Payments as a Platform pushes mobile money in emerging markets

December 16, 2021

group of friends laughing over something they're viewing on a mobile phone.

Jonathan Kriegel


Mobile money services that let consumers make purchases and initiate bank transfers using just their phone without needing a bank account have already enjoyed phenomenal success in many countries of the world. And providers like M-Pesa, Orange Money and MTN look set to grow their customer base even further over the next five years as they expand into additional financial services.

The State of the Industry Report on Mobile Money 2021 report published by GSMA Intelligence estimates that the number of registered mobile money accounts grew by almost 13% year on year to reach 1.2bn in 2020, partly due to national regulators implementing more flexible know your customer (KYC) processes and relaxing customer onboarding requirements. However, the fastest growth also came in regions where governments provided significant Coronavirus related relief to their citizens, with the value of government to person (G2P) payments quadrupling during the pandemic.

PaaP drives mobile finance portfolio expansion

Juniper Research now estimates that the total value of mobile money in emerging markets will expand further from US$555bn in 2021 to US$870bn by 2026, representing 60% growth. Its report – Mobile Money in Emerging Markets: Segment Analysis, Vendor Strategies and Market Forecasts 2021-2026 – also predicts that more providers will look for ways to increase their revenue through the delivery of additional financial services.

The market, which includes microinsurance, microloans, microsavings and mobile money, will be partly driven by the transition of existing mobile money providers to a payments as a platform (PaaP) business model that helps them offer third party services to customers. In its report Embracing payments as a platform for the future of mobile money the GSMA defines PaaP as a means of connecting consumers with third party services across a range of industries and deepening engagement with individuals and businesses by offering a frictionless end to end experience.

PaaP and mobile money expansion are predicted to have a particularly significant impact in the countries of Africa and the Middle East which support large numbers of start-ups, small businesses, and entrepreneurs. The new mobile fintech services they enable are expected to not only stimulate commercial development and expansion by helping the “unbanked” participate in the digital economy, but also support new applications and use cases in industry verticals like energy and agriculture that will draw banks and smaller financial institutions into the mix.

Africa and the Middle East dominate

Juniper estimates that Africa and the Middle East will dominate mobile money transaction values, accounting for 56% of total value generated by emerging markets by 2026. Other reports suggest that the value of mobile money in sub-Saharan Africa accounted for 64% of the daily US$2.1bn global total during 2020, with Nigeria and Senegal seeing some of the highest concentrations of mobile money services due to the success of providers like OPay and Wave.[i]

M-Pesa, which is delivered by Vodafone subsidiary Safaricom in Kenya, Tanzania, Mozambique, the Democratic Republic of Congo, Lesotho, Ghana and Egypt had amassed 50m monthly active users (MAUs) as of September 2021[ii]. Transaction volumes increased 44% year on year in the first quarter of the current financial year, generating 4.5bn transactions worth EUR63bn.

June also saw the launch of the M-Pesa Super App, which incorporate a series of mini mobile apps that enable customers and businesses to access government services and engage in online shopping. Safaricom is now planning to expand that remit to facilitate microloans alongside business payments, savings, wealth management and insurance features.

Other MNOs in Africa have launched microloan services, with 50 mobile lenders offering loans ranging from US$10 to US$400, led by M-Pesa. Other providers include Orange Money in Sierra Leone, and MTN and Telkom in South Africa, while Vodafone has plans to expand its lending, insurance and payment businesses across the continent.

Challenges ahead

The GSMA notes that mobile money providers still face a number of organisational and technological challenges before they can successfully transition to a PaaP model, however. These include establishing plug and play access to the mobile money system; introducing new business models; optimising the user experience and interface to entice new customers; enabling third parties to develop new relationships via the front end; and adopting a personalised approach to product design.

In order to realise the type of revenue growth being forecast by Juniper, mobile money providers will also have to form partnerships with third parties (particularly banks and financial institutions, but all insurance companies and investment funds), offer enterprise solutions and facilitate greater integration between messaging and payments. That might not be easy, or quick, to implement but the rewards for mobile money providers and consumers without bank accounts in emerging markets should ultimately be worth the effort.

[i] How mobile money grew in sub-Saharan Africa in the last 10 years, Quartz Africa, 28th September 2021

[ii] M-Pesa celebrates reaching 50 million customers, Vodafone, 7th September 2021

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