Visa’s Rwanda Initiative: An Electronic Journey Starts with the Last 3 Feet
April 16, 2012
Ken Paterson
Mercator Advisory Group
I had the opportunity to attend a briefing on Visa’ s partnership with the Rwandan government to establish a basic electronic payments infrastructure in the emerging nation. This initiative leverages Visa’s recent acquisition of Fundamo as an enabling platform for mobile financial services, most notably P2P payments.
As we struggle in the U.S. to figure out the basics of mobile payments, their technologies, and business models, mobile financial services mean something much more basic in an emerging nation like Rwanda. There, mobile is the vehicle of choice because it is one of the few available vehicles to support financial services. With few banks, branches, ATMs, and POS terminals, wireless communications provide the one potentially unifying element.
What interests me is not so much the technology of mobile money and integrating a custom-built market into the broader Visa payments network, although that is indeed the capability that makes it all possible. Rather, it is the challenge I term the “last 3 feet” of the transaction, between the end user and a non-bank agent. In nations where nearly everyone is unbanked (because there are few banks), the organization, training, and management of a network of local agents is a significant and necessary step to providing financial services. Money movement may be electronified, but the end delivery of money in these new markets is often via cash. We in the developed world may go for long periods without tapping the cash sides of our wallets, thanks to the lowly POS terminal and ubiquitous payment cards. But in a market without POS terminals or bank accounts, consumers must first learn to trust their local agents, and believe their promise that money will be delivered at the end of a mobile transaction. Some day there will be POS terminals and more ATMs, but that is not the starting point.
Visa’s partnership with the Rwandan government is important for many reasons. While there is a justifiably feel-good angle to the initiative, it is an investment in a long term market that will deliver new payment customers. Visa’s acquisition of Fundamo, a platform devoted to enabling mobile payments in emerging markets, and its integration into the Visa payments network, show broad commitment to the dealing with the infrastructure needs of those markets. But I don’t want to lose sight of Visa’s commitment to the last 3 feet of the transaction—the non-electronic part. That’s a necessary stage of development, and fraught with organizational and cultural challenges.
As we embark on our own mobile payments journey, it’s worth noting that some mobile paths are much more fundamental in nature. Visa’s willingness to take on these specific challenges of emerging markets is noteworthy.