East Africans Embrace Mobile Money Subsciptions

While Mobile Money services are more of a convenience in Western countries, for many African countries, the concept of mobile money is what allows many to be financially included.

The most recent case for mobile money comes from East Africa, where a new report shows that consumers in Kenya, Uganda, Rwanda and Tanzania are transacting a massive amount of money through their mobile phones. That amount, in fact, hit $45.74 billion in 2014, which was 32 percent of their combined GDP, according to an All Africa news report. That’s a significant five-year jump from 2009’s figures of $4.86 billion, which only accounted for 3.4 percent of GDP.

Having the ability to move money via mobile also enables consumers in those regions to move money more on average than before mobile money services were widespread as viable options. East African consumers, on average, now move $125 million a day — a substantial growth from the $13.3 million moved a day just just five years ago.

This is made possible with the now 24 mobile money service providers in the region. M-Pesa, of course, is the largest in the area and has more than 20 million registered customers.

So how has the mobile money services helped consumers most? Leora Klapper, a lead economist at the World Bank, noted that it’s helping people move money quicker and safer.

“It has reduced risks like leaky transfers, delays and high cost of transactions for users who want to transfer money to family members and friends,” Klapper said, adding that it has the potential to have a big impact on how the area and its people continue to grow economically.

“This means greater opportunities for women to find funds for keeping a small business going, keeping children in school, and dealing with medical and other emergencies,” Klapper noted.

Where mobile money schemes have really had an impact is in helping serve the financially excluded (aka the unbanked). Worldwide, more than 2.5 billion adults (half the adult population) do not have an account at a financial institution, according to the World Bank’s Global Financial Inclusion Database.

But through partnerships with card brands like MasterCard or Visa in developing regions (like Africa, for example), mobile money schemes are bringing access to populations that were once isolated from financial services. The number of mobile money accounts in existence represent 8 percent of mobile connections where mobile money services are available, according to the report. The number of mobile money accounts has doubled from 2012 figures, but there’s still a gap.

“In 2014, seven new markets joined the ranks of countries where there are more mobile money accounts than bank accounts. Sixteen markets now hold this status, indicating that mobile money remains a key enabler of financial inclusion. … 75 million additional mobile money accounts were opened globally, bringing the total to 299 million at the end of December,” according to a GSMA report.

The rise in popularity over mobile money solutions in Africa’s emerging nations also translates to a rise in money transfer services in the remittance market. This means everything from paying utility bills to paying off taxes. Now, instead of spending valuable working time walking to deliver payments by mail, consumers in emerging nations can rely on affordable and reliable mobile money services to help them keep better connected to the rest of the world’s financial systems.

“Mobile money has been growing at a dizzying rate. Mobile money is transforming the way people access financial services,” GSMA researchers wrote in their most recent report. “Traditional ‘bricks and mortar’ banking infrastructure struggles to make the business model work to serve low-income customers, particularly in rural areas.”

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New PYMNTS Report: Preventing Financial Crimes Playbook – July 2020 

Call it the great tug-of-war. Fraudsters are teaming up to form elaborate rings that work in sync to launch account takeovers. Chris Tremont, EVP at Radius Bank, tells PYMNTS that financial institutions (FIs) can beat such highly organized fraudsters at their own game. In the July 2020 Preventing Financial Crimes Playbook, Tremont lays out how.

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