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  • Thierry Spanjaard

Mobile Money provides adequate solutions to Coronavirus crisis

Those of us interested in mobile payments may remember that one of the oldest and most successful technologies for mobile payments is the one that requires the least features from mobile phones: mobile money. The technology, now available on smartphones, has been working on feature phones for long, as mobile money can use a simple SMS exchange to secure a financial transaction.

In our current pandemic times, mobile money appears as a strong and reliable foundation allowing to operate payments in a totally safe manner. Mobile operators and governments are taking initiatives to support the use of mobile money and reduce the circulation of physical currency. For instance, in Kenya, Safaricom is waiving transfer fees on M-PESA transactions under KES 1,000 (EUR 8.50) during the epidemic and, in Nigeria, Paga is letting merchants accept mobile payments without any fee.

Mobile money is meeting an always-increasing success, with over 469 million users just in Sub-Saharan Africa, at the end of 2019, according to GSMA. The total value of the 23.8 billion transactions carried out in 2019 exceeded US$ 456 billion (EUR 417 billion).

Mobile money players are on an evolution path: M-PESA is now 100% under African ownership as Kenya’s Safaricom and South Africa’s Vodacom have acquired the stake of UK telecoms operator Vodafone. Both companies are now looking to expand M-Pesa into even more African countries. The companies did not disclose the value of the transaction, but Payments Cards & Mobile reports that, last year, Safaricom’s then chief executive Bob Collymore said the deal could be worth about US$ 13 million (EUR 11.9 million).

Originally, mobile money, marketed as M-PESA, had been developed by Safaricom, a Vodafone affiliate, in Kenya. The first focus of the technology was P2P transfer, coming as an efficient alternative to physical cash movement or expensive bank transfers. Then, the service started to include payments to merchants and all types of service providers.

The mobile money market is increasingly competitive, as many mobile network operators now propose similar services: MTN Mobile Money, Orange Money, Tigo and Airtel among others. In Nigeria, the largest economy on the continent, MTN has just launched its MoMo Agent mobile money service, while Airtel Nigeria is expected to follow suit as well as 9Mobile and Globacom. In East Africa, the Ethiopian government has just announced the opening of mobile money licenses for non-financial services companies, MTN, Orange and Vodacom are said to have already expressed their interest in the Ethiopian market.

Mobile money is also developing beyond Africa: South Asia is the second largest market for the technology with 315 million accounts.

In South East Asia, the State Bank of Vietnam is completing a mobile money pilot project, that will see telecom operators VNPT, Viettel and MobiFone offer payment services for goods and services up to a limited value.

Globally, the GSMA, which just published its annual State of the Industry Report on Mobile Money, says that, by end-2019 there were 290 live services across 95 countries. The industry processed US$ 690 billion (EUR 631 billion) worth of transactions, up 26% on 2018. In other terms, the mobile money services processed US$ 2 billion (EUR 1.8 billion) in transactions per day in 2019. Of the 1 billion registered accounts worldwide at the end of 2019, 372 million were deemed active, defined as accessed at least once every 90 days. The GSMA also establishes that the reach of mobile money agents is now seven times that of ATMs and 20 times that of bank branches.

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