This guest blog was written by Francesco Pasti, Senior Manager of Mobile Money Services at GSMA.
Numerous new trends emerged in mobile money throughout 2017 – from the accelerated growth of bank-to-mobile interoperability, to the emergence of South Asia as the fastest growing region, and a raft of innovations designed to reach the most underserved. The mobile money industry is now processing a billion dollars a day and generating direct revenues of over $2.4 billion. With 690 million registered accounts worldwide, mobile money has evolved into the leading payment platform for the digital economy in many emerging markets. The 2017 State of the Industry report on Mobile Money from the GSMA sheds light on several factors underpinning the success of a growing number of mobile money providers: a sustained focus on activity rates, the digitisation of platforms and measures to reduce the net cost of the agent network. On each of these fronts, the trends in 2017 were positive.
A growing number of mobile money services are achieving activity rates of over 50 per cent
While average industry activity rates grew modestly to 36 per cent in December 2017, a closer look reveals significant variation among providers. Our analysis shows that these providers all have a strong distribution network, enjoy enabling regulation, and rely more on an account-based business model.
More funds are entering and leaving the mobile money ecosystem in digital form
Use cases such as bulk disbursements, bill payments and bank-to-mobile transactions have been the main drivers of this trend. As mobile money becomes more digital, it is connecting the wider economy and, in turn, becoming more profitable for providers and more useful to consumers.
Many successful providers are decreasing the net cost of the agent network
Agents remain a crucial and distinguishing asset of mobile money providers. In recent years, we have seen growth in the number of active agents and average values processed by agents. At the same time, the inflow of digital funds is reducing provider costs, by alleviating the need for subsidised cash-in agent commissions.
Amidst a changing landscape that sees the spread of smartphone and fintech companies and an increased digitisation of new sectors of the economy, mobile money providers serving as a payment platform for a broad range of entities appear to be best placed to thrive.
The persistence and scale of the cash economy in emerging markets means that complex distribution networks remain crucial for digital services to interface with physical lives. By leveraging these enduring assets and finding new ways to connect scale with innovation, mobile money providers can serve as a gateway to the widening array of digital services in emerging markets.
Policy objectives will play an increasingly important role, as the scope of mobile money regulation broadens. While the pace of core regulatory reform is slowing, this masks two important emerging trends: the extension of new areas of regulation to mobile money and the rapid spread of financial inclusion policies. As regulators confront questions around data protection, regulatory sandboxes, and more, the policy end game of greater inclusion must remain at the fore.
Read the full report for the detailed analysis of these levers to growth and sustainability, and for spotlights on success stories and examples of innovation from mobile money providers around the world.