One of the most popular emerging money trends today is mobile money.
Mobile money can be defined as an alternative method of sending and receiving money. Instead of using cash, credit cards or cheques, mobile money utilises a mobile application and a phone number acts as a bank account number. Consumers are able to use their cell phones to send and receive money as well as access a variety of financial services including loans. Below are interesting facts you should know about mobile money.
Developing countries are leading the way
The mobile money concept is most popular in developing nations with Kenya leading the way. According to the latest statistics, over 90% of all adults in Kenya use mobile money services. Mobile money is also popular in other developing countries like Uganda, Tanzania, and Zimbabwe. Outside Africa, the concept is most popular in Bangladesh and Pakistan. Developing countries attribute the popularity of mobile money to the scarcity of traditional banking services.
In fact, the United Nations among other international bodies have extended their support for mobile money services in developing countries because mobile money addresses financial inclusion problems. The trend is perfect where traditional banks can’t reach. As mobile money services evolve, the trend will easily spread globally serving other purposes besides financial inclusion i.e. to offer financial services more conveniently.
The major setback is agent liquidity
Mobile money services such as sending and receiving money require intermediaries (agents). To use mobile money applications like Kenya’s M-PESA, you must visit an agent to deposit or withdraw money. Although mobile money agents are readily available in developing countries, most lack the liquidity to handle large transactions.
Mobile money services usage varies
Mobile money allows customers to execute numerous transactions ranging from buying airtime to paying for goods and services. Person-to-person payments and airtime top-ups are the most popular mobile money transactions in developing countries. Bill payments are however catching up as the most popular mobile money services in South Asia.
Mobile money is largely cash-based
Contrary to popular belief, mobile money services are largely over-the-counter cash transactions. This may be surprising but true. As mentioned above, most transactions are facilitated by agents. Before you can start transacting, you must load money into your phone. To receive hard cash, you must visit an agent to withdraw. Although it is possible to send money from your phone to your bank account and vice versa, most transactions are still cash based. This will, however, change with time as mobile money services continue being connected to mobile wallets.
Top benefits of mobile money
Mobile money services attract a lot of benefits the most notable being;
1. Unmatched convenience: There are more people in the world with mobile phones than there are people with traditional bank accounts. Mobile money allows people to enjoy banking services anywhere, anytime. You never have to travel to a bank and queue to perform basic banking transactions. Since your mobile number is your bank account number, your phone is your bank.
2. Financial inclusion: Mobile money solves a very common banking problem i.e. financial inclusion. For many years, many people especially those in the developing world haven’t been able to access traditional banking services. Since there are more people with mobile phone globally today, mobile money bridges important gaps by ensuring everyone enjoys basic financial services.
3. Affordable financial services: Mobile money has brought the cost of banking services down. By creating competition in the banking sector, mobile money providers have been able to force banks (especially those in developing countries) to lower transaction fees charged on major services.
Fast, reliable and safe: It takes a few seconds to send or receive money using your phone. Mobile money is also reliable given the fact that it relies on cellular coverage. Mobile money is also safe given the fact that it eliminates the need to handle/carry physical cash. As long as users safeguard their PIN. No. Mobile money remains one of the safest emerging money trends today.