Africa leads global mobile money market

Mobile Money Services - Development Planning Unit University College London - FlickrService operators in Africa are preparing for greater adoption of smartphones. (Image source: Development Planning Unit University College London)A study by Juniper Research points to Africa as the global leader for mobile money transactions and forecasts the industry’s worldwide annual revenue to grow to US$4bn by 2018

The research paper, Mobile Money Transfer & Remittance: Domestic & International Markets 2015-2020, said that global mobile money transactions will touch US$2bn this year, benefitting service providers, especially those in Africa. It pointed out that mobile operators like Vodacom Tanzania and MTN Uganda are now generating more than 10 per cent of their revenues from mobile money.

Meanwhile, Safaricom’s M-PESA service, considered a pioneer in the sector, recorded mobile money revenues of more than US$330mn in the latest financial year, making it the most successful mobile or online money transfer service worldwide.

According to the study, the recent surge in both transaction volumes and values were being driven by technological advances in the region, i.e., increased implementation of both cross-border and intra-national remittance interoperability among different countries in Africa. The research cited the increase in traffic caused by recent agreements between Safaricom and MTN (for the Rwanda-Kenya corridor) and by national interoperability agreements in markets such as Tanzania and Pakistan.

The research also highlighted a shift in the mobile money service platforms offered by mobile operators. It said that a majority of operators are now seeking to roll out smartphone applications along with existing USSD (unstructured supplementary service data)/IVR (interactive voice response) in anticipation of greater medium-term smartphone adoption.

Striking a cautionary note, the paper also listed factors that have constrained growth in many markets. It pointed out inadequate regulation as one such factor. Author of the research paper, Dr. Windsor Holden, said that low adoption or activity rates could be attributed to poor decision making by service providers in some cases. “There are too many instances where service marketing is inappropriate or incorrectly targeted; where the message simply isn’t reaching the desired audience.” The paper observed that in Nigeria, a number of services had failed to gain repeat usage because of the high cash-out fees and that savings accounts in some other markets had withdrawal fees that were inappropriate for low-income users.

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