The world has more than 100 million mobile money users, a study by the Groupe Special Mobile Association (GSMA) shows.
Mobile money has been growing rapidly over the past few years, and with 255 services in 89 countries, mobile money is now available in 61 per cent of developing markets.
Mobile network operators (MNOs) have led in the provision of 149 of these services, demonstrating the important and growing role they are playing in the development of the mobile money industry.
In Tanzania, Kenya, Madagascar and Uganda there are more mobile money accounts than traditional bank accounts, and in 25 countries around the world there are more than 10 times as many mobile money agents as bank branches, it says.
The latest GSMA’s ‘Mobile Financial Services State of the Industry Report’ shows that over 50 per cent of all MNOs have already launched a mobile money service. By December 2014, 23 per cent of all mobile connections were linked with a mobile money account in Sub-Saharan Africa.
“As this report demonstrates, mobile financial services have an important social and economic impact on millions of people in emerging markets around the world,” said GSMA chief regulatory officer Tom Phillips.
Mobile money continues to transform the way people access financial services. In three-quarters of the markets where mobile money is available, agent outlets outnumber bank branches and in 25 markets, there are more than 10 times as many mobile money agents as bank branches.
The report shows that the number of active mobile money users continues to grow rapidly year-on-year, with more than 100 million accounts active as of December 2014, compared with 73 million in December 2013, demonstrating the significant traction that mobile money is gaining globally.
As mobile money becomes a core service offering for MNOs, increased competition and customer demand has led to greater interest in the development of account-to-account interoperability.
Between 2014 - 2015, operators in Tanzania, Pakistan and Sri Lanka interconnected their services to allow their customers to send money directly to mobile wallets on other networks, following in the footsteps of operators in Indonesia, where interoperability was implemented in 2013. Operators in other markets have also committed to interconnect their services, paving the way for the creation of a ubiquitous digital services ecosystem.
Take the case of Tigo Tanzania which has interconnected three operators in the market: Vodacom, Airtel and Zantel. “Tigo Pesa customers now have access to Africa’s first universal mobile money exchange system. They will be able to safely and securely send to and receive money from their respective mobile money wallets with over 12 million people across the country,” said Tigo’s outgoing general manager Diego Gutierrez.
“If you are an M-Pesa farmer and want to buy tools supplied by a Tigo Pesa customer in [Kariakoo/Dar es Salaam], this new service will be an ideal payment mechanism. Following the success of the service with Airtel and Zantel, we hope many more Tanzanians will choose mobile money so that everyone benefits and we can extend financial inclusion even further.”
By allowing consumers to transfer money across networks, mobile financial services can achieve meaningful adoption. Consumers won’t have to work around the system by signing up for different services and carrying around different SIM cards.
“Mobile is a key enabling tool for financial inclusion,” Mr Gutierrez said.
On the consumer side, mobile money users are already becoming aware of how interoperability can benefit them, saving them time. A recent consumer survey conducted in six countries in Africa and South Asia identified the lack of interoperability with other mobile money services as one of the primary barriers for adoption—a point brought up by nearly 30 per cent of the 2,500 survey respondents.
As the industry embraces implementation of interoperable programs —meaning consumers of competing mobile money schemes now can send money to each other— economists see three key elements needed to ensure sustainable success in the country.
Economics: Create business models that benefit all stakeholders in mobile payments, including financial institutions, mobile network operators, agents, and consumers.
Balanced regulations: Strike a balance between regulation that protects consumers and domestic economies, abiding by international requirements without hindering potential growth, especially in multi-currency environments.
Fraud monitoring and risk management: Create sufficient security and reliability to foster consumers’ trust in mobile money services.
Over the past 50 years, payment networks have built the technology that connects consumers, merchants, financial institutions, businesses, and governments. By fostering a system where parties can collaborate and all stakeholders benefit, they have reached a degree that few industries have achieved. Existing networks can be leveraged to offer mobile money services to consumers in emerging markets with the same degree of payment security, reliability, and easy access that consumers in developed countries have long enjoyed. It will likely transform economies in many countries.
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