Wed | Dec 12, 2018

Mobile money providers seek booster shot from Gov't

Published:Friday | August 31, 2018 | 12:00 AM
JCUES epayment service, later rebranded as Conec mobile wallet.
GK MPay mobile wallet

Five years since the first mobile money product was launched in Jamaica, providers of epayment services can't seem to excite the market, so they want the State to do it for them in the name of financial inclusion.

Heston Hutton, a financial adviser who was engaged in the launch of Jamaica's first mobile money product, JCUES, later rebranded as mobile wallet Conec, says mobile money adoption could continue at a snail's pace unless the Government intervenes to create critical mass.

The former credit union executive, who is now CEO of Baker Tilly Tax and Advisory Services, said the Government would save "tens of millions" in transaction costs if it makes PATH welfare payments as well as other regular distributions through mobile money platforms.

His rationale is that merchants would be more willing to accommodate purchases through mobile wallets, once they were assured that those wallets were being consistently topped up and in use by masses of people, and that those masses would acculturate to the product once the issue of choice was removed.

"Right now, the success of any mobile wallet solution is contingent on adoption that is scalable. The merchants are not going to engage aggressively unless there is a critical mass of consumers...," he said.

Conec was pulled from the market last December by the Jamaica Co-operative Credit Union League, JCCUL, because of limited take-up and attendant losses. The owner of the technology behind the product has renamed it M-Conec and is hunting a new partner to relaunch it.

In the meantime, Jamaica now has three mobile money providers and a prospective fourth: GraceKennedy's GK MPay; NCB's Quisk and just last week, Digicel's MyCash entered the market in partnership with Sagicor Bank Jamaica and Mastercard. MyCash has a different edge, as it offers a mobile money app and card that can be used internationally. Supreme Ventures is currently conducting a discrete test of its mobile money product through its sports betting platform, JustBet.

Group CEO of GraceKennedy Don Wehby says his company has invested about US$2 million in GK MPay since 2016. The conglomerate has been tagging the mobile wallet to its other services to drive subscriptions, but he acknowledges that take-up of the wallet has been disappointing.

Wehby remains an adherent of mobile money as the wave of the future, but he too believes that the local market won't take off without some form of government intervention. In the meantime, he is seeking regulatory approval to introduce GK MPay to other Caribbean markets.

"GK sees products like GK MPay as being able to facilitate the participation of all Jamaicans in the financial industry and removing the barriers of the formal banking system," he said.

"The mobile wallet concept is still fairly new to the Jamaican market and so the penetration level is still quite low at this time. We agree that moving mass government payments to these platforms will assist in raising the acceptance rate."

Before JCCUL gave up on Conec, it had tried to engage the Jamaican government on distributing PATH benefits through the wallet - unsuccessfully.

"The savings would have been tens of millions of dollars. We did the assessment, looking at what the government was spending on the production of cheques, the reconciliation of cheques and cheques paid out without ascertaining receipt, and issuing cheques for small amounts," said Hutton.

"Under mobile money infrastructure, all of that would be automated. You would not have a cheque to write. The reconciliation would be instantaneous."

Wehby says he sees numerous opportunities for the mobile money, including toll payments.

But first, Hutton says, a way has to be found to get mobile money to go viral, "and the way to do that is to get government involved" through the use of the platforms for transactions and being less reliant on cash.

After all, as Wehby notes: "In 10 years, most transactions will be cashless globally."