Mobile money companies are racing to serve an estimated 2.5 billion unbanked population spread across the globe, most of which has access to mobile phones, according to Reuters.
The growth has been described as “dizzying” by GSMA in a report released last week. However, among the vast segment holding mobile money accounts, few remain active. About two-thirds of the volume of active transactions comes from users adding credit to their prepaid mobile accounts.
Mobile money has proven to be a huge success story in countries like Kenya, where mobile money accounts for over a fifth of $1.59 billion annual revenue for M-Pesa, a Vodafone company operated by Kenya’s Safaricom Ltd. “It’s a part of our lives. We wonder what we did without it. I don’t need to physically have cash. The beauty is you can even have a savings account on your mobile phone,” Daniel Maison, a consultant in Kenya who uses M-Pesa to buy gas and pay bills, said in an interview with Reuters.
However, mobile money hasn’t been a success story everywhere. In Afghanistan, for example, the service provided by local telecom company Roshan has been used to pay policemen. Though it has greatly helped reduce corruption, it currently serves just about 1 percent of the police force and has cost the government $10 per transaction.
The popularity and growth of mobile money has not always rocketed to success right away. In Kenya, many attribute M-Pesa’s success to the electoral violence in 2007-08, which left many displaced without access to banks. In Cambodia, the growth has been slow, but has eventually yielded modest profits with less than 50,000 active accounts, since the launch of “Wing” six years ago, Reuters reported.
The expansion of mobile money networks should not be left to mobile service providers, Anthony Perkins, CEO of Wing, told Reuters. He believes telecom companies never aim for financial inclusion, but for an increase in money spent over their networks.