May 4, 2023

Mobile Money Services Are Growing Faster Than Predicted, Says GSMA Report

According GSMA's State of the Industry Report on Mobile Money 2023 report, "mobile money is now considered a mainstream financial service in many countries." Funded by the Bill and Melinda Gates Foundation, the UK-based organization says: "During the COVID-19 pandemic, mobile money enabled millions of people in low- and middle-income countries (LMICs) to access digital financial services (DFS) for their daily needs." Available in English and French, the report "looks at the growth of mobile money in a post-pandemic world."

The report notes that adoption and active usage continue to rise. "Registered mobile money accounts grew by 13% year on year, from 1.4 billion in 2021 to 1.6 billion in 2022. This can be attributed, in part, to regulatory changes in Sub-Saharan Africa, particularly in Nigeria and Ethiopia where mobile money adoption rose rapidly."

What is more, digital transactions are increasing as the use of cash slows down. "Transaction values grew by 22% between 2021 and 2022, from $1 trillion to around $1.26 trillion," the report explains. "However, the share of cash-based transactions in the overall transaction mix declined, with cash-in and cash-out transactions dropping nearly two percentage points. This is due to a significant rise in digital transactions, particularly interoperable bank transfers and bill payments."

Encouragingly, global daily transaction values are exceeding predictions. "In 2020, global daily transaction values exceeded $2 billion. The State of the Industry Report on Mobile Money 2021 (covering data from 2020) suggested this could reach $3 billion a day by the end of 2022. This figure has been surpassed, with $3.45 billion transacted daily via mobile money in 2022."

Mobile money remains a key savings channel, according to the GSMA. In 2022, approximately 60% of mobile money providers (MMPs) "offered users a savings account. Half of these providers did not offer a savings product in 2021. The World Bank Global Findex 2021 found that 15% of adults in Sub-Saharan Africa, or 39% of all mobile money account owners in the region, saved using a mobile money account."

Disappointingly, women in LMICs are 28% less likely than men to own a mobile money account. "More women have a mobile money account than ever before and are using it at a similar rate as men on a 30-day basis. However, there is still a gender gap in account ownership that has recently widened in countries such as Nigeria and Pakistan." The report continues to explain that "One of the main barriers to closing the gender gap is mobile phone ownership: increasing mobile phone ownership can improve mobile money adoption rates among women. Other steps to close the mobile money gender gap include increasing women's digital skills and awareness of the benefits of mobile money, and tackling social norms and other barriers that are preventing women from using it."

Another key finding of the report is that regulation has been influenced by challenges such as taxation and fraud. "Regulation has focused on ensuring payment systems remain safe and efficient while also encouraging innovation. However, the mobile money industry is facing several regulatory challenges. Some countries have introduced taxes on mobile money transactions and fees that do not align with their financial inclusion objectives." Moreover, "Fraud also remains an industrywide issue, which many regulators are aiming to overcome through improved consumer awareness and capacity building."

GSMA's report on the state of the mobile money industry draws on the results of the annual GSMA Global Adoption Survey of Mobile Financial Services and data from the GSMA Mobile Money Deployment Tracker. I appreciate how this report provides insights on mobile money performance from the GSMA's engagement with the industry.

What do you think of the report's findings? What is your engagement with the mobile money industry?

Aaron Rose is a board member, corporate advisor, and co-founder of great companies. He also serves as the editor of GT Perspectives, an online forum focused on turning perspective into opportunity.