Achieving Interoperability In Mobile Financial Services: Tanzania Case Study

Interoperable standards, a set of agreed rules and standards facilitating customer transactions among service providers, has been a focus area in the mobile financial services industry for several years. Regulators, vendors and providers initiated this discussion as far back as the inaugural GSMA MMU meetings in 2008 in Cairo. Despite the apparent advantages of interoperability, great industry interest and some ambitious initiatives, success has generally been elusive outside of bank-to-wallet integrations. This is largely because interoperability has either been mandated by the central bank or has focused only on technical integration (as in Indonesia), a less efficient solution than effective interoperability. In 2014, Tanzania became the first country to successfully develop and implement standard business rules for interoperable MFS transactions. Currently, registered users at participating MFS providers can receive and send money directly to one another’s wallets under rules developed at the industry level that govern how those payments flow. It is the first phase of a longer term vision of interoperability across the entire MFS ecosystem.

This case study examines Tanzania’s journey to-date in establishing rules to govern MFS interoperability by tracing the contextual factors, motivations, and processes that contributed to the agreement reached in September 2014 to interconnect according to an agreed industry set of rules for wallet-to-wallet transfers (supported with bilateral agreements between operators). It builds on interviews conducted with all stakeholders involved in interoperability discussions between December 2012 and November 2014. From these interviews, common themes have emerged that suggest important factors contributing to Tanzania’s experience. This case study does not describe in detail the actual solution, but rather provides background on the industry engagement process. It includes high level information on the solution as it relates to the choice of interparty agreements, business model and clearing and settlement architecture.