Mobile Money: New banking of modern era
- February 16, 2017
Letting cash into the hands of people to use it, is limited on the supply-side as compared to demand-side. More than shortage of funds, it’s the ability to move money from sender to receiver which is the stumbling block. Since the creation of money, the ability to move it from A to B—the so-called “velocity of money”—has been a fundamental cornerstone of economic activity. Mobile Money Transfer platform is a useful platform which has the potential to substitute the banking infrastructure.
Mobile money is a form of electronic money, which allows you to do financial transactions using your mobile phone. It allows financial services to be extended to people at a significantly lower cost because physical infrastructure isn’t required here. The success of mobile money lies in the advantages which it has over the conventional banking. It not only provides hassle free transactions; it is also quick and easy.
Mobile wallets provide a safe and secure place to save our funds as they are saved virtually. They provide an efficient level of security as both the mobile money facility and the mobile phone could be secured with a password. Savings can be used during hard times or for productive investments, like establishing or expanding a small business etc. The alarming growth in mobile phone ownership raises the potential for mobile money to reach unbanked people, providing them with a more affordable payment system. One of the leading mobile money transfer services in Kenya is M-PESA. It is Africa’s first mobile money platform, which was launched by Safaricom in Kenya in 2007. The service was designed to enable remittances to be sent home, and has enjoyed widespread adoption. Today 96% of households outside Nairobi have at least one M-PESA account. It has not only reduced the cost of transaction, but is also easily accessible to the users as the average distance to the nearest M-pesa agent is 1.4 kilometers. M-Pesa has continued to see strong, accelerated growth in East Africa during 2015, most notably in Kenya and Tanzania.
Following are some of the facts about the M-pesa:
- Worldwide M-Pesa usage has increased 27% year-on-year to reach 23.4 million active customers across Vodafone Group by 30 September 2015.
- • M-Pesa customers are served by more than 240,000 agents.
- • More than 2 billion individual M-Pesa transactions were carried out in the six months to September 2015, more than 26% as compared to same period last year.
- There are around 665,000 active users of M-Pesa in India, where the service was granted approval in principle by the Reserve Bank of India to establish a payments bank.
- • Vodafone Albania launched M-Pesa in May 2015, the second Vodafone market in Europe to offer the service.
- • International money transfers between M-Pesa customers in Kenya and Tanzania were launched in April 2015.
- • M-Pesa and MTN Mobile Money reached agreement to enable direct money transfers between their respective customers in seven countries across East Africa.
The above stated facts and figures are sufficient enough to justify the progress and expansion of mobile wallets and mobile money transfer services in Africa. Moreover, according to a study conducted, it was found that mobile money has reduced the poverty in Kenya. The expansion of mobile money has lifted an estimated 2% of Kenyan households (some 194,000) out of extreme poverty. The constant success and growth of M-pesa in Ghana, Kenya and Tanzania is sufficient enough to portray the fruitful future of mobile money transfer services providing companies in Africa.