Home Mobile Financial Solutions Commission is no longer the key to a successful and sustainable mobile money deployment

If there is one key take away from my extensive field study for one of the top mobile money (read remittance) service providers in India, it is the eye-opening and refreshing revelation that ‘commission’ to the channel (agents mainly and distributors somewhat) is no longer the decisive factor in favour of a choosing a service provider over others. A distributors case is little different and he still gets lured by high commission but it is ultimately the retailer who perform day to day transactions and generates volumes and thus ultimately lucrative revenues for everybody up the chain including distributors.

A retailer’s interest and continuous activity in any mobile money service provider primarily depends on below factors in order of importance:

  •     An easy to use and stable system
  •     Regular retailer engagement and quick issue resolution
  •     Commissions
  •     A wide range of services

Retailers prefer ease of transactions and quick issue resolution over a small increase in commission. Most retailers have their own other businesses (stationary, Xerox/printing, general store etc) and hence do not want to chase the service provider over issues of failed transaction etc. They need a system where minimum manual input is required over mandatory information, less toggling among the pages on the website, etc. Quick issue resolution is also critical as a disgruntled customer whose money hasn’t reached the destination beyond a reasonable period of time creates ruckus at the retailer’s shop which affects existing as well potential customers. These cases may be few but has significant impact as this is really a word of mouth business.

Sure, commission still plays its part when a sales officer of a service provider is luring the retailer into the system but certainly is not enough by any means to keep the retailer’s interest in using the service. These days, most retailers do not have to deposit money, pay fees or invest in a computer or an internet connection to get on-boarded with a particular service provider. In all likelihood, the retailer already has the required infrastructure in place for his other business (ticketing, printing, or may already have a money transfer service provider). What is required to keep the retailer’s interest in a particular brand (if there is such a thing in remittance business in India) or service what is most definitely needed is the ease of performing transactions and sound issue resolution (and prevention wherever possible).

There is fierce competition in the market with similar commissions offered by all the service providers. And since there is no additional cost a retailer sign-up with multiple service providers. In my field study all the retailers in the sample employs the services of three or more service providers. On-boarding a retailer is easy but the essential task is to keep him engaged and interested where the above listed factors holds the key.

There is also a phenomenon with some retailers where they charge a fixed service fee from the customers irrespective of the commission given by the service provider. They could do so because of their location advantage (no other retailers in the area) and lack of reasonable customer awareness.

Finally, a retailer does not like to toggle among various service providers for different services. As an instance, if a customer approaches the retailer for money transfer as well as a mobile recharge, the retailer would ideally prefer to do both via the same service provider whose portal he has already logged in. In short, the more the services provided by a single service provider, more are the chances of retailer opening its portal for fulfilling one of those services. Hence a service provider should aim to provide as many other ‘not so lucrative’ services along with the ‘cash cows’ viz. money transfers give a one-stop-shop solution to retailers.

Retailers are the critical arteries of mobile money ecosystem. They’re the subscriber’s first and usual ongoing point of contact with a mobile money service provider. It is nothing but absolutely critical to win their mindshare to gain competitive advantage over the competitors.

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