and spot trends to forecast their cash needs. Third, some FinTechs, like Onango, recognizing this liquidity challenge, provide mobile money agents with short-term loans to meet demands for physical liquidity and electronic floating. Finally, some banks and financial institutions, including microfinance, also support mobile money agents with on-demand liquidity support.

In conclusion, mobile money agents are now firmly embedded in our society, playing a central role in facilitating mobile money transactions, especially cash-in and cash-out services. Therefore, any innovation that can help them solve their liquidity problems will last a long time. way to support the growth of mobile money as a development tool.

Kwami Ahiabenu, II (Ph.D.) is a technology innovation consultant

Casey J. Nelson