The number of mobile money subscribers globally surpassed 1 billion in 2019 while the volume of transactions per day reached almost $2 billion according to GSMA’s new report “2019 State of the Industry Report on Mobile Money”.
During the same year, and for the first time, digital transactions represented the majority of mobile money flows, an indication that increasingly more value is circulating within the mobile money system than going out of it. The ratio of digital to cash-based transactions has increased by nearly 50 per cent since 2017 as a larger proportion of money enters and leaves the system in digital form.
(TOP: A Lipa na MPESA till. The ratio of digital to cash-based transactions has increased by nearly 50 per cent since 2017).
“For customers, this marks a shift away from cash towards digital payments – for school fees, e-commerce, international remittances, savings, credit, pay-as-you go utilities and more. For the industry, it is evidence that the ‘payments as a platform’ model – a strategic shift by the industry to encourage more value to remain digital and to
diversify revenue models – is paying off,” notes Mats Granryd, GSMA’s Director General.
Communities and individuals are becoming increasingly dependent on digital technology, thereby highlighting the central role of mobile money in harnessing digital finance for sustainable development. Mobile money is accelerating progress towards the Sustainable Development Goals and is contributing to the economic empowerment of individuals and communities including marginalised groups and businesses even though some 1.7 billion people remain financially excluded.
“For instance, 60 per cent of surveyed mobile money providers reported partnering with a humanitarian organisation to deliver mobile money-enabled cash voucher assistance to over 2.7 million unique mobile money accounts,” states Granryd.
The report, which highlights the transformative ability of mobile money to generate broader benefits for the
industry and society, is prepared by the GSMA’s Mobile Money programme in collaboration with the Bill & Melinda Gates Foundation and Flourish.
It also shares some of the most significant trends noted in 2019.
A growing number of providers are becoming commercially sustainable with a number of providers crossing the threshold to become commercially sustainable with 60 per cent of providers reported a positive EBITDA.
Direct revenues from mobile money are supporting investment in innovative products and services, network expansion, and healthy and sustainable agent commissions. With trusted brands, widespread distribution and secure channel access, more and more providers are delivering services sustainably.
The mobile money industry has created opportunities for entrepreneurs in emerging markets to become agents, with the number of agent outlets almost tripling over the past five years while the reach of mobile money agent is now seven times that of ATMs and 20 times that of bank branches. In rural and hard-to-reach areas, mobile money agents have had a transformative impact on financial inclusion.
Agents are also seeing their monthly incomes rise substantially with commissions that are not taking away from investment in other areas of the mobile money business.
Providers are shifting to a ‘payments as a platform’ model, a move by the industry to encourage more value to remain digital and to diversify revenue models by unlocking more targeted services for individuals, businesses and communities.
The year also saw a significant drop in reliance on revenue from customer fees alongside rising revenue from business fees, a clear indication that providers are focusing more on expanding the digital ecosystem and adjacent services like mobile money-enabled credit, insurance and savings.
More value is circulating in the mobile money system than exiting, with the total value in circulation (P2P and merchant payments) reaching $22 billion in December 2019, more than doubling over the past two years and significantly surpassing the total value of outgoing transactions ($18 billion).
Integration via APIs with organisations ranging from government agencies to utility companies, online businesses and local entrepreneurs is also on the rise.
The regulatory landscape is evolving as interventions that enable low-cost services for the financially excluded have been crucial to the success of mobile money, and there is a clear correlation between high mobile money adoption rates and enabling regulatory environments.
However, the GSMA report notes that certain policy interventions, such as sector-specific taxation and data localisation requirements, are putting pressure on the industry and may have long-term negative impacts on financial inclusion gains, innovation and the achievement of the SDGs.
The report examines these trends and industry initiatives that will push the number of registered accounts well beyond a billion in 2020 and move us a step closer to a digital future for all.
Be the first to comment