Home Guides Mobile Money: What Is It & What Are The Benefits?

Mobile Money: What Is It & What Are The Benefits?

Mobile Money is an innovative way for billions of people across the globe to gain access to financial services they would otherwise be shut off from. With over 1 billion Mobile Money users worldwide, this payment method is only growing, connecting more and more people to vital financial services and support that provide a safety net to vulnerable communities. In this guide, we’ll be breaking down exactly what Mobile Money is and it’s many benefits.

Updated: 10/02/2021
Read time: 7 minutes
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In the past few decades, sending and receiving money around the world has become more convenient, more accessible, and more cost-effective for the millions of people sending global remittances every single day.

The growth of specialist money transfer providers offer an alternative to the expensive fees and unfair exchange rate margins often charged by traditional financial institutions, and have made managing money transfers possible with just a few swipes of a button on a mobile app.

One innovative feature offered by many money transfer providers is a range of payment and delivery options. Bank-to-bank transfers no longer need to be the default – payments by debit or credit card are equally accessible, while recipient’s can be paid in a number of ways, including Mobile Money.

What is Mobile Money?

The ultimate goal of mobile money is to make sending money more accessible to more people – rather than needing to send money to a registered bank account, you can transfer money to your recipient’s mobile wallet which is then available for them to spend online. With billions of people still unbanked around the world, mobile money now provides a secure and safe way to access financial services that were previously cut off from many in more vulnerable areas of the world.

Mobile money is a solution that makes sending and receiving money more accessible to the people around the world who don’t have a bank account (some 1.7 billion adults, according to the World Bank). According to the GSMA, the number of registered mobile money accounts has now surpassed 1 billion – which is considered a significant achievement considering mobile money is a solution only around a decade old. 

Currently, there are over 270 mobile money services around the world providing a secure and quick alternative to sending money via bank transfer or cash. Mobile money is particularly popular in the Asian, African, and Latin American continents, but can be accessed by anyone with a phone. 

How does it work?

Mobile wallets are linked to a mobile phone number, so you don’t need a smartphone or internet access to use Mobile Money – even a basic mobile phone will work provided you have a signal. 

Mobile money can be used to send and receive money using a mobile phone, which can then be used to purchase items online, in shops, to pay bills, or just simply store money as savings within the account. For many, this means that Mobile Money is, in fact, a cheaper and more reliable way to make payments than a bank account which can be difficult or expensive to open.

What are the benefits of mobile money?

The vast benefits of Mobile Money is only now beginning to really be seen – especially in a world tackling a global pandemic in which our most vulnerable communities are even more at risk of poverty, illness, and economic difficulties.

In Bangladesh, as an example, an estimated 68% of the population have access to mobile phones, while just 15% of the population have bank accounts. The advancement of Mobile Money could potentially, therefore, be making financial services more readily available to almost 50% more people.

Just some of the benefits Mobile Money offers include:

Transforms the lives of underbanked people 

For many years, billions of people were underserved because they could not access a bank account, which meant they could not access a number of financial services. In turn, this led to a lack of economic growth in many areas of the world, which Mobile Money is now changing by providing an accessible, safe, and secure way in which economies and individuals can flourish.

Connects millions of people all over the world 

Mobile Money allows people all over the world to connect by sending payments to friends and family. A family member living abroad, for example, may have previously struggled to send money back home to their family without a bank account, while Mobile Money makes that accessible.

It has a knock-on effect to access wider services

Receiving money via their mobile is just the start for many, triggering access to a number of life-changing services and facilities that millions of people may previously have never had the chance to obtain. Those with access to mobile payments are then able to go on and access wider life-improving services for both themselves and their families, from insurance to even small business loans.

It has been used to provide aid in humanitarian disasters

In Nigeria, an estimated 172 million people are registered mobile users, while just 40 million of the country’s adult population have access to a basic bank account. Mobile Money bridges this gap, giving millions of people access to financial services that they would not otherwise be able to have. Moreover, Mobile Money has been used in humanitarian crises – for example, the World Food Programme (WFP) launched an emergency cash transfer operation to assist the hundreds of thousands of people fleeing their homes from attacks by Boko Haram in northeast Nigeria.

Reduced corruption 

In some countries, official payments such as taxes, permits, and licenses are synonymous with corruption and bribery. Mobile Money provides access to these services without users needing to deal with officials face-to-face, which can remove much of the corruption involved in these processes.

Instant transfers

Mobile Money transfers can often be processed instantly or within minutes by many transfer providers offering the service, so are a great method for getting funds to your recipient quickly.

Secure

Most mobile money accounts are still protected by local financial regulations, with money transfer providers verifying the identity of both sender and receiver before a transfer is approved. 

Mobile money operators

Mobile Money services are usually owned by a Mobile Network Operator in each country. A few major mobile operators throughout the world supporting Mobile Money include:

  • M-Pesa: Vodafone’s own mobile money transfer and payment service, M-Pesa first launched in Kenya in 2007, and now has over 19.9 million active users across Afira, Asia, Europe, and the Middle East.
  • MTN Money: This operator supports Mobile Money in partnership with over 10 banks, and has over 22.2 million subscribers using the service in a number of African countries.
  • GCash: Based in the Philippines, GCash enables users to turn their mobile into a mobile wallet to pay for items and send money as quickly as sending a text.
  • EcoCash: EcoCash is Zimbabwe’s dominant Mobile Money group and had over 2.3 million registered users just 18 months after its initial launch in 2018.

International Mobile Money transfers

Mobile Money makes it easier for people to send money to friends and family all over the world. Today, international Mobile Money transfers are possible in 51 of the 92 countries in which the service is offered.

To send an international transfer via Mobile Money, you can follow these steps:

Step 1. Find your provider
Step 2. Set up your account
Step 3. Enter the details for your transfer
Step 4. Fill in the recipient’s detials
Step 5. Double-check the charges

Bottom line

Mobile Money has the potential to transform the lives of billions of people around the world. Although it’s most commonly used for domestic purposes at the moment, Mobile Money also has the capability to connect people all over the world and make sending and receiving money more accessible than ever.

If you know someone who uses Mobile Money to access their finances, this may be the best way of sending an international transfer to them. Use our comparison engine to help you find the most suitable provider for your transfer needs.

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