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Know Your Customer is the Secret to MNO Negotiations


NGOs and social service organizations are increasingly turning to mobile technology as a tool for designing and delivering services to the poor, whether in health, education or any other sector. And of course a major element of these services is often the delivery of cash transfers, for which mobile money can play a critical role.

In approaching mobile network operators (MNOs) to help deliver these services, NGOs often hope that they can get a “discount”, or even get them for free, by virtue of the development role they play. Needless to say, they’re often surprised and dismayed to be told to pay “rack rate” like everyone else. These interactions add to the growing trove of stories about how “difficult” it is to negotiate with MNOs.

From the recent Technology Salon on How to Successfully Partner With Mobile Network Operators?, we learned that NGOs fail to appreciate that they often hold something that the MNOs value dearly and will definitely negotiate for—their clients’ and beneficiaries’ identities.


Mobile money operators face regulatory rules like any other payment service provider, particularly around what’s called “know your customer” or KYC rules. The world’s financial regulators, working through what’s known as the Financial Action Task Force (FATF), have agreed to a set of minimum standards for the provision of financial services, in order to prevent money laundering and terrorist financing.

A basic tenet of these standards is verifying the identity of a customer before opening a financial account and conducting transactions. And while these rules can be a pain at times for anyone (who hasn’t forgotten a utility bill to prove their address at the DMV?), they can present nearly insurmountable challenges for the poorest members of society. Few countries have national ID systems, and the poor rarely possess official documentation showing who they are, never mind proof of address in places where addresses don’t exist.

Mobile money operators face two main challenges in signing up poor customers when it comes to KYC rules. The first is that these individuals frequently lack any form of identification whatsoever. The second is that even those that do have identification often don’t understand what it is they need to produce in order to open a mobile wallet.

Everyone Deserves an Identity (Document)

This is where NGOs can help their clients out. The FATF rules allow for a “risk-based approach” to low-value transactions, and thus many countries accept a “tiered KYC” system. This means that for small transactions a less rigorous form of identification can often be accepted (with the proviso that if those same customers want to start conducting higher value transactions they will have to produce more detailed identity verification).

An NGO that is willing to produce basic forms of ID for their beneficiaries, say a card with name, picture, and some type of number, can usually get permission from the regulator (where it’s not already explicitly allowed) for that card to be used to verify the identity of those beneficiaries. An ID card along with the mobile SIM number of the individual is often all the MNO will need to register them for a basic mobile money account. (It’s important to point out here that we’re talking about providing the beneficiary with an ID card that can then be used to open up a mobile money account with an MNO; privacy concerns would prevent the NGO giving that information directly to the MNO.)

Help Streamline the Registration Process

The value of that identity information is critical to the MNO, as it enables their agent to easily sign up a customer without spending extended periods of time trying to explain to the customer what they need to be able to sign up. Not to mention the time wasted as that customer travels back home to collect whatever it is they need and comes back to the agent. This process of working with new customers to explain documentation requirements and how a mobile money system works is a major pain point for mobile money operators.

Agents often have other businesses to run, say a shop, and don’t want to have their time pulled away from other customers in order to educate poor, often illiterate, new mobile money clients. NGOs can do a lot of this prep work ahead of time, before the client even meets up with the agents. In addition, NGO staff, who are willing to work alongside mobile money agents to answer basic questions around how much money the clients will be receiving and how often (which the MNO won’t know anyway), can streamline the process tremendously.

NGOs have a tremendous amount of valuable information about their clients, including demographic and behavioral data, which may be of interest to MNOs for their own broader marketing purposes. But for mobile money operators, the NGO that shows up with a solution to their KYC challenges will be the one who’s driving the negotiations.

Kay McGowan is the Digital Finance Lead for the U.S. Global Development Lab’s Digital Development Team. For more, follow her and the team on Twitter, and sign up for the Digital Development newsletter.

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