Mojaloop Project Background
Designed to provide a reference model for payment interoperability, the Mojaloop Foundation’s open source software, Mojaloop (the word “Moja,” meaning “one” in Swahili), can be used to overcome barriers that have slowed the spread of digital financial services.
The Mojaloop open source software uses a set of eight principles that the Mojaloop Foundation members and community believe are required for payments systems to be inclusive. These principles are attributed to the Bill & Melinda Gates Foundation’s Level One Project and include:
- 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
- Enablement of 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
- Continual improvement by the Mojaloop open source community and by users that engage with it, contribute to it, test it, and adapt
While every market brings with it regulatory and governmental requirements, technical challenges create significant barriers for implementors looking to develop payments systems that increase financial inclusion. They include:
- A lack of interoperability between services and providers, which keeps customers in silos and puts a limit on potential transactions—as well as revenue.
- The expense of building out proprietary networks and systems, which means providers often end up either charging high transaction fees that the unbanked can’t afford or not building anything for developing markets at all.
- Designing interoperable payment systems is also dependent on regulators and central banks overcoming many challenges, including addressing consumer protection, overcoming the complexity of digital infrastructure development, and navigating the political and economic landscape.