2019 marked a major milestone for the mobile money industry: the number of registered mobile money accounts surpassed 1 billion. Reaching the 1 billion mark is a tremendous achievement for an industry that is just over a decade old.
The mobile money industry of today has a host of seasoned providers with a broad set of operational capabilities, a full suite of products and a global reach. With 290 live services in 95 countries and 372 million active accounts, mobile money is entering the mainstream and becoming the path to financial inclusion in most low-income countries – states the State of the Industry Report on Mobile Money 2019.
What is not captured in this figure is the empowerment that comes with owning an account. More women are using financial services, low-income households are accessing essential utility services and smallholder farmers are getting paid more quickly and conveniently.
Meanwhile, millions of migrants and their families are experiencing the life-changing benefits of faster, safer and cheaper international remittances and humanitarian cash assistance is being delivered more thoughtfully to those in crisis situations.
All of this is unlocking new solutions to some of the world’s most intractable development challenges and highlighting the catalytic role that it is playing in achieving the Sustainable Development Goals (SDGs). This year’s State of the Industry Report looks at what 1 billion registered accounts signify for the mobile money industry, mobile money users and the future of the ecosystem.
Biggest trends in 2019
A growing number of providers are becoming commercially sustainable
Not all deployments are profitable, but in 2019 a growing number of mobile money services crossed the threshold to become commercially sustainable: 60 per cent of providers reported a positive EBITDA.2 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 and at scale.
The industry continues to invest in distribution networks and sustainable agent income
The mobile money industry has created opportunities for entrepreneurs in emerging markets to become agents. The number of agent outlets has almost tripled over the past five years, and the reach of a 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. Meanwhile, agents are 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
In last year’s State of the Industry report, we charted the emergence of a ‘payments as a platform’ model — a strategic shift 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.
2019 saw a significant drop in reliance on revenue from customer fees alongside rising revenue from business fees. This is a clear indication that providers are focusing more on expanding the digital ecosystem and adjacent services like mobile money-enabled credit, insurance and savings.
The digitisation of payments has reached new heights
Over the past five years, there has been a gradual shift from cash to digital payments, but for the first time in 2019, digital transactions accounted for the majority of mobile money flows. 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. This is a signal that providers have taken major steps to ensure digital transactions become a part of their customers’ everyday lives.
More value is circulating in the mobile money system than exiting
Another industry first – the total value in circulation (P2P and merchant payments) reached $22 billion in December 2019, more than doubling over the past two years and significantly surpassing the total value of outgoing transactions ($18 billion). The industry has clearly zeroed in on what keeps value circulating. For example, by creating more compelling value propositions for MSMEs with business management tools like customer analytics and inventory management, and offering credit lines to agents and merchants.
The industry is increasingly interoperable and integrated
Interoperability with banks and account-to-account (A2A) interoperability is meeting the needs of entirely new customer segments, including traditionally underserved and cash reliant customers. Mobile money-enabled international remittances have flourished as the industry has become more integrated with international financial system players. 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
Regulation that enables low-cost services for the financially excluded has 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, 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 achieving the SDGs. This 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.