Trade body representing the interests of mobile network operators worldwide, GSMA explores the usage of mobile money and the progress of the industry in 2018. Main trends and challenges are identified while mobile money contribution to financial inclusion is pointed out. Here are the main findings from the report.
How did mobile money usage progress in 2018 ?
- In 2018, the mobile money industry gained 143 million registered customers globally with a total number of accounts reaching 866 million (20% increase). Most of this growth came from Asia, where 90 million new accounts were opened.
- When it comes to transaction values, the industry is processing over $1.3 billion per day, with a 17% rise in transaction values in 2018.
- While cash-in and cash-out transactions still represent most mobile money flows, digital transactions (which enter, leave or circulate the mobile money ecosystem in digital form) grew twice faster, driven largely by bill payments and bulk disbursements.
What are the major trends in the mobile money industry ?
Trend 1: To continue growing as reliable partners for companies, mobile money operators are working towards more interoperability.
- Mobile money providers are becoming strong partners for enterprises : indeed, the main drivers of digital growth in 2018 were bulk disbursements and bill payments.
- In order to increase the utility of mobile money, interoperability is a strategic priority for the industry.
- In 2018, with the support of the GSMA, MTN and Orange launched a joint venture to enable interoperable payments across Africa. Known as Mowali (mobile wallet interoperability), the service will start to operate this year. Get more information about Mowali in our article here.
Trend 2: The number of players in the digital financial services ecosystem is increasing.
- While large mobile network operators (MNO) still dominate Africa’s mobile money ecosystem, tech companies diversify by investing in mobile payment businesses to gain market access in Asia and Latin America.
- For instance, Singapore-based ride-hailing giant Grab expanded into mobile payment services in 2017 with the launch of mobile wallet GrabPay. Now available in major Southeast Asian markets, Grab recently partnered with MasterCard to enable online payments and cash-out.
- In Latin America, Argentina-based e-commerce platform MercadoLibre is now offering payment and financial services, such as credit and wealth management, serving both micro-, small- and medium-sized enterprises (MSMEs) and individual users.
- Although diversification of the financial services landscape is a sign of growing competition, the addressable market seems substantial enough to accommodate both MNO and non-MNO players.
Trend 3: To sustain revenue growth, MNOs are reinventing the mobile money business model.
- Mobile money providers report steady year-on-year revenue growth (23.9 % average) and profitability, with 30% of surveyed providers reporting EBITDA margins of over 25 %.
- Although 80% of providers reported that most of their revenues are driven by customer fees, they are now seeking to strengthen the mobile money business model by developing “Payments as a platform” approaches that connects consumers with third-party, from enterprise solutions for MSMEs to personalized services like e-commerce, credit, savings and insurance.
Trend 4: Complex and changing regulation requires careful monitoring.
- In order to achieve mobile money services expansion, increased collaboration between providers and regulators is strongly needed, especially in the fields of taxation, Know Your Customer (KYC) requirements, cross-border remittances, national financial inclusion strategies and data protection.
- Looking forward, 2018 reforms in Nigeria, Egypt and Ethiopia augurs well for mobile money players : they could lead to over 110 million new mobile money accounts in the next five years. Indeed, Africa’s three most populated countries have had for now limited access to mobile money, due to regulatory barriers (disproportionate KYC requirements, unclear legal framework) and lack of internet connectivity and financial literacy.
What is the contribution of mobile money to financial inclusion ?
- According to World Bank’s Global Findex Database 2017, around 1.7 billion people still lack reliable access to financial services around the world. However, 31 emerging markets have seen an impressive increase in financial inclusion rates, which can be attributed to growth in active mobile money use.
- Indeed, mobile money provides innovative solutions to reach underserved customers: MNOs are developing products targeted at populations traditionally excluded from the formal financial system, namely the rural poor, displaced persons and women.
- More than 50 % of surveyed operators report having or planning to launch a product targeted at rural customers.
- 55 % are partnering with humanitarian organizations to provide access to basic financial services.
- However, much work remains to be done to close the mobile use gender gap : women in low- and middle-income countries are still 33 % less likely than men to use mobile money and 10 % less likely to own a mobile phone.
For more information, download the full report here.