The uptake and use of mobile money in Kenya has been portrayed as a proof-of-concept to bring “banking without the bank” to wide swathes of people. Coverage of the M-Pesa system done by 60 Minutes called “The Future of Money” outlines of the changes and benefits resulting from the implementation of the mobile currency system by the Kenyan mobile phone service provider Safaricom.
The consensus is that mobile money is transforming the way unbanked populations are gaining access to financial services, with Africa leading the charge. But amidst all the excitement, may we in fact be starting to see the limitations of mobile money?
The article seeks to provide a view of some of the shortcomings of the M-Pesa system as it exists today. In doing so, it reminds the reader that there is indeed significant work to extend access to financial markets for the most of our planet’s inhabitants.
Closed systems and a lack of interoperability do not help with this. Interoperability between services and countries is only just beginning to become a reality. Vahid Monadjem, chief executive of South African enterprise payments provider Nomanini, believes this has hampered the concept. The industry body GSMA’s Mobile Money Deployment Tracker finds that of 300 mobile deployments across the world, the vast majority have failed
For mobile money schemes to be effective, they must achieve a critical mass of participants and enjoy ubiquity in a compressed timeframe. This truism applies in developing economies as well as developed economies. The apparent stalling expansion of mobile payment use in the U.S. is attributable to similar market forces that have worked against replicating the M-Pesa success in other developing economies. That is to say, in many cases, the majority of the population have yet to feel incented to change their current payment behavior or have access to the technology and other resources in order to utilize mobile money schemes.
Overview by Joseph Walent, Senior Analyst, Emerging Technology Advisory Service at Mercator Advisory Group
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