Organizational
Our vision is for universal financial inclusion, where everyone, everywhere, can access the digital financial services needed to connect to the global economy.
Our mission is to increase financial inclusion by empowering organizations creating interoperable payments systems to enable digital financial services for all. To achieve our mission, Mojaloop Foundation is a 501(c)(3) charitable nonprofit and maintains its free, open source software and community as a public goods in service of financial inclusion.
The Mojaloop Foundation defines the digital financial services provider (DFSP) ecosystem as banks, government offices, merchants, mobile network operators, national payment providers, regulatory bodies, technology companies, and any other players developing and implementing digital payment systems.
It can be costly and complex to build interoperable systems that are inclusive to all. A lack of interoperability between digital financial services and payment platforms is a large part of the problem. According to the World Bank’s Global Findex 1.7 billion people still lack access to digital financial services, despite mobile money services emerging in nearly 100 countries. Mojaloop serves as a blueprint for how to simplify and reduce the cost of payment interoperability so that banks and other providers can develop tools that meet the needs of emerging markets and unbanked. Increasing access to digital financial services and tools are critical to accelerating the rate at which the financially excluded move into the formal financial system and hold on to the gains they have made, especially in developing economies. If widely adopted, interoperable digital financial services could provide more of the population with access to important financial tools, while adding $3.7 trillion to emerging countries’ GDP by 2025, according to McKinsey Global Institute.
The Mojaloop Foundation operates as a 501(c)(3) charitable nonprofit organization and will maintain and advance its open source software and community as a public goods in service of financial inclusion.
By creating a new, independent charitable nonprofit, the Mojaloop Foundation aims to maximize the reach and ensure the long-term impact of the Mojaloop open source software.
The Mojaloop Foundation members and community believe that Mojaloop’s commercially-viable, real-time payments reference model will increase financial inclusion by empowering more organizations to create interoperable payments systems and expand access to no-cost or low-fee digital financial services that more efficiently serve the unbanked. The financial inclusion principles behind the design of the Mojaloop open source software empowers organizations to create payment models that uniquely meet the needs of the underserviced with safe, trustworthy, inclusive digital financial services available at low or no cost. The formation of the Mojaloop Foundation, along with the backing of its inaugural Sponsor members, as well as the support of its open source development community, will help uphold the financial inclusion standard set by the Mojaloop open source project.
By adopting Mojaloop open source software and community as public goods in service of financial inclusion, banks, government office, merchants, mobile network operators, national payment providers, technology companies and other implementors can reduce the high cost and technical complexity of creating payment models that offer inclusive, affordable digital financial services for all.
No. Mojaloop open source software has been in development for over three years, and the formation of the Mojaloop Foundation has been in discussion for nearly a year. Throughout that time, we have been talking to central banks, regulators, digital financial service providers and mobile network operators about the requirements needed to deliver interoperable payments systems at scale. Mojaloop has been designed in response to those requirements as a public good in service of financial inclusion.
That said, the economic impact of the pandemic highlights how important a well-functioning interoperable, real-time payments system is for the resilience of economies. By providing a secure and frictionless pathway for financial support and general remittances, economies can continue to function irrespective of limitations to physical travel, and those who need financial support can receive it.
The COVID-19 pandemic has highlighted the importance of real-time digital payments infrastructures and digital financial services in reducing person-to-person contact, as well as the need for the digital economy to continue working irrespective of the limitations to physical travel. The need to solve the interoperability and financial inclusion challenge is the same as it was before COVID-19. Closed-loop payments systems leave many underserved communities out of the formal financial system, regardless of whether countries are experiencing times of economic shock.
According to the World Bank, COVID-19 has highlighted the importance of digital financial services in reducing person-to-person contact to potentially slow the spread of the virus. As a result, mobile money providers in Africa are lowering or waiving their fees. Eighty-four governments worldwide are making government-to-person (G2P) payments part of their response to the economic and social consequences of COVID-19.
These trends highlight the growing need to increase affordable digital financial services that are inclusive across a country’s entire population. Yet, work remains to achieve the interoperability-at-scale needed to close the financial inclusion gap. According to the World Bank, inclusive payment systems need to:
● Include vulnerable populations, such as those without access to technology, the elderly, the disabled, and people living in remote areas.
● Proactively address any barriers that result from transitioning to digital payments, such as ensuring critical services are not denied due to technical issues.
While creating entirely new payment ecosystems from scratch during a crisis is not possible, fast-tracking interoperability and financial inclusion changes already in the works may help to ensure digital payments systems are inclusive to all.
Payments are the connective tissue that drives economies. Based on a growing body of evidence, they are a gateway to the financial services that buffer people from risk and allow them to take advantage of economic opportunities. While we see an increasing endorsement of interoperability as an essential market condition for financial inclusion, the high cost of investing in shared and open infrastructure to achieve true interoperability at scale has slowed the development of payment models that offer inclusive digital financial services for all.
Access to safe, affordable, digital financial services could bring more of the 1.7 billion unbanked adults into the formal financial system, especially in developing economies (World Bank, 2018). In fact, digital financial services, if widely adopted, could add $3.7 trillion to emerging countries’ GDP by 2025. That amounts to a 6 percent increase above business as usual. In low-income countries with very low financial inclusion rates, such as Nigeria, Ethiopia and India, GDP could increase by as much as 12 percent (McKinsey Global Institute, 2016).
Consistent advocacy and Mojaloop’s free, open source software, offer a path forward to support new scalable payments solutions to help countries achieve the scale needed to meet financial inclusion goals.
The Mojaloop Foundation will focus on expanding the work the Mojaloop project initiated in Africa, expanding its engagement where there is the greatest opportunity to directly affect financial inclusion through interoperable payments. The organization will engage with digital financial service providers, regulators, NGOs and governmental offices looking to address the critical challenges faced by local underserved communities. Specific initiatives include:
● Engage the Global Payments Community: The Mojaloop Foundation’s open source community, convenings and educational events will continue the unique collaboration environment created by the Mojaloop project. Through these activities, the organization aims to help more organizations understand how Mojaloop can be used as a blueprint for payment models that expand access to inclusive digital financial services. More information is available by reaching Mojaloop Foundation Community Manager, Simeon Oriko.
● Advance and Maintain Mojaloop: The Mojaloop Foundation will continue to advance and maintain its free, open source software, Mojaloop, and its community as public goods in service of financial inclusion. The Mojaloop Foundation’s Technical Governing Board (TGB), composed of member company representatives, will plan, and oversee all the technical work conducted within the organization. The breadth of the TGB representation helps ensure a diversity of perspectives and approaches regarding the technical work at hand.
● Grow membership: Membership is open to technical, charitable, non-governmental and service provider organizations (both public and private) interested in the organization’s mission of financial inclusion. The organization offers two membership levels, Sponsor members and Promoters. Membership is open to technical, charitable, non-governmental and service provider organizations (both public and private) interested in contributing to the organization’s mission of financial inclusion.
Membership
The Mojaloop Foundation’s Sponsor members will provide the funding, governance, and technical guidance needed to ensure the long-term health and growth of the Mojaloop open source software and development community. The organization’s members and community will ensure a critical mass of experts continue to contribute their expertise to the software itself and coordinate on advocating for financial inclusion through its use.
How will the Mojaloop Foundation ensure it balances technical, commercial, and charitable interests?
The Mojaloop Foundation Board of Directors is comprised of appointees from the inaugural Sponsor members, which each have one, equal vote, and a fiduciary duty to support the mission of the organization. Sponsor members are a mix of mission-driven, non-governmental and commercial organizations.
Sponsor members each appoint a representative to the Technical Governing Board members each nominate and elect three representatives, and nominations and an election will fill the remaining places (up to a total of 20) for additional Sponsor members and Promoter members. This approach ensures that commercial interests and applications that are essential to the technical viability of the Mojaloop software platform are balanced by charitable and non-governmental organizational input critical to ensuring that Mojaloop meets its financial inclusion mission.
The 2021-2022 Mojaloop Foundation Board of Directors include:
- Miller Abel, Deputy Director and Principal Technologist, Bill & Melinda Gates Foundation;
- Adama Diallo, Head of Partnerships for Next Billion Users Africa, Google;
- David Wexler, CEO, ModusBox;
- Kevin O’Neil, Director of Data and Technology, The Rockefeller Foundation;
- Matšeliso Thabane, General Manager, Coil South Africa;
- Ken Weber, Head of Social Impact, Ripple
The Mojaloop Foundation Board of Directors elected the following Officers for the 2021-2022 term:
- Chairman, Konstantin Peric, Deputy Director, Financial Services for The Poor, Bill & Melinda Gates Foundation;
- Executive Director and Secretary, Paula Hunter, Mojaloop Foundation;
- Treasurer Robert Ron, CFO, ModusBox
The Technical Governing Board (TGB) will oversee the organization’s work, including participation in software decisions and authorization of code maintainers, consistent with the Mojaloop Foundation’s charitable and educational purpose.
TGB representatives for the 2021-2022 term, include:
- Miller Abel, Deputy Director and Principal Technologist, Bill & Melinda Gates Foundation;
- “JJ” Geewax, Software Engineer, Google;
- Warren Carew, Vice President, ModusBox;
- Alan Lim, Division Head, Fintech Infrastructure Office, Fintech & Innovation Group, Monetary Authority of Singapore (MAS);
- Greg McCormick, Chief Strategic Business Development Officer, Sybrin;
- Jason Bruwer, Software Engineer, Coil
The Mojaloop Foundation offers two membership levels, Sponsor and Promoter members, each with a variety of benefits, privileges, and annual dues. Sponsor members serve on the Board of Directors and Technical Governing Board. Promoter members can nominate a representative to serve on the Technical Governing Board. Sponsor member dues are $200,000 (U.S.) per year. Promoter-level dues range from $10,000 to $100,000 per year, depending on the size of the company.
To ensure the appropriate balance of members, member applications will be reviewed by the Mojaloop Foundation Board of Directors. A super-majority of the current Board of Directors must approve Sponsor members. For this reason, applicants are asked to visit https://mojaloop.io/join to learn more about member levels, benefits, and activities. The Membership Agreement can be downloaded from the Mojaloop Foundation website https://mojaloop.io, along with the governing documents (Articles of Incorporation and Bylaws) for prospective members to review.
Mojaloop
Digital financial services have emerged in nearly 100 countries, but they’re not growing as fast as they could, according to the GSMA. One big reason is the lack of interoperability between different services and transaction platforms, in addition to addressing complex governmental and regulatory requirements. Cooperation between governments and regulatory authorities is essential to establish a safe and effective interoperable payments infrastructure.
Given the complexity of these challenges, companies have struggled to balance the cost of developing complex interoperable systems with the need to keep service fees affordable to the underserved. As a result, customers can transact only with other customers using the same service, while the unbanked need to transact across borders and service providers. Another issue is the prevalence of high-fee service options that are out of reach for many people in developing economies.
Mojaloop, which incorporates the Swahili word for “one,” aims to create a common open-loop solution instead of having multiple, closed-loop systems that have long been prevalent.
Mojaloop is open source software that serves as a reference model for creating interoperable payments platforms connecting all digital financial providers and customers, especially the financially excluded. Mojaloop’s open source blueprint will remove barriers—including time, money, and technical complexity—that have hindered payment models from meeting the digital financial needs of the world’s 1.7 billion unbanked people.
Mojaloop can be used whole, or adapted, to build digital payments platforms that connect all customers, merchants, banks, providers and government entities in a country’s economy, routing payments from anyone to anyone, securely. Rather than a financial product or application that customers or institutions would interact with directly, Mojaloop is a layer that can connect all the financial products applications in use in any given market with the customers that need them.
Mojaloop was designed to solve the biggest hurdle for digital financial services providers – interoperability – providing a blueprint for high-demand, cross-border payments between regions and countries in ways that meet financial inclusion principles.
While every market brings regulatory and governmental requirement challenges, solving the challenge of designing interoperable payment systems is critically important for financial inclusion efforts to succeed, for several reasons:
- Reach: The expanded reach offered by interoperability can have even greater significance for those who are financially excluded or underserved. Within interoperable digital payments platforms, transfers, payments and additional financial services occur seamlessly and as fluidly as cash across providers, including central banks and non-banks as well as nonfinancial firms such as retail networks, NGOs and mobile network operators (MNOs), among others.
- Lower cost: Interoperability can potentially lower the costs of building real-time payments systems. By reducing the entry barriers and improving the value proposition of the services, organizations can drive uptake and increase usage across a larger share of the population. Cost-efficiency of payments encourages the availability of services that are most effective for the underserved while reducing the costs of processing a higher volume of payments.
- Increased efficiency and inclusion: Interoperability reduces the duplication of services and makes service delivery more efficient. By facilitating cooperation between sector players, interoperability contributes to market access and service reach. In doing this, it addresses some of the barriers that the underserved may face, including high user fees and limited access. Ensuring that measures are in place to ensure the safety of the system will ultimately build safety and trust in digital financial services and transactions as the medium of exchange.
Interoperability is necessary for financial inclusion, but it can be difficult to achieve. Today, in many countries, achieving full interoperability across the various payment service providers and digital transactional platforms means bringing non-banks, such as MNOs authorized to provide payment services and digitally accessed transaction accounts, into the national payment system. Yet, if each of these providers builds their payments platform separately, customers are unable to conduct transactions across platforms, leaving many underserved.
“Mojaloop provides implementers with a reference model of a commercially viable real-time, interoperable payments platform. Mojaloop was designed using a set of eight financial inclusion principles attributed to the Bill & Melinda Gates Foundation’s Level One Project that Mojaloop Foundation members and community believe are required to expand safe, affordable digital financial services access to all, including:
Mojaloop provides implementers with a reference model of a commercially viable real-time, interoperable payments platform. Mojaloop was designed using a set of eight financial inclusion principles that Mojaloop Foundation members and community believe are required to expand safe, affordable digital financial services access to all, including:
● Open-loop interoperability between providers
● Adherence to well-defined and adopted international financial inclusion standards
● A push payments model with immediate funds transfer and same-day settlement
● Adequate system-wide shared fraud and security protection
● Efficient and proportional identity and know-your-customer (KYC) requirements
● Meeting or exceeding the convenience, cost, and utility of cash
● Enables organizations to customize the open source software to update or evolve their own system and ensure appropriate compliance with internal operational standards and local regulations
● Continually improved by the Mojaloop open source community and by users that engage with it, contribute to it, test it, and adapt it
Mojaloop’s open source approach will help the community more rapidly advance financial inclusion because it is publicly accessible for anyone to view, modify and share. Open source software, such as Apache Web Server and Linux, have long served as foundations for the underlying technologies that power the Internet and cloud computing. Today, open source software is used throughout the financial services industry with a great deal of success. Mojaloop open source software lowers upfront costs as there is no purchase price or mandatory expenses associated with maintenance or use. It’s also easy for a user to test and experiment with the tools before committing to adopting it entirely. Other advantages:
● Lower capital cost upfront since the open source software itself is free
● Lower maintenance costs because of the shared effort across many organizations
● Lower switching costs since there is no vendor lock-in
● Lower cost to acquire additional functionality as the open source core platform receives contributions of new functionality from implementers
Developers at fintech and financial services companies can use the Mojaloop code in three ways: they can adapt the code to the financial services requirements of a particular country, use the software to update their own products and services or create new ones, or improve Mojaloop by proposing updates and new versions of it for other users. For example:
● A central bank may commission the use of the software by its commercial partners to speed up the deployment of a national payments gateway.
● A major payments processor can use the software to modernize its current offering to achieve lower transaction costs without major R&D investments.
● A fintech startup can use the code to understand how to comply with interoperable payments APIs.
● A bank can use the code to modify its internal systems so that it can easily interoperate with other payments providers.
Mojaloop is different from other promising digital financial services and systems because it is a model that is available to any company at no cost, and it is designed to enable total interoperability. In particular, Mojaloop:
- Uniquely Addresses Financial Inclusion:
- Designed with eight core principles that outline how to build an inclusive, interoperable digital payments platform on a large scale. These principles echo and stand alongside those drafted by the World Bank, G20 and other international organizations committed to digital financial inclusion – including push payments and immediate funds transfer, same-day settlement and open-loop relationships between accredited participants.
- Unlike Cryptocurrency:
- Mojaloop uses national currencies, interconnects financial services providers in a country or region-wide payments system, and includes attribution of transactions to customers so that customer history can be built and so that anti-money-laundering and fraud detection mechanisms can be run.
- Unlike Proprietary Digital Financial Services:
- Mojaloop open source software enables customers of any provider to transact with other customers of another provider.
Mojaloop does not use blockchain. The software relies on the Interledger Protocol to operate, which is not a blockchain but uses some key concepts from blockchain technology, such as a decentralized design and cryptography-based security. The software aims to provide attributed currency transactions, as opposed to anonymous transactions, as the code will be implemented in accordance with country and regional regulations related to payments, such as identity and “know your customer” (KYC) processes.
Any developer can access the software on GitHub to explore it, use it to build or adapt products and services, and offer updates to the software itself. For more information, connect with the Mojaloop Foundation Community Manager, Simeon Oriko, or visit the Mojaloop Foundation website, https://mojaloop.io/.
Providers trying to reach developing markets with innovative, low-cost digital financial services currently build everything on their own. These proprietary systems raise costs and segregate services from each other, leaving many financially excluded. Mojaloop can be used as a foundation to help build interoperable platforms, lowering costs for providers, accelerating deployment, and allowing them to integrate their services with others in the market.
The basic idea behind Mojaloop is to connect multiple digital financial services providers together into a competitive and interoperable network in order to maximize opportunities for the underserved, enabling them to access financial services with low or no fees. Whereas closed-loop proprietary systems shut out new players and keep existing players in isolated subnetworks, Mojaloop provides an open-loop solution that connects all.
Mojaloop has four components that enable interoperability:
- The interoperability layer connects bank accounts, mobile money wallets, and merchants in an open-loop.
- A directory service layer navigates the different methods that providers use to identify accounts on each side of a transaction.
- A transaction settlement layer makes payments instant and irrevocable.
- It also has components for designing and implementing strong internal fraud controls. Mojaloop was designed with the highest security systems in mind and already works with existing banking systems such as ACH (Automated Clearinghouse) and RT-RPS (Real Time/Real Payments systems). While these components strengthen the system, organizations are responsible for monitoring and protecting their payment models against fraud.
The open source Mojaloop software was first established in 2017 by the Bill & Melinda Gates Foundation, to support its financial inclusion work– specifically the creation of open, interoperable solutions that improve access to digital financial services for the underserved. To date, Mojaloop has more than 400 developers who are collaborating on the software.
The Mojaloop Foundation brings together the financial inclusion and technology leaders needed to share best practices and ideas for developing innovative financial inclusion mobile solutions that can ultimately be implemented in key regions across the world.
The open source software won’t address the gap in digital financial services on its own, but it can help service providers open markets and accelerate progress.
With support and funding from the Gates Foundation, Mojaloop was designed by a team of leading tech and fintech companies: Coil, Crosslake Technologies, Dwolla, ModusBox, Ripple, and Software Group. It is available as an open-source project and is free to be used and adapted by anyone under the Apache 2.0 license. For more information on how Mojaloop ties into the larger initiative of financial inclusion, visit LevelOneProject.org.
