Telcos in Rwanda are seeking mobile money interoperability approval from the relevant regulator, a move that could see transaction costs in the country decrease.
Airtel Rwanda, MTN, and Tigo Rwanda want to roll out cross-network services the same way countries like Kenya and Tanzania have done.
The approval for mobile money interoperability in Rwanda will allow the telecom service providers to begin commercial negotiations, “agree on tariffs and sign agreements with an independent switch provider,” and offer services across networks.
Mobile Money Interoperability in Rwanda
The National Bank of Rwanda has for years been advocating for interoperability but the telcos have failed to reach an agreement. For instance, Tigo and Airtel interoperated Tigo Cash and Airtel Money but MTN Mobile Money refused to link with them until now.
If mobile money interoperability is approved, customers will enjoy fewer transaction costs and more people will be financially included.
Financial inclusion is part of the government’s agenda where it wants to link mobile money operators and financial institutions so that it can reach the financially excluded population.
The Spoke-hub Model
Rwanda could use the spoke-hub model of interoperability where an independent investor operates a switch that facilitates off-net mobile money services.
National Bank of Rwanda director of payment systems John Karamuka said: “The spoke-hub model has the advantage of economies of scale. We are not only linking mobile money operators but also banks and microfinance institutions.”
Karamuka said the model is comprehensive and inclusive because low-income people can utilise the service at affordable costs.
National e-payment switch of Rwanda, RSwitch Limited, is already connected to all banks in Rwanda. That means that will play a part in linking financial institutions and mobile money operators.
Utilising RSwitch will help mobile money operators and financial institutions to invest less in making mobile money interoperability a reality.
RSwitch chief executive Jean Claude Gaga said:
“Financial institutions will only invest in the front desk of their systems translating into much lower transaction fees for the consumer and also a seamless user experience.”
Rwanda is lagging behind in East Africa’s launch of a mobile money interoperability project which will complement private initiatives and facilitate bilateral linkages among mobile money operators in Tanzania, Rwanda, and Kenya.
