State of the Industry Report on Mobile Money 2018

Mobile Money

The GSMA represents the interests of mobile operators The GSMA’s Mobile Money programme works to worldwide, uniting more than 750 operators with over accelerate the development of the mobile money 350 companies in the broader mobile ecosystem, ecosystem for the underserved. including handset and device makers, software companies, equipment providers and internet companies, as well as For more information, please contact us: organisations in adjacent industry sectors. The GSMA also produces the industry-leading MWC events held annually in Web: www.gsma.com/mobilemoney Barcelona, Los Angeles and Shanghai, as well as the Mobile Twitter: @GSMAMobileMoney 360 Series of regional conferences. Email: [email protected]

For more information, please visit the GSMA corporate website at www.gsma.com

Follow the GSMA on Twitter: @GSMA

Lead author: Francesco Pasti Senior Manager, Mobile Money Services, GSMA, with the support of the wider GSMA Mobile Money team

THE MOBILE MONEY PROGRAMME IS SUPPORTED BY THE BILL & MELINDA GATES FOUNDATION, THE MASTERCARD FOUNDATION, AND OMIDYAR NETWORK 2018 State of the Industry Report on Mobile Money

Contents

FOREWORD 2

EXECUTIVE SUMMARY 4

MOBILE MONEY IN 2018 7

THE BIG PICTURE 8

2018 MOBILE MONEY HIGHLIGHTS 12

REGIONAL GROWTH 13

REACHING THE UNDERSERVED THROUGH 14 INNOVATION

FOUR TRENDS SHAPING THE MOBILE MONEY 18 INDUSTRY

CONCLUSION 34 2018 State of the Industry Report on Mobile Money

Foreword

2 2018 State of the Industry Report on Mobile Money

Foreword For over a decade, mobile money has been party products and services to suit customers transforming access to financial services with diverse needs. This signals the start of around the world. The scale of mobile money a major shift in the mobile money industry, continues to grow, with more than 866 which will promote digitisation more broadly: million registered accounts in 90 countries mobile money customers will not just have and $1.3 billion transacted every day. The access to an account, but rather to a full suite progress, challenges and most ground- of services that are relevant to their daily breaking industry trends are explored in this lives, encouraging them to keep their funds in year’s flagship report from the GSMA’s Mobile digital form and building resilience to financial Money team. shocks. For the world’s most vulnerable, especially Now more than ever, mobile’s unparalleled displaced persons and women, the benefits global scale provides a tremendous of mobile money are real and far reaching. opportunity to reach the 1.7 billion people Fifty-five per cent of surveyed mobile who remain financially excluded. I am pleased money providers have now partnered to have been appointed to the United Nations with humanitarian organisations, an Secretary-General's Task Force on Digital initiative closely supported by our Mobile Financing of the Sustainable Development for Humanitarian Innovation programme. Goals to harness this potential, and I look In August 2018, our Connected Women forward to working closely with fellow Task team released the Gender Analysis and Force members to unleash the power of Identification Toolkit (GAIT), a machine technology and digital financing in all corners learning algorithm that analyses mobile of the world. usage patterns, to assist operators in reaching I hope that you enjoy exploring the 2018 underserved female customers with relevant State of the Industry Report on Mobile and tailored products and services. Money, which has been produced with the We were also honoured to launch the generous support of the Bill & Melinda Gates GSMA Mobile Money Certification in April Foundation, The Mastercard Foundation and 2018, demonstrating the mobile industry’s Omidyar Network. commitment to bringing safe, transparent, and resilient financial services to mobile money users around the world. To date, nine providers across three continents have successfully certified, collectively covering over 133 million mobile money accounts. The mobile money industry is now fast- evolving against a backdrop of increasing Mats Granryd internet access and smartphone adoption. Director General, GSMA Successful providers are moving towards a 'payments as a platform approach', expanding their value proposition to a full range of third-

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Executive Summary

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Executive Summary Now processing over $1.3 billion a day, the mobile money industry added a record 143 million registered customers in 2018.

Providers are attracting new investments An enhanced customer experience. 2018 saw and forming strategic partnerships, a dramatic increase in smartphone adoption leveraging data and innovative financial in emerging markets, unlocking access technologies, and developing robust and to a broader customer base and allowing interoperable payments systems to diversify providers to offer a wider range of financial their revenue, product offerings and products and services through user-friendly customer base. apps. Interoperability also continued to be a strategic priority for the industry, not only In 2018, following a decade of incredible to increase the utility of mobile money for growth, the mobile money industry is still users, but also to allow increasingly important getting the fundamentals right. Mobile money use cases to scale up faster. The main accounts continue to provide a gateway to drivers of digital growth in 2018 were bulk life-enhancing services, such as healthcare, disbursements and bill payments — a signal education, financial services, employment that mobile money providers are becoming and social protections, which are reaching strong partners for enterprises. customers who have traditionally been underserved by the financial system. Many Diversification of the financial services industry players have reached scale, and landscape. While large MNO groups still account registrations, activity rates and dominate Africa’s mobile money ecosystem, transaction values continue to grow steadily. in Asia, fintechs and tech giants have entered the payments space and developed a While cash-in and cash-out transactions still range of customer-centric use cases, from represented the majority of mobile money transportation to food, medical and financial flows in 2018, digital transactions grew at services, and amassed a vast number of twice the rate, driven largely by bill payments partners, including financial institutions. and bulk disbursements. Successful providers Mobile money providers in both Asia and are now looking to strengthen their value Latin America, including fintech players, proposition with a full suite of use cases are driving growth in the mobile payment that serve diverse customer needs. This shift ecosystem, and expanding from e-commerce towards a 'payments as a platform' approach to offer financial services such as credit. is at the heart of the industry’s new direction.

This year’s State of the Industry Report looks at how providers are navigating this dynamic and shifting ecosystem, which was shaped by four key trends in 2018:

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MOBILE MONEY IN 2018 272 MOBILE MONEY DEPLOYMENTS 866m ARE LIVE IN REGISTERED MOBILE MONEY ACCOUNTS

90COUNTRIES 20% increase from 2017

MOBILE MONEY 90-DAY DEPLOYMENTS ACTIVE 62 HAVE MORE THAN1m ACCOUNTS compared to 54 in 2017 and 13 in 2013 Increasingly complex regulation. As the number countries, Nigeria, Ethiopia and Egypt, which we of players in the digital financial services ecosystem expect to spark a wave of adoption which could grows exponentially, regulation is becoming lead to over 110 million new mobile money accounts A TYPICAL ACTIVE MOBILE increasingly complex. Five main themes dominated in the next five years. MONEY CUSTOMER MOVES the mobile money regulatory landscape in Mobile money continues to play a vital role in 2018: taxation, KYC requirements, cross-border $1.3bn financial inclusion. Globally, around 1.7 billion remittances, national financial inclusion strategies people still lack access to safe, reliable and $206 processed daily and data protection. These developments call for a convenient financial services.1 However, 31 emerging PER MONTH by the mobile money industry more nuanced evaluation of regulatory frameworks markets have seen an impressive increase in and collaboration between providers and regulators financial inclusion rates, which can be attributed to to achieve the mutual aim of expanding mobile simultaneous growth in active mobile money use. money services. OF THE COMBINED DIGITAL TRANSACTION Although much work remains to be done in closing 54% ADULT POPULATION OF Expansion of the mobile money value proposition. VALUES the mobile money gender gap, there is evidence In our 2018 Global Adoption Survey, close to GHANA, CÔTE D’IVOIRE, from the 2017 Global Findex that the mobile 80 per cent of providers reported that most of BENIN AND SENEGAL money gender gap has narrowed in 17 countries Grew at their revenues are driven by customer fees. Many use mobile money on an active basis in Sub-Saharan Africa and in one country in Latin providers are now seeking to strengthen their more than America (Bolivia). Our Global Adoption Survey data value proposition with a 'payments as a platform' revealed a strong positive correlation between the TWICE the model. This connects consumers and businesses ASIA percentage of female agents in a provider’s network rate of with a range of third-party services to meet their x2 and female customers. evolving needs, from enterprise solutions for micro-, cash-in/ small- and medium-sized enterprises (MSMEs) to In this report, we take a closer look at these trends cash-out e-commerce, credit, savings and insurance. and unfolding industry stories. The full findings of 90m this year’s State of the Industry Report on Mobile NEW REGISTERED ACCOUNTS values It was not only these trends that captured our Money are based on the analysis of data collected 31% increase from 2017 attention in 2018. Other compelling developments through the GSMA’s Annual Global Adoption Survey. include reforms in Africa’s three most populated

1. World Bank Group (2018). The Global Findex Database 2017.

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MOBILE MONEY IN 2018 272 MOBILE MONEY DEPLOYMENTS 866m ARE LIVE IN REGISTERED MOBILE MONEY ACCOUNTS

90COUNTRIES 20% increase from 2017

MOBILE MONEY 90-DAY DEPLOYMENTS ACTIVE 62 HAVE MORE THAN1m ACCOUNTS compared to 54 in 2017 and 13 in 2013

A TYPICAL ACTIVE MOBILE MONEY CUSTOMER MOVES $1.3bn $206 processed daily PER MONTH by the mobile money industry

OF THE COMBINED DIGITAL TRANSACTION 54% ADULT POPULATION OF VALUES GHANA, CÔTE D’IVOIRE, BENIN AND SENEGAL Grew at use mobile money on an active basis more than TWICE the ASIA rate of x2 cash-in/ 90m cash-out NEW REGISTERED ACCOUNTS values 31% increase from 2017

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THE BIG PICTURE: Availability, adoption, accessibility and usage

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THE BIG PICTURE: Availability, adoption, accessibility and usage In its second decade, mobile money continues to reach new heights. Many industry players have scaled,2 growth in transactions and accounts is steady, and innovative solutions are being implemented to reach customers who have traditionally been underserved by the financial system.

In 2018, the mobile money industry added increased by more than 10 per cent. While another 143 million registered customers activity rates in Sub-Saharan Africa remain globally with the total number of accounts stable at 36.8 per cent, largely unchanged reaching 866 million — a 20 per cent year- from 2017, the region added over 17.5 million on-year increase. As in 2017, most of this new active accounts in 2018. In 13 African growth came from Asia, where 90 million new countries,4 over a third of adults are active accounts were opened. East Asia and Pacific mobile money users. experienced the highest year-on-year account Transaction values increased by 17 per cent growth at 38 per cent, and the region now in 2018, with 272 live deployments in 90 represents 11 per cent of registered accounts countries transacting $40.8 billion in the globally (Figure 1). month of December. The industry is therefore Activity rates are stable at the global level: now processing over $1.3 billion per day, and 34.5 per cent of the world’s registered while cash-in and cash-out transactions still accounts are now active,3 up from 33.9 per represent the majority of mobile money flows, cent in 2017. Activity rates are once again digital transactions5 grew at more than twice highest in Latin America and the Caribbean the rate driven largely by bill payments and (48.5 per cent), while the biggest increases bulk disbursements. For the average active are in Asia (East Asia and Pacific and South mobile money customer, this equates to 12 Asia) where activity rates in several countries transactions a month worth $206.

2. Scale implies onboarding and activating a large proportion of a provider’s customer base and increasing the number of transactions per customer. 3. An ‘active’ mobile money account is one that has been used to conduct at least one transaction during a 90-day period. 4. Benin, Botswana, Burkina Faso, Côte d’Ivoire, Gabon, Ghana, Kenya, Lesotho, Rwanda, Swaziland, Tanzania, Uganda and Zimbabwe. 5. Digital transactions are transactions which enter, leave or circulate the mobile money ecosystem in digital form, rather than through a cash conversion (cash-in or cash-out).

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Figure 1. Global spread of registered mobile money customers, December 20186

1.4% Europe & Central Asia

5.6% MENA

11.0% East Asia & Pacific

33.2% 3.1% South Asia Latin America & the Caribbean

45.6% Sub-Saharan Africa

The potential of India’s payments banks

While almost 80 per cent of India’s population Three years on, the sector has yet to show its is now banked,7 the country has one of the true potential. Actions including a ban on new world’s highest inactivity rates, with nearly customer registration, the imposition of certain half of banked customers (48 per cent) yet to penalties, slow deposit collection and delayed perform a withdrawal or transaction.8 This is launches were exacerbated when customer the context in which payments banks began onboarding also became more complex. A operating in 2016, and today there are seven in recent Supreme Court ruling has created operation, three of which are MNO-led. uncertainty around the extent to which the private sector may continue to use Aadhaar, Payments banks are financial institutions that India’s digital identification system, to link accept small-scale deposits (up to Rs1 lakh, or accounts. about $1,407 each), but are not allowed to lend. They began operating after the central bank, As a financial services platform, payments the Reserve Bank of India (RBI), granted in- banks could re-bundle a host of innovative principle payments bank licences to introduce third-party services and leverage the services unbanked and underserved customers to more that traditional banks offer while also attracting formal channels. unbanked customers, allowing India’s payments banks to live up to their true potential.

6. Only countries with live mobile money services are represented. 7. World Bank Group (2018). The Global Findex Database 2017. 8. Ibid.

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Unlocking future growth: Africa’s mobile money sleeping giants In a growing number of countries in Sub- and market entry. The unfavourable market Saharan Africa, a traditional stronghold of conditions in these countries are reflected mobile money, over 60 per cent of the adult in their low scores on the GSMA’s Mobile population has a mobile money account. Money Regulatory Index (see page 29). These While providers in these countries are still scores are due to factors such as restrictive driving growth in registered accounts, rates or unclear legal frameworks, lack of flexibility will slow as the majority of the population and clarity around innovation and investment, gains access to mobile money. However, and disproportionate Know Your Customer there is still a tremendous opportunity to (KYC) requirements.11 unlock growth and increase financial inclusion But change is coming. In 2018, regulatory in the continent’s mobile money sleeping reforms were introduced in Nigeria12 and giants: Nigeria, Ethiopia and Egypt. Home Egypt13 to harness the potential of mobile to a combined adult population of over money to drive financial inclusion, and 242 million,9 Africa’s three most populated reforms and an ambitious financial inclusion countries have had limited availability of strategy in Ethiopia have been attracting the mobile money services and low rates of attention of both MNOs and non-MNO-led financial inclusion (Figure 2).10 players. The reasons for this vary. In Nigeria and Egypt, regulatory frameworks have allowed Despite the challenges to overcome, we few players to offer mobile money services, anticipate that these reforms could spark a resulting in lower levels of investment and wave of adoption in these three countries — fewer innovative products and services. In over 110 million new mobile money accounts14 Ethiopia, a strictly regulated telco, restrictions in the next five years — and help to achieve on competition, lack of internet connectivity, the financial inclusion targets set out in and low levels of consumer trust and financial their respective national financial inclusion literacy have created barriers to uptake strategies.

Figure 2. Africa’s mobile money sleeping giants

Egypt Nigeria Ethiopia

Adult population: 67m Adult population: 111m Adult population: 64m

Adults with Adults with Adults with an account: 32.8% an account: 39.7% an account: 34.8%

Mobile Money Mobile Money Mobile Money Regulatory 67.21 Regulatory 65.67 Regulatory 65.83 Index Score: Index Score: Index Score:

Across Egypt, Ethiopia and Nigeria, over 110m 9. GSMA Intelligence and World Bank. mobile money 10. World Bank Group (2018). The Global Findex Database 2017. 11. This refers to the Authorisation, KYC and Infrastructure and Investment Environment accounts can be dimensions of the Mobile Money Regulatory Index. unlocked in the 12. In October 2018, The Central Bank of Nigeria officially proposed the creation of Payment Service Banks. 13. Alliance for Financial Inclusion (2018) Financial inclusion through digital financial services and fintech: next five years the case of Egypt. 14. GSMA analysis 11 2018 State of the Industry Report on Mobile Money

MOBILE MONEY HIGHLIGHTS IN 2018

2018 saw efforts to pursue MARCH APRIL new investments and CONSUMER strategic partnerships, to PROTECTION. leverage data and innovative INVESTMENT. GSMA launches the GSMA Mobile Money Certification scheme. Over financial technologies, Telenor Group and Ant Financial enter a strategic the course of the year, nine mobile and to develop robust and partnership to deliver inclusive money providers become certified, interoperable payments financial services in Pakistan. collectively covering over 133 million customer accounts. systems to support a range of use cases and financial products.

SEPTEMBER APRIL APRIL

STRATEGIC INVESTMENT. INVESTMENT. PARTNERSHIP. American investment Ant Financial invests in PayPal, Safaricom and TransferTo conglomerate Berkshire Bangladesh’s bKash to expand announce a collaboration Hathaway acquires a four per the capabilities of the platform enabling M-Pesa users in Kenya cent stake in Paytm, India’s to ultimately boost financial to securely transfer funds largest digital payments inclusion. between PayPal and M-Pesa company. accounts.

SEPTEMBER OCTOBER NOVEMBER

REGIONAL INNOVATIVE REGULATION. INTEROPERABILITY. USE CASES. The Central Bank of Nigeria Orange and MTN launch a issues guidelines for the 84.6 per cent of Ghanaian pan-African mobile money licensing, regulation and interoperability venture, Mowali, to investors buy shares for MTN operations of payment service Ghana’s Initial Public Offer scale up mobile financial services banks, enabling mobile across Africa. (IPO) using the MTN Mobile operators to lead financial Money Portal. inclusion efforts.

DECEMBER NOVEMBER NOVEMBER

STRATEGIC INVESTMENT. INTERNATIONAL PARTNERSHIP. Econet Wireless demerges and COMMITMENT. Safaricom and Western Union lists Cassava Smartech (which The United Nations announces partner to allow M-Pesa users to includes its EcoCash mobile money the launch of a global task transfer money to and from 200 operation) separately on the force on Digital Financing of countries. Kenya’s Family Bank Ltd Zimbabwe Stock Exchange (ZSE) the Sustainable Development and fintech SimbaPay also partner valued at around $3.9 billion soon Goals, with the GSMA as a to enable M-Pesa customers in after listing. member. Kenya to send money to WeChat users in China.

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REGIONAL GROWTH IN 2018

NUMBER OF AS OF REGISTERED ACTIVE 90-DAY TRANSACTION VALUE DEPLOYMENTS DECEMBER ACCOUNTS ACCOUNTS VOLUME US$ MARCH APRIL 722.9m 244.9m 2.1bn 34.9bn GLOBAL 2017

YEAR-ON-YEAR 19.8% 14.4% 16.8% 272 GROWTH 21.9% (TOTAL)

2018 866.2m 298.7m 2.4bn 40.8bn

SUB-SAHARAN 2017 348.3m 128.3m 1.5bn 23.3bn AFRICA

YEAR-ON-YEAR 132 GROWTH 13.6% 13.6% 11.8% 15.3% SEPTEMBER APRIL APRIL

2018 395.7m 145.8m 1.7bn 26.8bn

223.7m 63.9m 447.5m 7.5bn SOUTH ASIA 2017

YEAR-ON-YEAR 43 GROWTH 28.5% 39.9% 26.3% 17.9%

2018 287.6m 89.3m 565.1m 8.8bn

SEPTEMBER OCTOBER NOVEMBER EAST ASIA 2017 68.5m 21.1m 74.9m 2.7bn & PACIFIC

YEAR-ON-YEAR 41 GROWTH 38% 41.5% 38.3% 35.7%

2018 94.6m 29.8m 103.6m 3.7bn

LATIN AMERICA & 2017 23.5m 11.6m 66.4m 1.0bn THE CARIBBEAN

YEAR-ON-YEAR 28 GROWTH 14.7% 10.3% -29.9% -7.9%

DECEMBER NOVEMBER NOVEMBER 2018 27m 13.1m 46.5m 945m

MIDDLE EAST & 2017 47.3m 18.0m 39.7m 376.2m NORTH AFRICA

YEAR-ON-YEAR 20 GROWTH 3.4% 3.5% 5.6% 25.7%

2018 48.9m 18.6m 41.0m 473.0m

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Reaching the underserved through innovation

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Reaching the underserved through innovation Throughout 2018, mobile money continued to play a critical role in enhancing financial inclusion in emerging markets. Thirty-one markets saw an impressive inclusion has extended beyond Sub-Saharan increase of more than five percentage points Africa. in account ownership at financial institutions Countries where mobile money’s contribution between 2014 and 2017 (Figure 3), which can to the overall growth of financial accounts is be attributed to the simultaneous growth in not as significant tend to have a lower than active mobile money use. In fact, in almost average Regulatory Index score (see page 29). half these markets, growth in active mobile This highlights the importance of establishing money use exceeded eight percentage points, a more level regulatory playing field which and a third of the 31 countries analysed were allows for innovative market-led solutions to in either Asia or Latin America, demonstrating increase financial inclusion. that the impact of mobile money on financial

Figure 3. The contribution of mobile money to financial inclusion

25 In these countries, mobile money has been the main driver of financial inclusion growth 20

0 5 10 15 20 25 30 35 40 45 Growth of active 90-day mobile money accounts as

a proportion of adult population, 2014–2017 (percentage points) Growth of all accounts as a proportion of adult population, 2014-2017 (percentage points)

= Country

15 2018 State of the Industry Report on Mobile Money

For populations traditionally excluded from the formal financial system — women, the rural poor and displaced persons — the spread of mobile money accounts is providing a gateway to transformative services including healthcare, education, financial services, employment and social protections, and bringing more people online than ever before.

Rural market penetration and the Ghana, Kenya and Zambia, the share of adults digitisation of agricultural value chains receiving agricultural payments is about twice is a priority for a growing number of mobile the average for developing economies, and money providers. While in developing about 40 per cent receive these payments economies about 15 per cent of adults receive into an account, in most cases a mobile payments from the sale of agricultural money account.15 Over 50 per cent of survey products, the vast majority of these payments respondents reported having a product are made in cash, which can be risky, specifically targeted to rural customers or inefficient and inconvenient to collect. In plan to launch one in 2019.

Mobile money is increasingly a vehicle services to replace in-kind aid with direct for reaching forcibly displaced persons, cash transfers. Our survey found that over including refugees. Over 135 million16 55 per cent of mobile providers in affected people required humanitarian assistance countries are partnering with humanitarian and protection in 2018. To respond to these organisations, often to facilitate bulk demands, humanitarian organisations are disbursements or provide access to basic seeking to deliver services more efficiently financial services. and effectively and turning to digital financial

Closing the gender gap in financial and 10 per cent less likely to own a mobile inclusion will deliver broad benefits to phone.18 individuals, societies and economies, and Our 2018 Global Adoption Survey data represents a considerable commercial showed that providers are leveraging their opportunity for mobile operators. There is core assets to address the persistent gender evidence that the mobile money gender gap gap in mobile ownership and use, with is narrowing: according to the 2017 Global female agents emerging as powerful assets Findex, between 2014 and 2017, the gender for reaching female customers. For those gap has narrowed in 17 countries in Sub- respondents providing data on both the Saharan Africa and in one country in Latin percentage of their female agent base and America (Bolivia). However, much work female customer base, we found a strong remains to be done as women in low- and positive correlation19 between these two middle-income countries are still 33 per cent variables. less likely than men to use mobile money17

15. World Bank Group (2018). The Global Findex Database 2017. 16. UNOCHA (2018). Global Humanitarian Overview. 17. World Bank Group (2018). The Global Findex Database 2017. 18. GSMA (2018). The Mobile Gender Gap Report 2018. 19. +0.7 on the Pearson Product-Moment Correlation Coefficient. If the value of r is close to +1, this indicates a strong positive correlation. This was among survey respondents based in East Asia and Pacific, Sub-Saharan Africa, Latin America and the Caribbean, and South Asia, who answered both questions on their registered female customer base and percentage of female agents.

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Predicting the gender of mobile subscribers using machine learning

Understanding the nature and scale of the predict the gender of its subscribers. By training mobile gender gap is a prerequisite for closing the algorithm on a small but accurately gender- it, but a widespread absence of accurate tagged sample of a customer base, operators gender-disaggregated data is a consistent can see usage patterns by gender and identify barrier to measuring and evaluating mobile the gender of each of its subscribers with little ownership and mobile money use. This limits need for expensive primary research. the ability of operators to target underserved Once an operator has implemented GAIT across female customers with effective, relevant and its subscriber base, the gender estimates can tailored products and services. be applied to mobile money customers at an To address this issue, the GSMA Connected individual subscriber level. In Bangladesh, a Women programme, in conjunction with GAIT pilot achieved 84.5 per cent accuracy in Dalberg Data Insights, developed the Gender gender prediction. Figure 4 below illustrates Analysis and Identification Toolkit (GAIT),20 how mobile usage differed between male and a machine learning algorithm that analyses female subscribers for two key indicators. mobile usage patterns and allows operators to

Figure 4. Key gender-disaggregated mobile usage indicators from the GAIT pilot in Bangladesh

Average duration of incoming calls Number of distinct cell towers visited by subscriber gender by subscriber gender

0.10- 0.08-

0.07- 0.08- 0.06-

0.05- 0.06- 0.04-

0.04- 0.03-

0.02- 0.02- Proportion of subscribersProportion of subscribersProportion of 0.01-

0.00- 0.00- 0 100 200 300 400 500 600

Duration (seconds) Number of towers

Male customers Female customers Overlap between male and female customers

20. To access the GAIT toolkit and full technical documentation, see: “The GSMA’s Gender Analysis and Identification Toolkit (GAIT)”.

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Four trends shaping the mobile money industry

18 2018 State of the Industry Report on Mobile Money

Four trends shaping the mobile money industry

Mobile money is on the cusp of a transformation. Today, providers are navigating a dynamic and shifting ecosystem shaped by four key trends: an enhanced customer experience; diversification of the financial services ecosystem; increasingly complex regulation; and the expansion of the mobile money value proposition.

An enhanced customer 1 experience While cash-in and cash-out transactions (based mainly in Latin America), which can still represent the majority of mobile money have close to 30 per cent of their active flows in 2018 and grew by 11 per cent year customer base receiving salaries digitally on year, digital transaction values grew through mobile money. more than twice as fast (24 per cent). Meanwhile, mobile money providers The main drivers of digital growth in 2018 offering bill payments are connected to 102 were bulk disbursements, which grew by 29 companies on average. Bill payments are per cent, and bill payments, which grew by also an effective way to digitise government 41 per cent — a signal that mobile money payments and increase revenues. However, providers are becoming strong partners for for our survey respondents, just over 17 per enterprises (Figure 5). Around 68 per cent cent of all bill payments in 2018 were directed of all bulk disbursements are originated by to government agencies. The opportunity is a business and, on average, every mobile ripe for governments to follow the lead of money provider performing business-to- private sector players in digitising payments person (B2P) disbursements is connected to and revenue collection, to benefit from the 237 organisations. This number of connected transparency, efficiency and profitability that organisations can be as high as 4,000 to mobile money delivers. 6,000 for the best-performing providers

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The agent distribution network, which has in data collection and analytics, e-learning and been vital to the growth of the mobile money technologies, including online dashboards, industry over the last decade, shows no sign mobile apps, and conversational interfaces. of diminishing.21 In 2018, the global number of In addition to enhancing user experience registered mobile money agents grew 18 per and enabling greater digital inclusion, these cent to reach 6.6 million, 57 per cent of whom new services help to streamline operational are active on a monthly basis. processes by upgrading agent onboarding and training, and enhancing agent monitoring The role of the agent network is evolving and engagement. to support adjacent service offerings. An increasing number of providers are investing

Figure 5. An overview of the mobile money ecosystem, December 2018

Incoming Circulating Outgoing transactions value transactions

2.1% 1.3% 10.8% 0.9% 7.6% 16.4% 4.5%

Total Value Total Value Total Value 17.0% 9.1% $16.1 bn $11.1 bn $13.6 bn

73.2% 89.2% 67.9%

International International Bank-to-mobile Merchant payments Airtime top-ups remittances remittances Bulk disbursements Cash-in P2P transfers Off-net transfers Bill payments

Mobile-to-bank Cash-out

A strategic focus on interoperability Account-to-account (A2A) interoperability, between institutions), but also to enable which gives users the ability to transfer increasingly important use cases, such as bulk between customer accounts held with disbursements and bill payments, to scale up different mobile money providers and other faster. financial system players, continued to scale in Providers in several key markets have 2018. expanded interoperability use cases, including To lower barriers to access, mobile money in Kenya and Ghana, bringing the total providers must continue to develop robust number of markets that enable person- interoperable payments systems that bridge to-person (P2P) transactions between the gap between banked and unbanked mobile money deployments to nineteen.22 In consumers and accelerate financial inclusion. comparison, in 2013, this was only possible in Interoperability continues to be a strategic one market. Overall, off-net P2P transaction priority for the industry, not only to increase volumes more than doubled from 2017 to the utility of mobile money for users (by 2018, and in interoperable markets, on-net enabling the seamless movement of value transaction volumes did not decline.

21. Juma. J. and Wasunna. N. (2018). Distribution 2.0: The future of mobile money agent distribution networks. GSMA. 22. Bolivia, Egypt, Ghana, Jordan, India, Indonesia, Kenya, Madagascar, Malawi, Mexico, Nigeria, Pakistan, Peru, Philippines, Rwanda, Sri Lanka, Thailand, Tanzania, Uganda.

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Mobile money-to-bank account interoperability However, innovative solutions will be needed to has continued to grow significantly, increasing integrate mobile money providers with the broader by 47 per cent year on year in 2018. On average, financial ecosystem. There are an increasing number mobile money providers with bank integrations of options around central switching infrastructure are connected to 10 banks, which has dramatically for the industry to enable nascent use cases to increased volumes moving between mobile money scale, including merchant payments and efficient and banking systems. Whereas a few years ago connections to domestic and international financial flows into the mobile money ecosystem vastly system players. outweighed those going out, today they are more However, much of the existing bank-focused balanced: a bank can now help large numbers infrastructure is not optimal for mobile money. In an of MSMEs with mobile money accounts to move effort to solve this, MTN Group and Orange Group money out of the system, for example, to save or launched Mowali in 2018. Mowali aims to act as an pay suppliers. open industry utility to facilitate interoperability Interoperability continues to see strong growth as and provide the optimal technical, commercial the industry matures into a multi-sided financial and governance environments in which the mobile system offering a suite of use cases and products. money industry can continue to thrive.

Expanding regional interoperability through Mowali

In 2018, with the support of the GSMA, MTN to lower-income customers. Additionally, by and Orange launched a joint venture to enable creating a common mobile money acceptance interoperable payments across Africa. Known brand, and with the potential to provide one as Mowali (‘mobile wallet interoperability’), the connection for all mobile money providers, service is open to any mobile money provider banks, merchants and other digital service in Africa, as well as to banks, money transfer financial providers to reach the 396 million operators and other financial services providers. mobile money accounts across Africa, Mowali aims to lay the foundation for the future of the Built on top of the Bill & Melinda Gates mobile money ecosystem. Foundation’s open-source platform Mojaloop, Mowali offers an industry-owned and industry- As of early 2019, Mowali will be available to all governed payments hub that is technically and MTN and Orange mobile money customers in commercially designed specifically for mobile 22 of Sub-Saharan Africa’s 46 markets, with money. With its pan-African footprint allowing more mobile money providers expected to join for economies of scale and a cost-recovery in the next year. commercial model, Mowali has the potential to drive down the prices of services offered

21 2018 State of the Industry Report on Mobile Money

The dramatic rise in smartphone adoption The disruptive nature of smartphones has smartphone opportunity, more and more already transformed service models in the providers are offering apps to perform communications, entertainment and transport transactions. The total number of customers industries, and competition is now poised to using a smartphone app to transact has more disrupt the traditional banking and payments than doubled (2.6 times) year on year. industry. Smartphone adoption is increasing In Asia, Latin America and Middle East and dramatically in emerging markets, especially North Africa, one in three mobile money where mobile operators are investing heavily providers that offer a smartphone app are in connectivity and vendors are pushing seeing 20 per cent or more of their active affordable devices to market.23 customer base transacting through the app, In several markets where mobile money and a growing number of deployments in has scaled, users are more likely to own a Asia and Latin America are seeing over half of smartphone than a feature/basic phone.24 transactions performed through smartphone Global smartphone adoption was 60 per cent apps. in 2018 and is predicted to increase to over These deployments also have higher average 79 per cent by 2025. Dramatic uptake is also revenue per user (ARPU) as smartphone expected in: customers typically transact twice as much • Emerging markets: Currently at 56%, set as customers using traditional feature phones to rise to 78% by 2025 and register higher ticket sizes (owing to typically higher incomes) — an attractive • South Asia: 48% by end of 2018, set to rise target segment. The story is very different to 75% by 2025 in Africa, where over 90 per cent of mobile • Sub-Saharan Africa: 39% by end of 2018, money transactions are still driven by USSD. set to rise to 66% by 2025 However, with smartphones and data-enabled For mobile money providers, smartphones devices becoming more affordable and unlock access to a broader customer base equipped with longer battery life, growth is and allow them to offer an enhanced user likely to accelerate. experience and a wider range of financial products and services. To capture the

The total number of customers using a smartphone app to x2.6 transact has more than doubled

(2.6 times) year on year.

23. Baah. B and Naghavi, N. (2018). Beyond the basics: How smartphones will drive future opportunities for the mobile money industry. GSMA. 24. GSMA Intelligence consumer survey

22 2018 State of the Industry Report on Mobile Money

Diversification of the financial 2 services ecosystem

2018 saw many non-financial players account has increased rapidly. South Asia diversify and invest in mobile-based payment has seen the fastest growth in the region — a businesses in order to gain market access in compound annual growth rate (CAGR) of 63 the payments space and then leverage their per cent between 2013 and 2018 — which experience to strengthen portfolio companies. today means that more than a fifth of the While this underscores the commercial population has a mobile money account potential of mobile money, not to mention (Figure 6). Meanwhile, in Southeast Asia, the social benefits, it is also a sign of growing account registration rates among the main competition. ASEAN25 economies have grown at a CAGR of 44 per cent, resulting in a similar adult In recent years, the share of the combined population penetration rate of close to 20 per adult population in Asia with a mobile money cent.

Figure 6. Mobile money account registration growth in Asia

East Asia South Asia 63% 44% CAGR & Pacific CAGR (2013-18) (2013-18)

2,1% 22% 3,3% 19%

2013 2018 2013 2018

% of adult population registered for % of adult population registered for a mobile money account a mobile money account

While the growth in registered accounts in Asia is remarkable, rates of account ownership and usage are still low in many countries, providing a very real and sizeable opportunity for MNOs and other financial services providers. Although competition and consolidation in Asia are increasing, the addressable market is by all accounts substantial enough to accommodate both MNO and non-MNO players.

25. ASEAN stands for the Association for the Southeast Asian Nations. Cambodia, Indonesia, Malaysia, Myanmar, Philippines, Singapore, Thailand and Vietnam (not included: Laos and Brunei).

23 2018 State of the Industry Report on Mobile Money

The looming opportunity for Asian mobile money providers Asia’s financial ecosystem sets itself apart While mobile money providers in Asia are by the role played by non-banks, which connected to more online merchants than constitute a significantly different set of the average global mobile money service, players than in markets in Sub-Saharan deployments have fewer integrations with Africa or Middle East and North Africa, companies leveraging mobile money for bill for example. While large MNO groups still and bulk payments. On average, Asian mobile dominate Africa’s mobile money ecosystem, money providers are connected to 33 billers, providing an expanding range of innovative less than a third of the global average of digital solutions to more urban and tech- 102, while the difference in bulk payments is savvy customers, the competitive landscape even greater (69 versus 237). This presents a in Asia has changed substantially. In addition significant and largely untapped opportunity to mobile money providers, the Asian market for Asian mobile money providers to also hosts a sizeable number of fintechs such expand their service offering. The disparity as Alipay and tech giants such as Tencent. in bulk disbursements and bill payments is particularly noteworthy as these services have These players have raised significant capital historically been the main drivers behind the in the last few years, which has allowed them digitisation of mobile money ecosystems in to connect with a wide variety of partners other markets. and develop many customer-centric use cases, including transportation and food, With this looming opportunity in Asia, medical and financial services. Alipay alone deployments in the region stand to has partnered with more than 200 financial benefit tremendously from increasing institutions and offers over 2,500 mutual their investments in mobile money and investment funds and is integrated with over concentrating on expanding integrations and 100,000 merchants outside China. use cases.

24 2018 State of the Industry Report on Mobile Money

The evolving financial services ecosystem

Ant Financial. Asian markets such as Indonesia, Malaysia, the In Southeast Asia, Ant Philippines and Vietnam, and in early 2018, the Financial has announced company purchased all of Uber’s Southeast a string of acquisitions, Asian operations. Grab’s rapid expansion including Paytm in India, Mynt in the Philippines should be seen in the context of another ride- and bKash in Bangladesh. It has also entered hailing service, Go-Jek in Indonesia, which into a strategic partnership with MoneyGram, has launched a mobile wallet, Go-Pay, and and in Kenya partnered with Equitel and Red announced a $500 million regional expansion Dot Payments to serve Chinese tourists in that plan in 2018. Grab’s most recent move in digital market. While these investments provide new payments is partnering with MasterCard to market access to global organisations, mobile- offer its 110 million+ registered users a virtual based payment businesses also benefit. For prepaid card to enable online payments and the example, bKash, a mobile money provider in possibility to cash-out. Bangladesh, plans to leverage Ant Financial’s investment to add capabilities around product offering and technological enhancements like MercadoLibre. In Latin artificial intelligence (AI). America, Argentina-based MercadoLibre has become the most popular e-commerce GrabPay and platform in the region. As of 2017, the service Go-Pay. Over-the- had 212 million registered users across 18 top (OTT) players are countries in the Americas. With its marketplace, expanding rapidly as Mercado Pago, at its centre, MercadoLibre has international and regional competition stiffens. expanded into offering a range of payment Singapore-based ride-hailing giant, Grab, first and financial services, such as credit and expanded into mobile payment services in 2017 wealth management, serving both MSMEs and with the launch of GrabPay. The mobile wallet individual users. service is now available in major Southeast

Figure 7. New business models emerging in the global financial services ecosystem (illustrative)

Commercial Payment Non-transactional Telecom Social platform platform services financial services

Mobile operators

Source: GSMA / Sofrecom 25 2018 State of the Industry Report on Mobile Money

3 Increasingly complex regulation Enabling regulation has a tangible influence distribution of mobile money services as on the adoption and use of mobile money agents or super agents. services. The most successful providers Regulatory change also came to Indonesia today overwhelmingly operate in markets in June 2018, which despite increasing where regulation is enabling. Conversely, transaction limits for deposits by unregistered restrictive regulatory frameworks can stifle users, has so far not made the market any investment, limit the roll out of new services more enabling for mobile money providers. and raise costs for consumers, all of which Regulations have been tightened with new can negatively affect adoption and activity provisions for IDR 3 billion minimum capital, rates. In several cases, 2018 regulatory limits on foreign shareholding (49 per cent) developments appeared encouraging at first and a mandatory requirement to link all glance, yet their layers of complexity reveal foreign remittance providers through the increasingly restrictive requirements. national payments gateway. The Bangladeshi government, for example, Globally, the mobile money industry released a new regulatory framework in encountered developments in five main areas July 201826 that allows non-banks, such as of regulation in 2018, all of which affect the NGOs, investment and fintech companies, to provision of mobile money services: taxation; participate as equity partners (maximum 49 Know Your Customer (KYC) requirements; per cent) with scheduled commercial banks. cross-border remittances; national financial Although a welcome concession, MNOs are inclusion strategies; and data regulation. Each specifically prohibited from partnering with of these areas are explored in more detail scheduled commercial banks to offer mobile below. financial services. Their role is limited to the

26. Bangladesh Mobile Financial Services Regulations (2018).

26 2018 State of the Industry Report on Mobile Money

Taxation The mobile industry is already one of money does little to support public the highest taxed in Sub-Saharan Africa. finances and to advance the many positive Throughout the region, mobile money contributions of mobile money.28 Moreover, providers encounter three layers of taxation: excessive taxation undermines prospective general taxes, such as value-added taxes; investment into mobile money, at a time when mobile sector-specific taxes, such as excise mobile operators already face considerable duties on airtime usage, and mobile money cost pressures to enhance service quality, taxes.27 In 2018, industry concerns intensified expand networks and meet new regulatory regarding the introduction of taxes on requirements. As an alternative to excessive mobile money transactions throughout the taxation, governments should consider region and beyond. Affected markets include supporting the growth of mobile money Uganda, Kenya, Zimbabwe and Gabon. services by digitising the payment of fees, rates, taxes and levies due from taxpayers. Our analysis has shown that taxing mobile

Mobile money taxation in Uganda

Mobile money is an accelerator for payments smaller amounts via mobile money. This tax will and money transfers in Uganda, with over 30 also have an impact on mobile money account- per cent of the population actively using the to-bank transfers that enable commercial banks service and over 200,000 jobs directly created to capture around US $19 million in deposits, by the mobile money industry. As a result, the which stand to decline. Also at risk are mobile introduction of a one per cent tax on mobile money use cases: 60 per cent of electricity money deposits, withdrawals, transfers and and national water payments are made via payments by the Ugandan government in July mobile money; around 5,000 savings and credit 2018 made mobile money transactions more cooperatives collect deposits and disburse expensive for a significant number of users. microloans using mobile money; 12,000 to While the introduction of a 10 per cent excise 15,000 farmers receive daily microloans via duty in 2013 only affected mobile money mobile money; and 40,000 to 50,000 transfers transaction fees, this new initiative aims to tax are made to refugees every month. both the transaction fee and the transaction By attempting to introduce a tax-boosting value. measure to meet fiscal targets for 2018–19, The new tax had an almost immediate the Ugandan government has put the existing negative effect: the value of P2P transactions tax base at risk. The government has since declined by 50 per cent within two months attempted to redress the issue by reducing of implementation while the value of all the tax to 0.5 per cent of the transaction value transactions dropped by around 25 per cent. of withdrawals only. However, rather than tax Around 100,000 agents saw their earnings mobile money transaction values directly, decline by 35 to 40 per cent, and around the government could tax mobile money in a 30,000 agents went out of business completely. less punitive manner or, even better, leverage Customers have resorted to using cash or mobile money to increase collection of existing agency banking while others are transferring taxes in a digital and efficient way.

27. Muthiora, B. and Raithatha, R. (2017). “Rethinking mobile money taxation.” Mobile for Development Blog. GSMA. 28. Ibid

27 2018 State of the Industry Report on Mobile Money

Know Your Customer (KYC) requirements The ability to conduct KYC efficiently and example, by using SIM registration data for effectively is key to expanding access to mobile money account opening. Pakistan, mobile money. However, the mobile money Ghana, Sri Lanka and Haiti are all examples industry’s capacity to scale services is of countries that permit the use of SIM challenged by onerous KYC requirements. To registration data for mobile money KYC. address these challenges, providers are taking • Use of digital IDs to enable electronic two approaches: KYC (e-KYC): To meet the needs of an • Simplifying customer onboarding: increasingly digitised user base, mobile In markets without ubiquitous money providers — and the broader identification systems, mobile money financial services industry — are looking to providers struggle to onboard prospective innovative technologies for ID verification, customers who are unable to provide such as queryable digital ID systems sufficient proof of identity. While ensuring and biometric authenticators. Some universal ID coverage remains a long- countries, such as Kenya, have ID systems term endeavour, a careful relaxation of that already offer e-KYC, and several regulatory restrictions in the short term can others are well positioned to offer such bring more people into the financial system services should governments embrace the without substantially increasing risks; for opportunity.29

Cross-border remittances Mobile money remittances can be a UEMOA are leveraging the ease of movement lifeline and vital source of income for poor of people and trade by creating integrated communities in developing countries. payments systems. The total value of mobile money-enabled This progress in mobile money-enabled international remittances processed in international remittances has been facilitated 2018 was $4.3 billion. Results from a study in part by regulators’ willingness to allow conducted in August 2017 showed that market entry for non-traditional providers. mobile money-enabled remittance services However, in many markets, regulation are available across 184 unique corridors, remains a barrier to further expansion. and there is growing awareness among These challenges are different from country governments, regulators and the industry to country, ranging from the acquisition of itself that mobile money can lower the costs a license that allows mobile money to be of sending international remittances. used for international remittances, to more The average cost of sending $200 via mobile complex issues that can hamper the opening money is 1.7 per cent, a reduction of nearly of new corridors such as data localisation 40 per cent since 2016.30 Recognising the requirements, or differences between role of mobile money in lowering the costs of international and domestic KYC requirements. sending remittances, there has been a greater Against this backdrop, establishing an open push for interregional operating models to and level playing field and encouraging ensure more people can benefit from the competition through conducive regulation cost savings. In Sub-Saharan Africa, regional will be crucial in unlocking the full potential of economic communities SADC, EAC and mobile money for international remittances.

29. Naghavi, N. (2019). Competing with informal channels to accelerate the digitisation of remittances. GSMA. 30. GSMA (2017). Working Paper: Guidelines on International Remittances through Mobile Money.

28 2018 State of the Industry Report on Mobile Money

National financial inclusion strategies Governments across developing economies Jordan, Palestine and Russia are planning have initiated policy reforms to improve the to launch their strategies within the year. quality, access and availability of financial A good NFIS is regularly reviewed against services through national financial inclusion defined objectives and updated within agreed strategies (NFIS). An NFIS sets milestones timelines, as Tanzania demonstrated in 2018.31 and defines roadmaps for public- and private- Other qualities of an effective NFIS include sector stakeholders to achieve financial technology neutrality, gender inclusion and inclusion targets. As of December 2018, proportionate regulation. 36 countries have adopted an NFIS, and

Data regulation For mobile money providers, customer to data localisation, data security, the lawful data provides an important opportunity basis for data processing and data sharing. to diversify and improve service offerings, For example, data localisation requirements bridge the financial inclusion gap and stipulate that customers’ personal data ultimately boost profits. At the same time, collected within a particular jurisdiction these developments inevitably increase must be stored or processed within that the risks of data breaches and reputational jurisdiction’s boundaries, which may result in damage, so maintaining consumer confidence prohibitive costs for providers, disincentivising in mobile money services is vital to leverage market entry and compromising innovation. new commercial opportunities and safeguard For regulators, the challenge of strengthening broader financial inclusion efforts. data protection without stifling innovation requires collaboration with industry players to Mobile money providers will need to consider strike the right balance. recent changes in data protection regulation that may have an impact on the provision of mobile money services, particularly relating

31. The Alliance for Financial Inclusion (2018). Tanzania: National Financial Inclusion Framework 2018-2022.

29 2018 State of the Industry Report on Mobile Money

The Mobile Money Regulatory Index

The fast-evolving regulatory landscape calls in creating enabling environments for mobile for a more nuanced evaluation of regulatory money operations (Figure 8). The Index frameworks, which extends beyond a binary provides regulators and other stakeholders categorisation of regulation as enabling or non- with insights into improving their regulatory enabling. Recognising this, over the last year, environment and ultimately expanding mobile the GSMA has studied regulatory frameworks in money services. Figure 8 provides an example more than 80 countries and developed a tool, of a country's Regulatory Index Score and the Mobile Money Regulatory Index, to assess composite dimension scores. the effectiveness of regulatory frameworks 100

Figure 8. The Mobile Money Regulatory Index

Pakistan Regulatory Index Score: Authorisation: 75.53

Consumer Protection 72.5 80.65 Transaction Limits: 84.1 KYC: 70

Agent Network: 93.33

Infrastructure and Investment environment: 100

The Index comprises six dimensions and 27 Investment and Infrastructure. The Index indicators weighted by impact. These six also provides a foundation for public- and dimensions, or enablers, have the biggest private-sector dialogue on reforms that influence on the development of scalable and can promote market growth. For instance, responsible mobile money businesses that data on transaction limits could be used to can sustainably reach the underserved and set appropriate transaction limits for entry- foster digital financial inclusion. They include: level accounts based on global benchmarks Authorisation, KYC, Consumer Protection, extracted from the Index. Agent Networks, Transaction Limits, and

30 2018 State of the Industry Report on Mobile Money

Expansion of the mobile 4 money value proposition

Mobile money providers responding to our This has moved us towards a significant Global Adoption Survey reported steady evolution of the mobile money business year-on-year revenue growth (23.9 per cent model: a 'payments as a platform' approach on average) and profitability (30 per cent of that connects consumers with third-party providers reported EBITDA margins of over services across a range of industries. 25 per cent). However, with close to 80 per Recognising the compelling opportunity to cent of providers reporting that most of their increase and diversify revenue streams and revenues are driven by customer fees, they reach new and broader customer bases, are increasingly seeking to strengthen their providers are seeking to develop a diversified, value proposition to meet the evolving needs multi-sided model of adjacent services, of individuals and small businesses. enterprise solutions and personalised services.

Figure 9. The expanding mobile money proposition

79% 26% Growth in e-commerce Mobile money deployments transactions facilitated by for whom building enterprise mobile money solutions is a strategic priority

46%Customer activity rate among Difference24% in ARPU for providers with a credit, savings or insurance product providers offering a credit, savings or insurance product (compared to compared to providers without 26% customer activity rate among providers who do not)

31 2018 State of the Industry Report on Mobile Money

Enterprise solutions While only a few mobile money providers 83 per cent were using it for business needs. have developed a customised offering for MSMEs reported performing transactions businesses, they are well placed to serve more frequently than individual mobile MSMEs thanks to their strong presence money users, with over three in ten receiving on the ground. Despite being tailored for payments several times a day for a variety individual needs, GSMA research in two of use cases, including receiving customer Sub-Saharan African countries has found payments and paying utility bills and that approximately 80 per cent of MSMEs suppliers.32 have a mobile money account and, of these,

E-commerce More and more customers are coming online. years and another 470 million users expected In just four years, global mobile internet by 2025. penetration has risen sharply, from 29 per In 2018, e-commerce transactions facilitated cent in 2013 to 43 per cent in 2017, and is by mobile money grew 79 per cent in projected to increase to 61 per cent by 2025. value. This strong growth has meant more In Sub-Saharan Africa, this has risen even integrations are happening directly between faster, doubling in the last five years to 21 per operators and providers or through gateways. cent. An additional 280 million subscribers Operators are also looking to launch their own are estimated to come online between now marketplaces, such as Safaricom with Masoko and 2025. South Asia has seen similar growth, (see below). with subscribers doubling over the last five

Masoko by Safaricom

Launched in November 2017, Masoko became the moment it is placed — a core added value. the first e-commerce platform in Africa to Another strength is its unique data capabilities be launched independently by an MNO. The and insights, which allows it to offer customers platform has allowed Safaricom to leverage a more relevant and tailored experience online. the reputation and trust of its highly successful As of November 2018, Masoko had 120 mobile money service, M-Pesa. At a time when (pre-approved) active vendors and offered MNOs around the world are seeking to digitise over 30,000 products or stock-keeping their operations, Safaricom has put its focus on units (enhanced by the recently launched e-commerce, with Masoko now an integral part Masoko Fresh, a new part of the portal that of its plan to sustain future growth. offers delivery of fruits, vegetables and dairy As a mobile money provider, Safaricom brings products). As in other developing countries, several unique strengths to the e-commerce Safaricom’s main e-commerce challenge has domain. For example, while Safaricom offers been logistics. The MNO is addressing this by several payment methods other than M-Pesa using its sizeable agent network (160,000+) (such as VISA and MasterCard), Masoko does as delivery and collection points, as well as not offer the payment option of cash on multiple delivery partners. This has been a delivery. As a payment service provider itself, success; Masoko is now delivering products to Safaricom can guarantee payment for an order 45 of 47 counties in Kenya.

32. Pasti, F. and Nautiyal, A. (2019) Addressing the financial services needs of MSMEs in Sub-Saharan Africa. GSMA.

32 2018 State of the Industry Report on Mobile Money

Credit, savings and insurance While financial account ownership has seen positioned to facilitate this, as it involves a remarkable growth in recent years, little shift from one-on-one negotiations and one- progress has been made in access to savings, off integrations to a platform that is open credit and insurance services. By offering to all potential third parties that pass the adjacent services such as credit, savings, required checks. As a result, smaller financial insurance and wealth management, mobile institutions and microfinance institutions money providers better serve the varied (MFIs) with a more niche focus will also be needs of their customers while reducing their able to offer their services to mobile money reliance on revenues from customer fees. users. In 2018, providers increasingly embraced Providers stand to benefit from expanding this opportunity. Currently, 23 per cent of their value proposition to adjacent services providers offer a credit service through in two key respects. First, mobile money partnership models with banks or credit providers that also offer savings, credit or providers, and 41 per cent are planning insurance products have on average 24 per to launch one in 2019. Several of the cent higher ARPU than providers that do deployments that launched a digital credit not offer any of these products. Second, offering in the last 18 months saw an average the same providers are also likely to have a of 11 per cent of their registered customer higher activity rate (45.7 per cent) than those base take out digital credit loans. who do not (27.0 per cent). The synergies created by offering these products are just Our survey also showed a healthy appetite as significant as the increased direct revenue among mobile money providers to offer opportunities; these new services will help insurance; at least 45 per cent of providers providers acquire new customers, reduce currently offer an insurance service or are customer churn and cross-sell services. planning to launch one in the next 12 months. The platform-based approach is uniquely

Mobile money providers already possess the necessary skills and resources to move towards a platform-based model. However, to transition fully and position themselves strategically for simple integrations and quick access to customers, providers will need to address several key organisational and technological challenges.33 These include empowering third parties to directly embed and implement their catalogue of services through mobile money apps, and leveraging their datasets effectively and responsibly to glean insights from new usage patterns.

33. Nika Naghavi (2018). Embracing payments as a platform for the future of mobile money. GSMA.

33 2018 State of the Industry Report on Mobile Money

Conclusion

34 2018 State of the Industry Report on Mobile Money

Conclusion 2018 saw the industry shift its focus to meet evolving customer needs, with more industry players embracing a platform-based approach connecting consumers with third party services across diverse industries.

The enduring strength of the agent network, an As the 'payments as a platform' approach takes increased focus on interoperability and widespread flight, providers will be able to glean insights from access to digital tools such as smartphones will help new usage patterns and data, tap into new revenue to further ease this transition. The merchant network sources and concentrate on building a robust will also become increasingly important as mobile platform and innovative ecosystem. It will be critical money providers connect customers to MSMEs, that commercial use of this data is balanced with both retail and online. Smartphones will be a key concerns about data privacy, data security, fraud enabler of this model as they provide an enhanced prevention, regulatory compliance and consumer user experience and open access to a wider range of trust. For any new product or service, providers financial products and services through third-party should establish clear and open processes and rules apps. In countries where feature phones are still for data security, storage, consent, minimisation, the primary channel for accessing mobile money, anonymisation and sharing. however, providers will need to determine how to Improving access to credit for the underserved also offer the core benefits of the platform model to this raises questions about responsible lending, which enduring customer segment. will need to be addressed. Namely, how can lenders As in previous years, regulation designed to enable ensure that more widespread access to credit does low-cost services for the financially excluded has not lead to an increase in over-indebtedness? And proven essential to the success of mobile money. how can financial education, by lenders, mobile There were some encouraging trends in financial money providers, regulatory authorities and the services regulation in 2018 as national financial wider ecosystem, help to address this? inclusion strategies gained momentum and Laying the groundwork for the financial services collaborative sub-regional initiatives worked to ecosystem to grow around the mobile money create integrated payments systems. However, two platform is essential, but the 'payments as a major regulatory risks to financial inclusion emerged platform' approach is not only about incorporating in 2018: higher taxation of the mobile industry across more partners and third parties. It is also about Sub-Saharan Africa and the global emergence of deepening engagement with individuals and potentially restrictive data protection requirements. businesses through a smooth end-to-end experience Ultimately, regulation should help to build consumer that ultimately encourages greater uptake and use confidence in engaging with digital services without of mobile financial services moving us closer toward creating significant additional costs for service the end goal of universal financial inclusion. providers. Communication and collaboration between mobile money providers and regulators will be vital to strike he right balance between service provision and cost.

35 2018 State of the Industry Report on Mobile Money

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