If you are involved in mobile money at all, you’ve likely been keeping a keen eye on Bitcoin. The controversial digital currency is getting a lot of attention around the world and raising a lot of questions about the how it will fit (if at all) with mobile money.
At the AfricaCom 2013 event earlier this month, Pelle Braendgaard, the co-founder of the Kipochi Bitcoin wallet and transfer service shared his belief that Bitcoin could be a “facilitator between mobile money platforms.” Kipochi launched a Bitcoin to M-Pesa transfer service back in July, but the service was shut down two weeks later. Speculation was that Safaricom was under pressure from Vodafone.
Braendgaard has correctly pointed out a major sticking point in the adoption of mobile money - the fact that systems are not compatible so consumers are bound by the platform they use. With mobile money remittance market growing rapidly, this is a major barrier to success in the long-term as consumers need flexibility.
Is Bitcoin the answer to facilitating transactions between mobile money systems?
While Bitcoin has been the currency of choice for black market dealings to date, there’s signs that the currency may be gaining in legitimacy. The Guardian reports that the Chicago Federal Reserve commented that Bitcoin “may very well be used by existing financial institutions” and US Federal Reserve Ben Bernanke recently indicated that there may be a need to “make Bitcoin part of US currency regulation.” This is a long way from the European Central Bank’s statement last year branding Bitcoin as a Ponzi scheme.
Theoretically, if Bitcoin becomes accepted by governments and central banks it could act as a connection point with mobile money. However, mobile money itself has been struggling with adoption in many markets, so we are a far way from Bitcoin being something that consumers trust when handling their money.
Then there’s also the tricky issue of commercial banks and mobile carriers and if they will be willing to open up to the use of Bitcoin. Banks are already concerned about how mobile money impacts their bottom line, and moving to Bitcoin transactions only stands to further degrade their services with consumers. For mobile carriers, are invested in keeping people on their platform, so they may be more apt to create partnerships to facilitate transactions than to bring yet another player to the table.
In my mind Bitcoin is far from being the answer to facilitating mobile money at this stage in the game. Only time will tell, but Bitcoin will be worth watching as it becomes less the domain of shady deals and part of established systems.