FEATURE
Transaction route using common network processing. (Source: Guide to the ATM and debit card
industry, Federal Reserve Bank of Kansas City)
Transaction route using national switch processing. (Source: Guide to the ATM and debit card industry,
Federal Reserve Bank of Kansas City)
distribution are skewed to large urban
and commercial centres.
Another innovation that is increasingly
driving movement towards mobile based
POS payments is availability of virtual
mobile cards. Issuing banks in Africa can
save millions of dollars by not producing
the physical card and relying on scaling
the platforms for delivery of virtual mobile
cards. “The virtual card is a total cost
saving, I mean there is no physical card.
It is just a virtual card but it allows you to
use it anywhere. That is where the world
is now moving. We are using a mobile
application to actually disperse what we
wanted to use as a service.”
For OMA Emirates, access to consumers
through telecommunication service
providers and their deployment of country
wide networks is critical in its next moves
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into the African continent. The consumer
base that uses formal banking channels,
and those that can be reached through
telecommunication service providers,
differ by a couple of magnitudes of scale. themselves that play the role of the third
party for transaction processing. This is
because of their dominant investment
into networking and communication
technology in comparison to banks.
However, for a new entrant like OMA
Emirates, the entry into the African
payment services market is quite
complex for multiple reasons. Unlike
more developed markets like the Middle
East, the connectivity between the
retail merchant’s POS terminal and the
acquiring bank is typically through the
telecommunication service provider rather
than the bank’s own communication
network. In fact, in Africa, Sangal points
out a lot of banks are using third party
providers to complete their transaction
processing. In most cases, it is the
telecommunication services provider “Phone is the carrier in Africa today.
If I do a payment transaction, the
line that carries it, is through the
telecommunication services provider.
It is not a bank that gives the line. The
telecommunication services provider
carries the bandwidth and does the
authorisation. The only thing banks have
is the license to actually execute that part,
which the telecommunication service
providers do not have,” elaborates Sangal.
Globally and in Africa, retail transaction
authorisation and fees settlement
follow a similar step-wise process.
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