Accelerating mobile money innovation could expand the reach and benefits of financial services offered to the unbanked, which makes APIs exciting for anyone who cares about financial inclusion. There is an optimistic view that with open APIs “the possibilities of what could be done with this are endless,” together with the counter view that “Telcos need to open their mobile money platforms to developers if they want mobile money to survive as a payment method past 2020.”
There are no real examples of widely adopted open APIs for mobile money. Of course, open or closed is to some extent a question of degree, depending on who the MNO grants access to, with what restrictions, and with what approval hoops the developer must jump through before gaining access to the necessary code. What is lacking are ‘fully’ open APIs where all the code for the API is published and accessible without weeks of negotiations and technical discussions with MNO integration teams to agree on protections and other specifics.
A successful open API requires three things:
- A mutually attractive business model between MNOs and developers
- An effective and easy-to-use API
- Ways to encourage active use from the developer community
Identifying the right business model can be tricky, not least because there is often a lack of trust between developers and MNOs which is rooted in developers’ belief that MNOs will “steal their product ideas” or threaten them with denial of access. To mitigate this mistrust working on the following three options can greatly help to build the relationship:
- Free. Theoretically the most attractive to developers, free APIs encourage the most activity and innovation.
- Developer pays. APIs where developers pay for access can include a number of options based on how they pay (e.g., pay as you go, one-time transaction fee) or when they start to pay (e.g., tiered model).
- Developer gets paid – typically through a revenue share. In this model, APIs developers receive commissions for transactions conducted through their platform typically achieved through a one-time, periodic or recurring revenue share.
Business models and campaigns can be structured to encourage innovation targeting specific challenges – such as financial literacy – or specific products – such as insurance – that reach underserved people. Partnership is the missing ingredient to achieve the right incentives for all.