Mobile money: banking for all
Mobile networks have played a key role to connect people in emerging markets, particularly in rural regions where there is virtually no infrastructure. In little less than a decade, mobiles have played another key role in becoming a real banking alternative in these markets, and now the technology might even be making its way to more developed economies.
At the end of 2013, there were 219 mobile financial services providers in 84 countries worldwide, offering a combined 203 million end-user accounts. In Kenya, where mobile money has been available since 2007, 83% of mobile users subscribe to various services, including the bulk of the unbanked poor.
Today, mobile money has spread far and wide throughout Africa and other developing economies. They have not been a success in all markets, but where they take hold, they play a transformational role for low-income workers.
Orange Money is a key mobile money provider on the continent. It currently operates in 13 countries and has 12 million subscribers, with a 53% increase year on year. The dramatic growth of the service is shown in money transfer figures. In September 2014 the total amount of transactions through Orange Money have reached €400 million – whereas in the whole of 2013 the figure was €2 billion.
“We consider the different African markets as very diverse in terms of mobile money potential and opportunities,” explains Alban Luherne, Orange Money Director for Africa and the Middle East. “After succeeding on a large scale in Ivory Coast, demonstrating that Mobile Money can be a real opportunity in West Africa, we are busy replicating this uptake in our affiliates of the region, in particular in Mali.”
The beauty of mobile money is its simplicity. Mobile phone users register for the service to gain access to an electronic money account linked to their mobile phone number (and SIM). They use the phone to send money to other users and can withdraw or deposit money at a network of registered cash outlets.
There are many ways people use mobile money. They can send money back home, pay a deposit, pay a taxi fare, or just simply bank their money. The latter in particular is useful for merchants who don’t wish to carry too much cash on them as they travel.
Orange Money cash payments are handled through a network of more than 50,000 point of sales. “This distribution network is slightly different to the airtime sales network,” explains Luherne. “They are a vital part of the mobile money value chain, so we look for providers with good finance and infrastructure, such as supermarkets and gas stations.”
security is essential
The security of mobile money systems is vital and they need to gain the trust of people before the service takes off. Transfers need to be transparent and secure, and end-user training can play a big part in building trust. For example, if users lose their handset, they are able to go to a shop to recreate their SIM and retrieve the money.
Orange Money uses a universal technology, USSD technology, which is similar to the system used for text messaging and is compatible with 99% of mobile phones.
While the core mobile money service remains cash transfers, its potential is far wider. For example, Luherne says that in the Ivory Coast, the government is accepting school fees through mobile money. Other public services that citizens can buy with mobile money include electricity, water or pay TV bills. This is a massive advantage in Africa where paying these bills frequently requires travel and queuing. In Niger and Cameroon, users can also buy bus tickets through Orange Money.
In addition, mobile money can act as a stepping stone into further financial services, such as insurance and credit. Orange Money is collaborating with insurance Allianz to bring insurance services to Senegal designed to help students guarantee the payment of their university fees.
Orange Money supports local economy and entrepreneurs
Microfinance can enable thousands of startup microbusinesses. Mobile money history plays crucial role in helping credit providers score applicants who would not normally have any credit history at all. Of course the mobile money business itself is creating employment and entrepreneurs. Orange Mali, for example, has estimated that several thousands of jobs have been created as a direct result of Orange Money.
With the growth of services across Africa, interoperability is increasingly important. Across the Orange Money footprint, subscribers can already send money internationally between Ivory Coast, Senegal and Mali, which share a common currency. “We are also looking to expand the network by connecting to other providers and we are part of the GSMA program MMI (Mobile Money Interoperability),” says Luherne.
Interestingly, the success of mobile money in emerging markets is driving the launch of similar services in more developed markets. Orange Money for example is using its experience in Africa to launch a mobile money service in France, which will primarily be used by the West African diaspora to send money to relatives in Africa.
Find out more about Orange Money in this fact sheet.