LFR Communications is a financial services company operating in emerging economies and mainly serving the unbanked. LFR runs two businesses: Graphcard and Virtual Terminal Network (VTN), a mobile/web transaction network. The Central Bank of Nigeria just approved the VTN to roll out mobile payment to Nigerian public. Below is the press release.
VTNETWORK Limited of Abuja, has received regulatory approval from the Central Bank of Nigeria (CBN) to permit mobile access to its platform, previously limited to online access.
Through a suite of mobile apps suited for nearly every phone, even very basic handsets, VTNetwork’s new mobile money initiative will both provide much-needed service and develop much-needed volume, explained CEO Peter Ojo. Efficiently serving the needs of the unbanked requires volume unattainable exclusively online. Though Nigeria’s 90 million (some say 100 million) mobile phones this volume – and the means to reach the unbanked – can be harnessed. It is like adding thousands of smaller branches to a tree trunk with just a handful of large branches.
VTNetwork will start with a controlled pilot in urban and rural centers in Nigeria immediately following an analysis of the nearly 400,000 Nigerians already registered with VTN. In a sense the geo-targeting required by the regulators will be crowdsourced based on existing registrant demand.
Mobile payments are alternative payment methods that have been proven very effective and popular in cash-based developing countries. Due to the lack of alternative methods of transferring money or paying for goods and services. Instead of carrying cash, participants can use their mobile phone to pay for a wide range of services and digital or hard goods or simply send money for other purposes.
The mobile payment model adopted by VTNETWORK is Non-Bank Led (VTNETWORK is the lead initiator), while the method of operation is stored value (e-Money) account based. This method makes sense for the unbanked, and the prepaid nature of each transaction makes the model even more secure.
VTNETWORK has been at the forefront of payment innovation in Nigeria since 2007, with over 5 million ecommerce transactions processed pre-launch and rapid adoption by local and international merchants who have found Nigeria to be an untapped market with over 43 million internet users with limited access to buying goods and services. VTN was selected to power USA-Africa trade mission submit in Maryland, USA in 2008. Following a recent effort to recruit agents, over 1300 agents have signed up and there are over 4900 registered merchants on VTN many of which will find value in becoming an agent.
About 28 million Nigerians are banked in a country of about 150 million and following the CBN’s cashless policy that was announced to take effect from June 2012coupled with the World Bank’s support of same, it is believed that the policy will fast track the nation’s financial sector.
Mobile payment has been well adopted in many parts of Africa, Europe and Asia. Combined market for all types of mobile payments is expected to reach more than $600B globally by 2013.