How PaaP (Payments-as-a-Platform) is Opening Up the Mobile Money Market

October 2023

Digital Commerce

Nick Maynard

VP of Research

As we discuss in our latest digital commerce research, PaaP (or Payments-as-a-Platform) is defined as:

‘A model whereby mobile money providers build new capabilities in a multi-sided approach; expanding value proposition by building new capabilities that transform activities in a multi-sided model, enabling third parties to deliver products/services through a digital platform that eventually addresses a broadened user base.’

PaaP enables access to cloud-based services of actors within the payments ecosystem, such as banks/FIs, PSPs, acquirers and issuers, as well as fintechs and other actors. It helps lower the deployment costs and time-to-market of services, especially when compared to the alternative of updating legacy infrastructures to cater the needs of customers. Where banking services are increasingly accessed from mobile devices, PaaP offers for fast app development and enrichment become vital. Through open APIs, such offerings can be leveraged by multiple actors with ease, including the end users/customers.

In short, PaaP is a superapp-like business model for mobile money providers; offering services that place payments in its core, from basic day-to-day activities, such as transport cover and food delivery, to more lifestyle-related ones. The model allows MNOs and other providers to diversify their products, adding additional revenue streams and cutting costs to serve customers.

Moreover, one of the unique features of payment platforms is their focus on data analytics and related value-added capabilities aimed at understanding users better, which protects them from offering non-viable services or products and allows them to add different revenue streams by offering new solutions to users tailored to varying needs. Enhanced data analytics also lead to creating better customer experiences; boosting revenue, and reducing the number of inactive mobile money accounts.

PaaP, therefore, as a proposition, has largely become a core ‘enabler’ of sophisticated mobile money offerings, by equipping a variety of actors with means to quickly develop, deploy, customise, and scale mobile solutions. Since mobile money business models are typically MNO led and also involve collaborations/partnerships between MNOs and banks, MNOs, banks, and third parties (ie, fintechs, eCommerce providers), and banks and fintechs, PaaP gives the non-bank actors the ability to adopt bank-like service structures, while keeping the cost of services much lower than traditional FIs.

This is progressively being leveraged within mobile money services, as many of these models/providers have now sufficiently matured in several markets, and moved on to becoming multi-sided platforms, by involving other opportunities (ie, online marketplaces, communications, and social platforms for integrated payment solutions) and ecosystem actors to collectively build mobile money products/services for end users. In simpler terms, PaaP is critical to the deployment of an MNO-led, as well as a bank‑fintech-led mobile money model. The ability of PaaP to provide more solutions within the same platform can define how MFS work in the mobile money market, and offer non-MNOs capabilities to launch them rapidly and without substantial infrastructure investments.

Implementing a PaaP model means mobile money providers can reduce their dependency on revenue stemming from customer fees (ie, airtime top-ups, P2P transfers) and gain additional revenue streams from businesses that wish to be featured on extensive service platforms (ie, eCommerce platform). This shift holds the potential to broaden providers’ value proposition to new products and adjacent revenue streams, as well as to allow providers to build solid brand image and loyalty and gain insights into their customers through increased data on usage.

By partnering with fintechs and FIs, these providers will have the means to launch sophisticated MFS and gain access to a broader audience/customer base. This approach can especially be useful for financial inclusion of the least developed markets, where mobile money services are popular and FIs are weak.

Juniper Research believes PaaP capabilities present mobile money providers, fintechs, banks/FIs, and other third parties with a tangible opportunity to break into the mobile money market. Doing so will not only positively impact financial inclusion efforts but also help this market become a truly interactive one, which aims for continuous product/service innovation for end users.