How Revenue Assurance in Mobile Money Can Transform Telecom Business

Introduction

The mobile money market has emerged as a cornerstone of financial inclusion and convenience, revolutionizing how people manage and transfer money. With its rapid growth and increasing transaction volumes, ensuring revenue assurance is crucial for telecom operators. This blog delves into the importance of revenue assurance in the mobile money market, exploring the challenges, risks, and solutions that help telecom operators maintain financial integrity and trust in this dynamic ecosystem.

Overview of the Mobile Money Market

The mobile money market has seen phenomenal growth over recent years. According to the GSMA’s 2021 report, the number of registered mobile money accounts globally reached 1.2 billion, reflecting a 12.7% growth from the previous year. The number of monthly active accounts stands at 300 million, and there are 5.2 million unique agent outlets for mobile money services. The global value of daily transactions exceeded USD 2 billion and is expected to surpass USD 3 billion per day by the end of 2022.

Mobile money allows customers to send, receive, save, and spend money, as well as pay for goods and services using mobile wallets. Telecom operators offer a variety of services under the mobile money umbrella, including:

  • Transfer Funds and Credit: Customers can transfer money between mobile wallets, from a bank account to a mobile wallet, and vice versa. This includes both national and international transfers.
  • Pay for Goods and Services: Telecom operators partner with retailers and utility companies to enable subscribers to buy products online, pay utility bills, and purchase value-added mobile products like music, ringtones, and games.
  • Manage Bank Accounts: Mobile wallets linked with bank accounts allow users to check balances, perform transactions, and simplify banking operations.
Drivers of the Mobile Money Ecosystem

The mobile money ecosystem is driven by several key factors, each contributing uniquely to its growth and development. These major drivers include customers, agencies, and regulatory bodies. Each of these drivers further branches out into sub-categories, each playing a critical role in the overall ecosystem.

Customers

Customers are the most significant drivers within the mobile money ecosystem. The demand for financial inclusion by customers has prompted operators to establish platforms for mobile money services. Customers can be categorized into retail and enterprise customers:

  • Retail Customers: These are individual subscribers who utilize the services provided by the operator and are responsible for paying their own dues. They are not associated with any licensed entity.
  • Enterprise Customers: These are licensed entities that utilize a comprehensive suite of services for their subscribers. The enterprise customer, as an entity, is responsible for paying dues for the entire suite of services, rather than individual subscribers within the entity.

Agencies

Agencies play a crucial role in the activations and transactions of customers within the mobile money environment. Customers typically visit agents to activate their mobile money accounts, perform “cash-in” transactions (adding money to the mobile wallet), or “cash-out” transactions (withdrawing money from the mobile wallet). Agencies can be categorized into internal and external agents:

  • Internal Sales: These are the operator’s staff members who handle customer activations and transactions. Activations and transactions handled by internal staff generally do not command any commission, though this can vary based on the operator’s internal policies and local regulatory regulations.
  • External Agents: Licensed by the operator, these agents perform activations and transactions on behalf of the operator. External agents are particularly important in remote locations where it may be challenging for the operator to establish internal kiosks or stores. External agents help extend the operator’s reach nationwide and earn a pre-agreed commission for their services. External agents can be further divided into:
    • Direct Agents: These agents operate on behalf of the operator and assume full responsibility for sales and transactions, receiving 100% of the applicable commission. They are often referred to as parent agents.
    • Sub Agents: These agents work under a direct agent, sharing responsibility for sales and transactions. They receive a portion of the total applicable commission, with the remainder going to the parent agent. Sub agents are commonly known as child agents.

Regulatory Bodies

Regulatory bodies establish and enforce policy guidelines and frameworks to ensure operators remain compliant. These bodies enforce rules regarding transaction limits, account ownership, fraud prevention, agent and customer onboarding, among other areas. Key policies in a typical mobile money environment include:

  • Anti Money Laundering (AML) Policy: This policy outlines the regulatory body’s approach to controlling money laundering activities, including the prevention, detection, and reporting of suspicious transactions.
  • Electronic Payments Services Regulation Policy: This policy governs electronic payments within the mobile money environment, mandating operators to adhere to guidelines related to licensing, payment execution, transaction limits, and more.
Challenges in the Mobile Money Ecosystem

Despite its benefits, the mobile money ecosystem faces significant challenges. The nature of mobile money services, involving direct cash inflow and outflow among subscribers, merchants, banks, and retailers, makes tracking usage complex and prone to errors. Key challenges include:

  • Operational Challenges: Inability to transact, network delays, lack of cash or electronic float at agent outlets, abuse of customer details, balance update delays, and service outages.
  • Financial Challenges: Transaction replay by the network, counterfeit notes, variances between system and account pools, spoofed transactions, and teller counting errors.
  • Compliance Challenges: Relationship issues between service owners, inadequate KYC, limited screening of politically exposed persons (PEPs) and sanctions lists, and low adherence to AML compliances.
  • Business Challenges: Identity theft, provider impersonation, insufficient touchpoints, non-sustainable programs, and excessive short-term deposits affecting long-term liquidity.
Revenue Assurance in Mobile Money

Revenue assurance is vital for managing the risks and complexities of the mobile money ecosystem. It ensures the confidentiality, integrity, and availability of all transactions. One of the critical aspects of revenue assurance is addressing and mitigating revenue leakage, which can significantly impact the profitability and sustainability of mobile money services. Effective revenue assurance involves several key components:

Preventing Revenue Leakage

Revenue leakage can occur due to various operational inefficiencies, fraud, and inadequate controls. Telecom operators face challenges such as incorrect agent commissions, transaction errors, fraudulent activities, system inefficiencies, and regulatory non-compliance, all of which can lead to financial losses. Implementing robust revenue assurance practices helps to identify and mitigate these issues, ensuring that all potential revenue is accurately captured and secured.

Some common causes of revenue leakage are:

  • Incorrect Agent Commissions: Poor tracking and calculation of agent commissions can lead to overpayments or underpayments, causing financial discrepancies.
  • Transaction Errors: Inaccurate recording of transactions can result in lost revenue, especially if transactions are not properly reconciled.
  • Fraudulent Activities: Spoofed transactions, identity theft, and other fraudulent activities can lead to significant revenue losses.
  • System Inefficiencies: Inadequate system controls and lack of automated reconciliation processes can cause revenue leakage through manual errors and oversight.
  • Regulatory Non-Compliance: Failing to adhere to regulatory requirements can result in fines and penalties, indirectly causing revenue leakage.

Establishing robust controls to identify normal versus abnormal behavior is essential for managing risk exposure. For instance, creating controls linked to the number of deposits can help achieve tiered commissions while managing risks. These controls can prevent revenue leakage by ensuring that transactions are genuine and accurately recorded.

Reliable Data and Dashboards

Data is crucial for managing and monitoring risks in mobile money. Monitoring transactional activity is a key benchmark in an effective strategy. Reliable data comes from working with back-office teams and platform providers to ensure accurate monitoring. Accurate data helps identify discrepancies that can lead to revenue leakage, such as incorrect transaction recording or unaccounted fees.

Clear Reporting and Communication Channels

Effective communication among stakeholders is essential for risk mitigation. Mobile money managers, back-office support, customer service, finance, and revenue assurance teams must communicate anomalies or suspicious activities promptly. Clear reporting helps ensure that any potential revenue leakage is quickly identified and addressed.

Defined Internal Procedures

Comprehensive internal procedures ensure timely sharing of information, allowing appropriate actions to follow. For example, customer service centers must know how to escalate complaints about missing funds. Proper procedures help minimize revenue leakage by ensuring that issues are resolved promptly and correctly.

Monitoring Transaction Trends

Validating call volumes and revenues is critical for accurate taxation and telecom levies. Operators may under-declare traffic volumes, leading to financial losses. Establishing systems to verify revenue independently is essential. Monitoring transaction trends helps detect patterns that might indicate revenue leakage, such as unusual spikes in transaction volumes or discrepancies between reported and actual revenues.

Regulation and Compliance

Regulators should bring agent networks within their purview to ensure continued support as product offerings evolve. Proportional and cost-effective rules can help maintain the integrity of the mobile money ecosystem. Ensuring compliance with regulations helps prevent revenue leakage by making sure that all transactions and operations adhere to legal standards, reducing the risk of fines and penalties.

How Subex Mobile Money Assurance Helps

Subex’s Business Assurance solutions address mobile money assurance by employing a best-practices approach that leverages advanced analytics and deep domain expertise. This solution is among the top choices for mobile money assurance, trusted by several leading telecom operators. Key capabilities include:

  • Inline Subscriber Pre-check Validation: Validates biometric, address, and reference information.
  • Credit Risk Assurance: Assesses user credit scores.
  • Transaction Verification and Correlation: Correlates receipts and verifies taxes and commissions.
  • Analytical-driven Insights: Uses machine learning to identify money laundering and financial terrorism activities.

Subex’s Mobile Money Assurance solutions offer several benefits, including:

  • Optimized CAPEX on Risk Controls and Technologies: Efficient use of resources for risk management.
  • Informed Decision-Making for New Mobile Money Offerings: Supporting strategic decisions with data-driven insights.
  • End-to-End Assurance on Transactions: Ensuring transaction integrity across systems.
  • Adequate Documentation Across Processes: Maintaining comprehensive records for transparency.
  • Early Fraud Detection: Identifying fraud early to mitigate risks.
  • Enhanced Vendor Satisfaction: Reducing disputes and improving partner relationships.
Conclusion

Revenue assurance is essential for managing the complexities and risks of the mobile money ecosystem. Telecom operators must invest in robust fraud mitigation and revenue management frameworks to secure their revenue streams and ensure long-term sustainability. Continuous monitoring and adapting controls to evolving threats are critical for maintaining trust and integrity in the mobile money market. By actively managing and addressing risks, operators can ensure the financial health and growth of their mobile money services, benefiting all stakeholders involved.

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