Mobile Money Has Implications for Commerce, Not Just Banking

In 2001, SMART Money in the Philippines, run by SMART Communications, a wireless telecom, was the one and only mobile payment system operating in the world. By 2006, there were 10 such systems. Today there are more than 150, in both the developed and emerging worlds, and 90 more are on the drawing board in the emerging world alone, according to Knowledge@Wharton and Ernst and Young. 

Today, nearly 20 percent of Kenya’s gross domestic product moves through M-PESA, the nation’s mobile-money system operated by Safaricom, its leading mobile network. 

Also, more than half of Kenya’s 22 million adults have M-PESA accounts, twice as many as have bank accounts. Most of those transactions are used to send money from urban areas to recipients in rural areas. 

Moreover, there is evidence that all those new users also are spurring the spread of ;hysical banking facilities as well.  For example, between 2005 and 2010 the number of bank branches in Kenya doubled (from 500 to 1,000), a growth that many attribute to pressure from M-PESA. 

International remittances are another area where mobile service providers have gotten into the "mobile money" business. Airtel Money, which is available in 11 countries in Africa and the Middle East, enables its 15 million users send and receive minutes of airtime, and trade those minutes for money. 

According to the Bank’s Global Financial Inclusion Database, there are 20 nations in the world where more than 10 percent of the population has used mobile money in the past year. As The Economist noted in analyzing this data, 15 of those countries are in Africa.

Potential customers for mobile money include the 1.8 billion people who, according to the World Bank, have a mobile phone but no bank account.  

The remittance market is about $400 billion a year globally through formal channels and, it’s been estimated, about $1 trillion through formal and informal channels. 



In developed economies, where banking is not a problem, as such, other values will drive mobile money, in particular the value of data about who is buying, what and where they are buying. In other cases, "owning the customer relationship" might be the value.