Moving cash across East African borders is a tough day's job, as a visit to the international taxi park in Nyabugogo in the Rwandan capital Kigali shows.
Here if one wants to send money to another person in any of the EAC member states, one has to contact a mobile money agent, and hand over the money plus a commission of at least 15% of the sum on small transactions.
The operator in Nyabugogo then makes a call to their partner mobile money agent in the country where the recipient of the money is. The partner agent then sends the money through the local mobile money platform to the receiver who is again charged the normal commission of receipt in the particular country.
Clain Maseka, the project manager of Airtel Rwanda says he has witnessed such transactions and wants to change things.
"The demand for a cross-border mobile money platform cannot go unnoticed because it is rising every passing day," he told The Independent. Developments such as the free movement of labour in the bloc increase the need for simplified financial communication between the countries and mobile money platforms.
He said telecommunication companies in Rwanda are ready to roll of more convenient and cheaper cross-border mobile money platforms but the absence of a regulatory framework is delaying their roll out.
Rwandan telecom companies say mobile money transfer platforms that are used for the local transactions are capable of taking on the responsibility of the cross-border transactions. Maseka said Airtel Rwanda which is yet to introduce Airtel Cash, knows that including international transactions on the platform would not require big extra investments.
"Initiating the cross-border mobile money transactions is not something that would require development of new systems because it is just a matter of upgrading the interface," he said as Airtel operates in all the East African member states except Burundi.
Maseka said the company was ready to launch its Airtel-Cash product by end of March with a cross-border touch but their license could not provide for the development. The Rwandan market already has Tigo Cash and MTN Mobile Money.
Maseka said as soon as Airtel Cash is launched, it would start engaging the regulator for cross-border business.
"We have not asked on what is being done in regards to developing the necessary regulatory frameworks for international mobile money services. However we know that the regulators are smart and that with the rising demand and need for such developments, they might also be working on something," Maseka said.
MTN's Albert Kinuma, who is the head of Business in Rwanda's largest telecom company, also confirmed that with the available systems, the company can roll out the cross border transactions. "We have all that it takes," he said.
Regulations for cross-border mobile money operations would require legislations on good practices, transaction protection, and financial malpractices like money laundering.
Airtel cash innovations
Cross-border mobile money transfer services have the potential to foster economic integration of the East African Community (EAC) through easing the financial communication channel among the region's many financially excluded citizens.
Many rural Rwandan have either been able make money transactions for the first time or considerably reduce the cost since mobile money transfer was launched.
Companies with many casual employees like construction sites that used to have to carry hard cash now conveniently pay through the mobile money platforms.
Airtel Cash is introducing communicability between what is known as the mobile wallet (mobile account) and one's bank account. "In this development, the Airtel cash client will be able to withdraw or deposit money from or onto the mobile wallet and the bank account respectively.
For instance one will be able to withdraw money from their mobile wallet using an ATM card or even to top up the wallet through their bank account. Also it makes possible the transfer of money from one's mobile account to any bank account," Maseka explained.
The National Bank of Rwanda (BNR), the regulator of the financial sector and payments services confirmed the need for cross border mobile money payment to supplement existing channels. "In Rwanda, individuals who need to transfer money across the world use means like international money remittance companies, long distance buses or bank transfers," said John Bosco Sebabi, the Director of Payment Systems at the BNR.
Sebabi said there are promising initiatives from Mobile Network Operators in regard of cross-border mobile money platforms. He said stakeholders at the EAC level are preparing a study on how to harmonise laws and regulations to cover cross-border mobile payments services but challenges remain like foreign exchange conversions, the virtual payments of mobile money, and there multiple disbursement favouring money laundering.
He said sealing these loopholes will be more complicated in cross-border schemes and that quality of service needs proper structures to ensure that the users benefit. "The risk of interruption or denial of service on mobile channels affecting the ability to transact can't be ignored," Sebabi said.
He added: "Consumer protection issues where disputes resolution will need strong guidelines as cross-border service involves the institutions which are not supervised by the BNR and it complicates the oversight of cross-border schemes and different security protocols and business models of stakeholders are contributing to the delay of the implementation of cross-border mobile money platforms."
For BNR the urgent need that the EAC should address in terms of payment systems is to ensure interoperability among financial institutions in the region which also includes payment systems like mobile money. "In reality, the interoperability is an urgent matter for EAC as a lot of trade is done within the region involving money movement. The implementation of the interoperability will help to increase security of funds but at the same time trade level within the region."
Meanwhile, the East African Payment System (EAPS) has been implemented to facilitate the development of cross-border payments within EAC region but this also is only still possible at central bank level.