FEATURE
on a capital investment basis, the buy-
ins from local players has become a lot
easier. “That is a game changer in Africa.”
Another reason for OMA Emirates
selecting to partner with
telecommunication service providers is
the lack of cost predictability in setting
up Internet connectivity across multiple
African countries on its own. “Internet
as a channel probably could be a costly
affair in the long run, because we cannot
define the cost depending from country
to country.” Globally telecommunication
service providers have been striving to
become the bridge between issuing and
acquiring banks but have been limited by
financial regulations. “We become a kind
of a mediator for both parties to actually
complete an ecosystem what they have
wanted to do in the country that they are
in.” Telecommunication service providers
would receive a fee for enabling network
based transactions for OMA Emirates.
With OMA Emirates making the upfront
investment, and using the available
devices and technology investment from
the banks and telecommunication service
providers as they are and integrating
them as well, there has been a significant
positive response from within multiple
African countries. While the business
model is to leverage multiple banks to
use the same networks thereby offsetting
investments costs and increasing traffic
on the same capital investment, the
name of the game for OMA Emirates
is still to find local partners in its go to
market. The requirement is to prioritise
its points of entry into various countries
with local partners. In its role as payment
services provider, OMA Emirates would
be required to locally setup within the
specific African country, hence the need
to find a local partner as well.
Sangal spells out his way forward. “We
want to be very selective and we have to
because everybody wants to do it. It is
not about money. It is about resources.
When it comes to resources that is a
challenge every company faces worldwide
today.” Potential in-country local partners
would have to match the system
operating procedures of OMA Emirates,
which are used in multiple countries
and are well defined. Interconnectivity
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with the central bank of the country and
national switch would also be required as
part of the local setup process, either by
OMA Emirates or its local partners. Sangal
admits this is an uphill task.
OMA Emirates will start its service as a
model, as a pilot project in North Africa
with its local partner, Business Rules
Solutions-OMA Emirates Group. This
will be followed by a pilot project in
South Africa. At present, it has on-
going negotiations in eight African
countries. “That is what we will do this
year to see how deep is the water in
Africa. It is a virgin market according to
me and a lot of countries are not fully
tapped to the potential.”
Common terms
Issuing bank
An issuing bank is a financial institution that
is in charge of issuing card to consumers
on behalf of the acquiring bank or card
networks. It is also known as the credit
or debit card company and as the name
implies, they pay the acquiring bank on
behalf of the customer. They are also given
the authority to grant credit card or debit
card with the bank logo sometimes also
with that of the acquiring bank. The most
renowned card networks are MasterCard,
Visa and American Express. These card
networks grant access to issuing banks that
are in partner with them to issue cards on
their behalf. The bank that maintains the
consumer’s credit card account and must
pay out to the merchant’s account in a
credit card purchase. The issuing bank then
bills the customer for the debt.
Acquiring bank
An acquiring bank also known simply as an
acquirer is a bank or financial institution
that processes credit or debit card payments
on behalf of a merchant. The acquirer
allows merchants to accept credit card
payments from the card-issuing banks. The
acquiring bank enters into a contract with a
merchant and offers it a merchant account.
This arrangement provides the merchant
with a line of credit.
Under the agreement, the acquiring bank
exchanges funds with issuing banks on
behalf of the merchant, and pays the
merchant for its net balance—that is, gross
sales minus reversals, interchange fees, and
acquirer fees. Acquirer fees are an additional
markup added to interchange fees by the
acquiring bank, varying at the acquirer’s
discretion. The acquiring bank accepts the
risk that the merchant will r