For most MNO-led or third party mobile money operators, some of the magic happens in their “pool account”. They have realized that individual bank accounts are difficult to open, expensive to maintain and integrating directly with bank systems is very tough. To get around these problems, they use a sleight-of-hand whereby they maintain one or more bank accounts to represent all the e-money in the system, and use their mobile money platform to maintain individual accounts or wallets for the mobile money customers. At any time, the total amount of money in the bank account(s) should equal the total amount of e-money in the mobile system.
- Understanding: Do you understand all the accounts involved? Mobile money platform providers will often use their own terminology for the accounts involved in the process, and it is important that they are all understood. There should be no “hidden” accounts that have an unclear purpose and can be used to fund or hide frauds.
- Segregation: Is there a true segregation of duties in the process? This includes not only the person who initiates a request from the person who executes or authorises it, but also the person who reconciles the accounts. If the person who initiates the request is also in charge of reconciliation, they can easily hide fraudulent requests. It is also important that the information input into the reconciliation process comes from an independent source. If one person is responsible for both execution and data extraction, they may be able to obscure transactions by manipulating the reports used for reconciliation.
- Management Involvement: Management of bank accounts and e-money is too important to leave to junior staff. Senior management must have a good understanding of the process and should potentially be able to roll up their sleeves and get involved in the reconciliation process.
- Escalation and resolution: If the reconciliation highlights errors or mismatches, it must be clear how to escalate these to senior management and how to resolve them. In many cases, a problem has been going on for months but the underlying cause has been hidden because no-one understood the implications of a failure to resolve the reconciliation.
- Documented process: For the e-money processes to be truly effective, they must be formally documented in a clear and easy to follow format. This is particularly important as the business grows and the process and team will need to scale up to manage the increasing volume and complexity of transactions.
- System capacity: Many e-money systems have evolved from top-up platforms or been written with an emphasis on throughput rather than integrity. They may lack the detailed transaction-level reporting and handling of cut-off times that is necessary to do bank account reconciliations. Banks typically freeze their accounts for a period each night to make this easier to manage: 24x7 mobile money operators have no such luxury.