Why TelCo integrations can take time
A story of paperwork and compliance
This is the first piece in a series of articles by PaygOps -and guest contributors- on TelCo.
Payments through mobile money became an essential part of the Pay-as-you go (Paygo) model in the last few years and contributed to its rapid growth. A study from GSMA shows that between April 2018 and June 2019, the penetration rate of mobile money among Paygo solar customers increased from 27% to 113%.
Distributors who are keen to penetrate the Paygo market want to seize the opportunity offered by the mobile money technology that facilitates the collection of payments in hard-to-reach areas and, therefore, enable them to scale their operations faster. While acknowledging that technical issues may arise from such an operation, often too few of them are aware of the cumbersome compliance and administrative procedures that must be undertaken to benefit from this service.
The compliance issues faced by MTN, one of the largest mobile telecommunication companies in Africa offers some perspectives on a topic which complexity is often underestimated, and this precedent explains, to some extent, why Telcos are strict on this dimension. Indeed, in 2015, an audit conducted by the Nigerian Communications Commission (NCC) revealed that MTN failed to comply with the Telephone Subscribers regulation (TSR), that since 2011, requires MNOs to deactivate newly registered lines that remain inactive for 48 hours after registration.
The investigation exposed that the lines of 5.2 million unregistered customers were still activated beyond the time limit. Unlike other MNOs, MTN couldn’t meet the 7-days granted by the NCC to deactivate these subscribers. Consequently, the company was fined with the sum of $1000 for each unregistered subscriber, which amounted to $5.2bn. While not being directly related to mobile money account setup, this case is a striking illustration of why Telco operations would be demanding in terms of respect of local requirements or frameworks in the context of mobile money services. In this article, we will describe the most common steps of the administrative and compliance procedures to help Paygo distributors better understand its implications and challenges.
Similar to any other service, the account opening is the first step that must be taken by the distributor. Once they decide which Telco operator they want to work with, the distributor gets in touch with a Sales Manager, chooses the best plan, and the account is open with the unique company credential, e.g. shortcode, account number or Paybill number depending on the Telco. In practice, the process is more complex. Distributors must be ready to face latencies due to Telcos bureaucratic rigidities.
Vicenzo Capogna, CTO at a renown paygo distributor, Oolu, points out that “when we look at integrating with a new mobile money provider, we would say that ⅔ of the time if not more, is actually spent around what we call “passing papers”. Agreeing on terms with the Telco, receiving the contract and getting it signed by legal and commercial teams, that is where we spend most of the time”.
Another compelling testimony highlights the delays faced when he tried to integrate with a Telco in Tanzania: “they lost our form requesting to integrate at least 3 times, leading to over 12 months just to get the form signed back and starting the process”.
With the precious number in his possession, the distributor will pass it on to his software provider that will use it to roll out the integration in production.
Type of accounts available
When starting the registration process, distributors must consider the distinction between both "shared" and "bring your own" accounts and their specificities. Shared accounts are quicker to set up as they are mostly offered by Aggregators who already have partnerships with the Telcos. Aggregators do not request the paybill number on behalf of the distributor, but act as intermediaries in the integration process, avoiding Telcos from requiring additional documentation to the distributors to approve the integration.
For "bring your own'' account, distributors have their own account which is better for branding and easier for clients to use, but can require up to 70% of the original integration time. It takes between 4 to 12 months to actually set it up as the Telco needs to follow their internal process to approve the integration for that specific account:
Benjamin David, CTO at Solaris Offgrid - PaygOps and leading the Telco integration processes, points out: "In addition to the red tape surrounding account opening, there is often a lot of work to do in ensuring that the mobile money provider goes through and prioritizes your integration setup with their technical team. Convincing them of the value of your business and the promise of future revenues is often a first step towards them giving a greenlight to their technical teams. While having an existing technical integration usually helps by reducing the investment of time for testing on their side, each account setup can still require a lengthy process".
In this crucial step, the most time-consuming element is usually the testing, as Telco operators often do not have an easy-to-use or easy-to-setup testing environment and the response time can be relatively long. Synchronizing with their technical teams to roll out the integration for production is also a challenge (i.e. getting approved by the telco to use their production environment URLs): “In Nigeria, the average response time for the engineer to answer our question was around 60 days, leading to very simple conversations taking months” according to a consultant.
Telcos’ technical team responsiveness is really key and can considerably impact the duration of the whole process. The technical integration usually takes between 1 and 4 weeks after validation and needs to be done one-time only per Telco in the same country: “Once the project is finally approved, and the Telcos development team is available, it’s only a matter of a few lines of codes and maybe a few days or a week to be online and in production. Probably the shortest was a month and a half from when we first interacted with the company to when it was done and this was in Niger. The longest one in Senegal, where the operation took more than 2 years for 1 operator between when we signed the contract and when we were on the USSD menu. Nothing happened for 1 year and a half for some reason ” says Vicenzo.
We highlighted below the critical milestones, distributors, Telcos and Paygo providers must achieve to complete successfully a full mobile money integration:
As the graph illustrates, the two stages that can become the longest, are those related to Telcos organisational procedures that slow down the whole process: