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Aggregators for Last-Mile Distribution
A silent ally interconnecting digital finance
This is the third piece in a series of articles by PaygOps -and guest contributors- on TelCo.
Introduction
The mobile landscape in Africa keeps growing swiftly, making the continent not only the world’s fastest-growing mobile phone market, but the largest holder of active accounts in the whole world; According to GSMA’s State of the Industry Report on Mobile Money 2021, out of 1.2 billion registered accounts globally, 548 million are just in Sub-Saharan Africa (SSA). What’s even more impressive: out of US$ 790 billion in terms of transaction value, US$ 490 billion was processed only in SSA.
These figures may attest how important the Mobile Money (MoMo) industry is for the African continent, a region where 57% of the population is unbanked and where, precisely, mobile technologies have stepped in to address this matter. Being able to make payments via MoMo is clearly vital for African people, especially those in remote areas, and thus for distributors of essential products and services, it is crucial to enable mobile payment options if they aim to reach as many households as possible.
At the center stage of the whole Mobile Money industry are TelCos, who haven’t necessarily had the capacity or infrastructure to adapt to the changes, as the staggering development of the mobile industry has taken many of them by surprise. On the other hand -and unlike other regions such as Europe and Central Asia- the lack of standardised procedures, policies and regulations around TelCos in Africa explains partly why timelines to carry out TelCo integrations are lengthy, and the paperwork needed is generally complicated (as explained in one of the previous chapters of our TelCo mini series: Why TelCo integrations can take time).
Enter aggregators. An aggregator is an intermediary Fintech that enables the communication between customers, businesses, payment providers and third-party services, or as CGAP describes them, they are “the glue that helps many parts of the digital financial services ecosystem to work together.” Generally unknown by end users, chances are that when they’re making a transaction, whether it is, for example, to pay the bills or to receive remittances, an aggregator is involved at some point of the process, as these organisations are nowadays an integral part of the financial ecosystem. Aggregators have been around for years and have now become reliable platforms that work closely with Mobile Network Operators (MNOs) and digital finance institutions.
For Pay-as-you-go (Paygo) distributors of essential products and services wanting to scale their last-mile operations, having the possibility of integrating with TelCos through aggregators is a real time-saving alternative, as most of these organisations are already integrated with several TelCos and third-party apps across Africa, have special technical arrangements, take care of the complicated paperwork, and embody a centralised point of contact for support to handle any issues that may arise, making the entire integration process less tedious.
It’s time to elucidate around Aggregators, what the process when integrating through these intermediaries looks like, and the aggregators we’re in touch with, looking forward to paving the way for LMDs to set up their SMS and Mobile Money integrations as smoothly and “quickly” as possible.
What types of Aggregators are out there?
Defining the types of services that an aggregator offers is not an easy task, as there are multiple aggregators that serve different purposes across Africa, such as payment, communication, IoT features, among others. Nonetheless, for the purpose of this article, we’ll be exploring SMS and Mobile Money integrations through aggregators, which are two of the most common services that last-mile distribution organisations need to operate with; the former for distributors to send payment notifications, payment reminders or any other type of notifications to end users via text message; the latter for the end user to send payments to the distributor.
Standard TelCo Integration vs. Integration with an aggregator
Basic TelCo Integration through an external app:
A Basic TelCo integration goes through Apps such as Telerivet or SMS Sync and doesn’t require an API. When someone sends a payment to a TelCo, the owner of the account being paid receives an SMS indicating how much money they’ve received and from which user. Telerivet forwards the SMS from a TelCo 2G network to the Internet through an Android mobile phone -hosting the Telerivet app- that receives the SMS and forwards it as data to the Telerivet server, which finally forwards it to PaygOps, where the content of that SMS is decoded to identify the contract to reconcile that payment with on the PaygOps platform (using a reference ID number, memo field, etc). This is the Basic process for MoMo. The SMS Basic integration works similarly and is simpler, as the only information needed is the SMS per se, forwarded from the Android phone to Telerivet and then to PaygOps.
As in this situation, the distribution does not need a contractual agreement for the use of the APIs with the Telco, setting up this Basic TelCo Integration may take a few weeks to be operational. For further reading on this process, we recommend you to go through the second chapter of our TelCo Mini Series or visit our dedicated page on TelCo Integrations.
Direct/Full Telco Integration:
Integration between the Paygo platform and a specific TelCo in a specific country. This type of integration is done via the API documentation provided by the TelCo and requires an agreement between the distributor and the TelCo. The agreement allows the distributor to access and use the TelCo's API. However, this is usually a contractual agreement that may take several months to be approved, as it entails complex compliance and administrative procedures that the distributor must face. To have a thorough understanding of such procedures, we recommend you to read the first chapter of our TelCo Mini Series: Why Telco Integrations Can Take Time).
Why integrate through an aggregator?
Aggregators were put together to allow communication between a business/single point of contact and multiple TelCos. For instance, if a business wants to send SMS in bulk, they first send the SMS to one point of contact (the aggregator), which will dispatch it to different SMS providers. In terms of integration, it would only consist of an API integration with that aggregator, who later on takes care of sending the SMS to the other TelCos, given the aggregator already has integrations with each one of them. Aggregators have been doing integrations to communicate with every TelCo in the industry for years, to ultimately offer their own APIs as centralised points of contact to go through and communicate easier with the other TelCos.
Aggregators may handle both Mobile Money and SMS integrations. However, it’s important to clarify that each one of these procedures is done separately and, in many cases, it involves different processes and different prices depending on the aggregator. Whichever the case, the Mobile Money integration is more complex and will take longer to be conducted, whereas the SMS integration is always more straightforward.
Moreover, the costs that aggregators offer are usually competitive given they have special agreements with TelCos, so many of the TelCos’ services are offered to aggregators at a discounted price. Nonetheless, in some cases, a threshold needs to be reached regularly, for example, in the number of bulk SMS sent, so it’s cost-effective both for the aggregator and the client. Otherwise, the fee percentage on top of the TelCo service may vary.
It’s always faster to implement an integration through an aggregator because that’s their reason for existing in the first place. Even though some aggregators may have outdated technology, and might be tricky to connect with, they’re already integrated with several TelCos, which will smooth the process for all parties involved. If that was not the case, it might take a long time for them to integrate with a new TelCo, because they would do it the same way we would directly on our own, and that, as explored previously, takes time.
Own Paybill Number vs. Shared Paybill Number
For starters, a paybill number is the code/number that the distributor/business is assigned to which their end-users will be able to send MoMo payments to. It’s usually mid-sized or large businesses, the ones who have MoMo accounts with their own paybill numbers. If the integration has been done directly with the TelCo, the distributor will be required to open a MoMo account and will be assigned a paybill number. If any of our clients carries out an integration -through PaygOps- directly with a TelCo then they will have their own paybill number that we can integrate with via API to send or receive payments.
But aggregators, such as Beyonic, offer customers a shared paybill number, which is no more than Beyonic’s own paybill number which they share with each of the TelCos that they’re integrated with.
Let’s say Beyonic has integrated with MTN Uganda with their own paybill number. If an end user wants to send money to our client/distributor via the TelCo Direct integration, they would just put the paybill number of the distributor, whereas if the TelCo integration is made through Beyonic, they’ll have to enter the paybill number of Beyonic. It’s one single account number for Beyonic that can be dispatched to any of the distributors that are integrated with them, meaning that companies who do it this way won’t have to open their own MoMo accounts because Beyonic already takes care of it through their shared paybill number.
Nevertheless, already established LMDs usually want to keep their own paybill number even when moving to an aggregator, as their long-time customers are used to sending payments to said number; therefore, changing the paybill number would mean re educating their customers, which involves time and money. Although keeping their own paybill number is, in theory, possible, this is tricky, as an aggregator would prefer the distributor to adopt their shared paybill number, because using the distributor’s own paybill number would require technical and commercial agreements between the aggregator and the MoMo provider, re-running tests and many other technical aspects that would take longer to carry out the integration.
Example of Aggregators PaygOps is in touch with
SMS Aggregators
Africa’s Talking is a key player in the SMS aggregator scene serving SSA. They’ve been developing their solutions since 2010. Among their offerings, they carry out bulk SMS, two-way SMS and premium SMS integrations, as well as voice infrastructure, Airtime distribution services and IoT management features. They have one single API, are easy to integrate with, have an easily reachable back office administration page for customers to see the SMS that are being sent -from our clients- to whichever network.
For pricing, please refer to the breakdown of costs we prepared in Chapter 2 of this blog series (Mobile Money and SMS: How much does it truly cost?)
Mobile Money Aggregators
Beyonic is an aggregator with presence in all of East Africa. They’ve been involved in the Fintech business since 2006 and currently are a reference when it comes to Mobile Money aggregators. We’ve seamlessly integrated PaygOps with their platform to allow our customers and their end users to manage their MoMo transactions. Among the advantages they offer are: the support of more than one network with one Beyonic account; No need to make a contract with multiple mobile payment networks in multiple locations; No need to maintain a float balance for each network; they are a multi-country aggregator and can easily manage mobile payments across multiple countries.
For pricing, please refer to the breakdown of costs we prepared in Chapter 2 of this blog series (Mobile Money and SMS: How much does it truly cost?)
For more resources on TelCo services (SMS and Mobile Money integrations) in relation to Paygo operations, please visit our dedicated page or engage with our team to discuss it further at [email protected].
If interested in knowing how much PaygOps costs, use our Pricing Simulator or Contact Us.
About Solaris Offgrid:
Solaris Offgrid supports distributors of essential services to build strong customer traction and greater relations with investors through flexible and inclusive Paygo solutions, designed for last-mile operations. Adopting a bottom up approach in the design of its solutions and creating synergies with a strong network of partners to solve last-mile challenges, the company has already deployed Paygo solutions in more than 30 countries through PaygOps, Solaris Offgrid in-house software solution built “In the Field, for the Field” and its product development services. Leading reference in the off-grid solar market, PaygOps is engineered to deliver modular and interoperable solutions to address off-grid energy access challenges and distribution complexity. For more information on PaygOps, please contact [email protected].