A Financial Analysis of Mobile Money Services
With limited reporting by mobile network operators (“MNOs”) on the financial performance of mobile money businesses, the paper develops a financial reporting framework to indentify (and quantify) operating costs associated with delivering mobile financial services to unbanked populations in emerging markets. The framework is based on a review of relevant literature and an analysis of the financial reporting of conventional money transfer businesses.
Mobile Payments Go Viral: M-PESA in Kenya
M-PESA is a small-value electronic payment and store of value system that is accessible from ordinary mobile phones. It has seen exceptional growth since its introduction by mobile phone operator Safaricom in Kenya in March 2007: it has already been adopted by 9 million customers (corresponding to 40 percent of Kenya's adult population) and processes more transactions domestically than Western Union does globally. M-PESA's market success can be interpreted as the interplay of three sets of factors: (i) pre-existing country conditions that made Kenya a conducive environment for a successful mobile money deployment; (ii) a clever service design that facilitated rapid adoption and early capturing of network effects; and (iii) a business execution strategy that helped M-PESA rapidly reach a critical mass of customers, thereby avoiding the adverse chicken-and-egg (two-sided market) problems that afflict new payment systems.
Mobilizing Money through Enabling Regulation
capability to receive and make payments, quickly and affordably, from and to any other person or entity from that store of value—in other words, to use mobile money. We are a long way from that goal today. Bank accounts are regarded as the traditional safe place to store money, yet a 2006 study estimated that globally perhaps only 1.5 billion people have bank accounts. Not all of these accounts have the level of speed or convenience—mobility—that comes from electronic banking, although the usage of e-banking channels has grown with the issuance of ATM and debit cards over the past two decades: in some developing countries, people still have passbook-based or domiciled accounts in which their money is effectively immobilized to cash access at one branch. At the same time, we have witnessed the amazing rates of adoption of mobile phone communications even in the poorest and most remote countries: in 2009, by far the majority of the earth’s population will live in areas with wireless reception, and four billion people will be mobile subscribers, most of them prepaid. Even if we account for the double counting that occurs because of multiple mobile subscriptions, it is clear that many more people are now in real-time voice or SMS contact with others across the globe, compared to the numbers using electronic financial services. What would it take to mobilize money fully? First, people need easy and affordable universal access to wireless telephony. This is not yet available: even though subscriber bases continue to grow rapidly in many developing countries, that growth may be limited by income, topography and market structure. However, the limits to mobile penetration are clearly not the binding constraint on