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Security in Mobile Digital Banking – Visa’s new move

Continuing on another security issue, the Financial Inclusion Global Initiative (FIGI) is designed to advance research in digital finance and accelerate financial inclusion in developing countries. FIGI is led by ITU, the World Bank Group, and the Committee on Payments and Market Infrastructures, with support from the Bill & Melinda Gates Foundation. Globally 1.7 billion people are still without access to bank accounts, but 1.1 billion have a mobile phone. The potential for digital channels to support financial inclusion is clear, but FIGI’s work has shown that security and trust will be key to their success.

FIGI has recently presented its latest findings on Security, Infrastructure and Trust. This looked at the security vulnerabilities of the international Signaling System 7 (SS7), digital identity and strong authentication, and security assurance frameworks to increase security across the value chain. SS7 is an international ITU standard created in the late 1970s. It enables all telcos to interconnect and will remain in use for years to come. But SS7 was designed as a ‘walled garden’. Entry to the SS7 network was intended to be highly regulated. Security was not considered, on the assumption that only trusted telcos would be granted access to SS7’s walled garden.

Along comes Visa which recently announced a partnership with MFS Africa, a fintech that connects over 180 million mobile wallets on the Continent, with an API which will allow Visa enable mobile money users on MFS Africa’s network to access a virtual Visa card for ecommerce and remittance transactions. The fintech is also set to integrate with Visa Direct — the card network’s push payments solution — so its mobile money users can access Visa Direct’s platform for transfers and remittances. Giving Africa’s mobile money users access to virtual Visa cards could boost their usage of digital payments while helping Visa bolster its volume. However, this has raised a problem with the SS7 standard.

Mobile money has encouraged financial inclusion in some African markets, but the wider acceptance it can gain from this partnership could make digital payments more popular. Consumers do not need to have a traditional bank account to use mobile money services, giving more consumers access to payments tools they may have lacked otherwise; for context, only 52% of men and 35% of women in the Middle East and North Africa had a bank account in 2018. Mobile money is accepted in Egypt (32.8%), Ethiopia (39.7%), and Nigeria (34.8%) – 2018 data. But not all merchants and financial services accept mobile money, especially in markets outside of sub-Saharan Africa. This Visa/MFS partnership could grow mobile money’s acceptance since the card network already has the leading (58%) purchase volume market share in the Middle East and Africa, which will enable mobile money users in Africa to make more digital payments.

Mastercard has partnered with Airtel Africa, a telecommunications and mobile money services provider, to allow its mobile money users to use a Mastercard virtual card and QR codes to make payments.

This should boost Mastercard’s volume by giving more consumers the ability to pay its network of merchants, but Airtel is just one of the services partnered with MFS Africa, so Visa’s partnership may reach more consumers. Additionally, Visa’s partnership includes fund transfers and remittances, which offers another volume opportunity, potentially setting Visa up to grow its leading position in the Middle East and Africa.

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Alastair Tempest

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