POS vs Mobile: The Battle Royale in Africa’s e-Space
Point of Sale (POS) systems have been the primary device used by banks in Africa to provide branchless banking services, while mobile phone based solutions are being used by banks in partnership with mobile network operators (MNOs) in the world to fulfil a similar role.
Given the functional capabilities and the multiple formats in which POS (merchant acquiring platform, cash advance device, teller management interface) and mobile phones (direct channel to customers, merchant environment, money transfer platform, branchless banking interface) are used by financial service providers, this note will focus on the relative merits of the POS and the mobile phone in a branchless banking environment
Indicative costs (service provider & customer)
Mobile phones offer a cost advantage from a device perspective in that most (if not all) branchless banking agents will have a mobile phone. In contrast, the POS, ranging from $400 to $800 per device and the overall total cost of ownership, including software licensing and maintenance, can be expensive, particularly if POS deployment runs into the thousands.
From a management/back office platform perspective, indicative costs are very similar. Platforms can range from $2.5 million upward depending on what systems are already in place and whether systems need to be Card Association certified (in the case of POS systems - add $500,000; M-commerce platforms - add $1m or more, depending on whether it is for issuing or acquiring).
When evaluating the two platforms, an estimated cost per transaction needs to be included. The POS has the capability to process transactions more quickly, allowing infrastructure costs to be spread across a high number of transactions. Using a mobile phone-based system is ideal in lower transaction volume environments (small or rural villages or with small merchants). Ultimately, however, at any given transaction volume, the mobile phone can offer a lower cost infrastructure.
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