Mobile Money Updates

Jul 25th, 2014

The mobile money industry continues to grow in the developing world, offering financial inclusion to the masses that were previously without access to financial services. Below are a few recent articles highlighting exciting developments in the industry.

Mobile Money Continues to Penetrate Africa by Emmanuel Iruobe on Ventures Africa

According to an industry report by the Global System for Mobile Association (GSMA), the mobile money industry is continuing to expand across more regions in Africa. As of early 2014, nine markets had more mobile money accounts than traditional bank accounts compared to four a year before. In Sub-Saharan Africa, mobile money is available in 36 out of 47 countries.

The industry has seen its most notable growth in Tanzania. As of September 2013, 90% of the population had access to mobile financial services, up from 1% in 2008. According to the report, the expansion in services was due in large part to the National Bank in Tanzania working closely with mobile operators.

Mobile money has undoubtedly been a driver of financial inclusion in Africa. As the industry continues to develop, service providers will be able to increase financial inclusion by offering financial services beyond mobile money transfer. These services could include mobile insurance, mobile credit and savings.

East Africa: Ericsson – Airtime Can Be Used to Boost Uptake of Mobile Money Services on allAfrica

Rajiv Bhatia, Ericsson’s head of mobile commerce sales for Emerging Middle East and Africa (EMEA), recently stated that airtime could be used as an incentive to drive the usage of mobile money services in countries where its growth has been sluggish.

Africa has been a leading market for mobile money and Bhatia credits its success to transparency, education and trust, stating: “There are fantastic opportunities to grow this business especially among the migrant population, which still uses informal means to remit cash. Banks should forge closer ties with operators, who have an expansive distribution network to encourage adoption and drive usage.”

According to the World Bank, almost half the world’s adult population is unbanked and in countries where financial inclusion is low, mobile money solutions offer a fast way to close the gap. Bhatia estimates that by 2016, the m-commerce market is expected to reach $800 billion worldwide, but an enabling environment needs to be put in place in order for it to thrive.

A New Kind of No-Frills Bank Could Kickstart India’s Long-Awaited Mobile Money Revolution by Leo Mirani on Quartz

The Reserve Bank of India (RBI) recently issued a set of draft guidelines for the establishment of a “payments bank,” a bank that would not be allowed to lend but instead would accept and cash out deposits and remittances. This new kind of bank could be exactly what the mobile money industry needs to jumpstart growth in India.

India has remained a laggard in the mobile money revolution due, in part, to the cautious nature of the RBI. Indian regulations previously required mobile operators to work with banks to dispense hard currency, meaning users would still need to travel to the nearest bank to receive the cash that was transferred electronically.

Under the new regulations mobile operators will now be eligible to become payment banks and the poor population living in rural India who were previously locked out of the financial system will now be able to open accounts and store money electronically. One stipulation for the new bank is that it must have at least a quarter of its access points in rural locations with a population of fewer than 10,000 people.

The shift will mean financial inclusion for India’s masses and the ability to realize full market potential for mobile money service providers.

Is Tanzania Ready for Interoperability in Mobile Money? By Omoneka Musa, Charles Niehaus and Martin Warioba on CGAP

Mobile money interoperability among MNOs, mobile money operators, and banks has the potential to offer great benefits to operators, regulators and customers in the mobile financial services market. Importantly, it also offers an opportunity to further advance financial inclusion.

Up until this point there have been few attempts at interoperability as most of the emerging markets using mobile financial services are simply not ready. Tanzania may be an exception. The country is currently experiencing a mobile money revolution comparable to Kenya’s. In the past four years, mobile financial services usage has increased from 7% to 44%. The four largest MNOs in the country – Airtel, Vodacom, Tigo and Zantel – have partnered with CRDB Bank, National Microfinance Bank, and the Bank of Tanzania to create a set of operational regulations for interoperability.

Both customers and agents of mobile financial services have expressed interest in the benefits that interoperability can offer such as improved agent liquidity management. The main challenge now is to align the interests of competing stakeholders and to encourage regular communication among them. IFC, with the Tanzanian mobile money industry is in the process of finalizing rules for person-to-person (P2P) transactions while market players have expressed interest in discussing agent or Cash-in/Cash-out (CICO) interoperability as a next step. As mobile money markets continue to mature and more of the population in emerging markets experience financial inclusion, the case for interoperability will only strengthen, as everyone stands to gain.

 

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