Building an agent network for rural communities with Mojaloop
Carbon is a Nigeria-based digital finance platform that grew from the digital lending company Paylater. It is the rebrand of Paylater, which launched in March 2016, and revolutionised finance in Nigeria as the first digital lender. After introducing instant loans, they added bill payments, airtime purchases, free credit reports, investments, personal finance management, and a wallet. More recently, they launched Bloom, a support system for female business owners.
What they want
Carbon wanted an understanding of how Mojaloop and interoperability will affect their business model and how to leverage Mojaloop to help build an agent network that can ease the financial burden in rural communities and underserved markets.
What they built
Carbon built a product where a customer can redeem a voucher for over-the-counter remittances or cash-outs from any agent on their network through a Mojaloop deployment.
How Mojaloop helps
Mojaloop was used to demonstrate how this OTC cashout could be implemented across any DFSP on a Mojaloop-enabled switch.
What they added to Mojaloop
The Carbon team scoped out a feature that enables Mojaloop to provide the ability to redeem a voucher:
This represents the flow of information between all the parties and assumes that the agent and sender have accounts with different financial institutions so Mojaloop becomes necessary as a switching platform. The use case outlined is a voucher-based remittance redeemable at any agent in a Mojaloop-enabled environment. This has the potential to lower costs of remittances by eliminating the branded remittance providers and opening up cash out points. To implement this use case, the transfer from the senders account and delivery of a voucher is asynchronous with the cash out and payment through the agent financial institution, which stretches the definition of “immediate funds transfer” outlined in the Level One Principles.
- Escrow Account – The Carbon team wanted to make the user experience as seamless as possible and wanted the sender to receive one quote for the entire transaction. While the money is drawn instantly from the receiver’s account, the voucher can be redeemed at some point in the future with an undetermined expiration date but with immediate payout once the recipient. With the approach that they would offer instant transfers for the sender and the receiver, to accomplish this, Carbon needed to create and own an intermediary, or escrow account that would store funds from the sender until the recipient redeemed the voucher they received. This escrow account does not need to sit inside a Mojaloop or even need an address on a Mojaloop, but the need for a secure, trusted escrow account is the basis for a large number of additional more complicated transactions that can be layered on top of payments. It is worth discussing how/if this should be considered in the Mojaloop platform itself.
- Combine Multiple Quotes into a Single Authorization – The need for an escrow account requires the ability to combine two different quotes, from the sender’s bank into Carbons bank and then Carbons bank into agents bank along with an associated fee or markup charged by Carbon, into a single quote fed back to the sender for them to approve prior to making the transfer. This multiple quoting system isn’t currently supported but would be necessary to eliminate the confusion around how much will actually be charged to the sender in this type of use case. The request for this capability was presented across three participants in the hackathon.