Fighting: Fraud and mobile money


By Luis Bras, senior professional services manager, WeDo Technologies

While great progress has been made with financial inclusion in recent years, resulting in a 20% drop in the number of unbanked individuals, 38% of the world’s population is still without a bank account [World Bank 2015]. Mobile money has therefore become a key means of offering banking concepts to those who previously haven’t had access.

Acting in a similar manner to a bank, mobile money provides users with services which enable them to have access to their savings, take money with them, or transfer money to relatives and friends throughout the world. Through these services, mobile money can provide enormous opportunities to unbanked people and offer a vital way out of poverty.

Rising value

The impact of mobile money has already been huge; in Kenya, for example, a massive 43% of its GDP flowed through M-Pesa, its mobile money platform in 2013. This momentum looks set to continue, with the mobile money market estimated to be worth $129.29 billion by 2021 [MarketsandMarkets]. However, for mobile money’s potential to be fully realised, it is vital that operators address risks, and with enterprises reporting average revenue losses of $92.3 million due to mobile money fraud, action needs to happen now [TeleSign/RSA 2015].

While operators are often familiar with managing risk on the GSM element of their business, mobile money brings with it a whole host of new challenges. As technology develops, fraudsters become more advanced, and human skills and processes will be needed to combat fraud issues. Operators must therefore ensure that they implement the right training to equip their teams with the necessary skills to tackle new threats.

In addition, it is essential that fraud managers select the right software to reinforce human efforts. In emerging regions in particular, where mobile money is most frequently used, operators are often using legacy systems and processes, which don’t have the modern tools needed to protect against highly sophisticated fraudsters. Mobile money, like voice or messaging, requires processes, tools and opportunities to monitor and regulate its services, and without the right solutions in place, fraud will run rife.

Less experience

In contrast to banks, operators are less experienced with processes, making them a much easier target for fraud schemes. For example, mobile operators start off acting like branches of banks, providing cash-in, cash-out payment transfers, similar to how banks and agents provide services to the end customer. This can give rise to a wide range of potential frauds, including payroll fraud, where fake employees receive payments, false transactions and identity theft, and these risks are constantly changing. Fraud management systems must therefore be agile, and capable of adapting and responding to threats in real time.

When fraud risks are managed effectively, mobile money presents a huge opportunity for both operators and the huge swathes of the population that are currently unbanked. Especially in regions where having a bank account is uncommon, operators utilising mobile money will be able to offer value added services and drive benefits for subscribers simultaneously.

With momentum for mobile money surging, operators must therefore act now to mitigate risk, and protect the bottom line. Once operators have strong fraud teams, systems and processes in place, operators, businesses and consumers can truly reap the benefits of mobile money.

WeDo Technologies is a provider of revenue assurance and fraud management, providing software and expert consultancy to intelligently analyse large quantities of data from across an organisation.


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