Mobile Money: The Future of Emerging and Frontier Market Transactions
Concept for mobile apps. Flat design vector illustration.

Mobile Money

The rate of evolution and change in today’s mobile payments market is breathtaking.  Even the industry ‘technorati’ may find it difficult to stay abreast of the latest news and innovations.  If you were to ask an industry insider about the most promising mobile solutions in today’s marketplace, they might well mention Apple Pay and its imitators and Samsung Pay. They might also bring up digital payments company Stripe, or the mobile credit card swiping system released by Square.

But what they might not tell you is that many of today’s greatest advances, and by far the highest adoption rates of mobile payments solutions, are occurring in the developing world. Earlier in the week GSMA, the industry group representing the world’s 240+ mobile network operators, released a report on the state of the mobile financial services industry.  The report’s findings are remarkable and impressive, underlining the depth and breath of the spread of mobile transactions around the world.

If you have a deep interest in mobile tech and emerging markets, the 77-page report is worthy of a read. For those that want to be spared the gritty details, I have summarized some of the report’s key findings and include my own comments below.

In the developing world, tens of millions of individuals are reaching monetary thresholds that finally give them access to the global economy. And importantly, they are not using traditional banking services.

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Economists, government officials, and others continue to express fears that unbanked populations stymie economic growth, spur illicit activities and expose individuals to undue risk. After all, banks require deposits to lend capital to businesses, governments rely on bank data to monitor the overall state of the economy, and individuals who maintain possession of large amounts of cash expose themselves to higher risks in the event of loss, theft or burglary.

The savings of these individuals and their families, often measured in the tens of dollars, might not seem much by Western standards, but for many the ability to cobble together savings, even at such low amounts, represents a significant advancement.  However, the traditional banking model is often infeasible for communities in developing communities because of the costs of maintaining branches in far-flung locations with low average incomes.  Banking branches are often hundreds of miles away for many people.  Additionally, they frequently lack the necessary documents required to open a bank account.

A more viable solution that is catching on, is being offered by mobile providers who have become the default banking solution for many of the world’s unbanked.  Anyone with a simple cellphone, or ‘feature-phone’, can walk up to a market, purchase credit, and receive or send money via SMS or text message.  In 2014, there were 2.3 million mobile money agents around the world, a 45% increase from 2013. Many of these agents operate simple tiendas –or other small stores in many remote communities where banks would be unlikely to open a branch.

The service is so popular in many countries, particularly in Sub-Saharan Africa, that the amount of money transferred through them accounts for large percentages of a particular economy’s GDP. In Kenya, M-Pesa transfers accounted for about one-third of the entire country’s GDP in 2013, according to the Financial Times.


Mobile MoneyGSMA found that mobile money usage is occurring seemingly everywhere, with 200+ services available in 89 countries. This accounts for 61% of the world’s developing markets, with the remaining markets predominantly much smaller in size and burdened with too much regulation for such services to take hold.

Today, just under 300 million mobile money accounts have been activated, a 41% increase from 2013.  The majority of these connections are occurring on Sub-Saharan Africa, a place where user adoption of both basic and smartphone is growing the fastest compared to every other region in the world.  Yet, these accounts only represent 8% of mobile connections in the markets where mobile money services are available.

2014 saw some interesting developments in mobile payments.  Perhaps the most change is the number of markets where regulatory and logistical hurdles have been overcome to allow individuals to send mobile money across borders and between networks. With individuals around the world becoming ever more transient and the amount of remittances skyrocketing, 2014 might just have begun a quiet revolution that will finally shake up the remittance market, which itself is continuing to experience double-digit growth. In 2016, the World Bank estimates that over US$515 billion will be transferred – typically from the over 1 billion people that are classified as ‘transitory’ by the World Bank.  A small cartel of banks and brokers extort fees that average around seven percent – but are significantly higher for individuals trying to transfer smaller sums to remote destinations. In other words, the banks are charging the largest percentage of fees from the individuals likely to need the money most.

Mobile operators such as M-Pesa are in early stages of providing an alternative, and might have just stumbled into a new strategy for a new and significant revenue stream. For millions  – if not a billion – people around the world, reducing remittance fees and increasing access points will mean that more money will arrive and be easier to access than through a wire service like Western Union.  In fact, according to the report, it costs on average about half the price to send remittance payments via mobile money rather than through a wire service.

According to BCG, mobile operators in sub-Saharan Africa alone are expected to generate $1.5 billion of revenue by 2019.  By disrupting other markets  – and as the GSMA report notes, expanding access to services like micro-credit and micro-insurance – this growth can only be expected to accelerate.

There are still over one billion people lacking access to mobile networks (companies like Endaga are working to provide solutions to them), and many millions more don’t have access to cheap and reliable power for their phones. But this is changing very rapidly. Mobile devices are becoming cheaper and offering the ability for billions of people to access the internet – and changing the lives of many not only thanks to improved and reliable access to financial services, but also to better quality of healthcare, education and other critical services.

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