M-money for unbanked set to rocket


'Scale' is the next phase of the mobile money market in developing markets, says Fundamo

Mobile money services for the unbanked are going to grow by huge amounts over the next two years, signalling a new phase of mobile money in developing markets, said Fundamo, a Visa Inc. company and specialist mobile financial service provider.

Aletha Ling, chief operating officer at Fundamo, stated that from the first mobile money service launched in 2003, to today's 156 million mobile money services serving between 60 million and 100 million mobile wallets according to estimates, that figure is set to double over the next year, and then double again the year after.

That growth means providers of mobile money services in these unbanked and underbanked countries have to deal with the high cost of building out an already intricate network to support the scale required, noted Ling.

She commented: 'A big problem for mobile operators and banks is it is complex and expensive to set up a mobile money programme, which inhibits a lot of operators from putting these services out into the market. The need for scale is adding more cost, so, in order to support scale, which we believe is the next phase of this market, we launched Visa Mobile Managed Money.'

Earlier in February Visa Inc. announced the launch of Visa Mobile Managed Money, a new plug-and-play mobile money platform created using Fundamo technology. It is designed to help banks and operators in developing countries get the scale they need for the fast growing mobile money market without the expense of doing it all on their own.

Visa Mobile Managed Money is the world's first bank-grade managed service for mobile money. This means Visa can host and fully manage all aspects of a mobile money programme on behalf of the provider, from user interface design to consumer enrolment, transactions processing, authorisation, clearing and settlement. The new service can enable domestic-only or globally interoperable mobile money services.

Unbanked consumers in India and Rwanda were the first to benefit from the service. Aircel mobile subscribers in India and customers of Bank of Kigali and Urwego Opportunity Bank in Rwanda now have access to a financial account that is linked to their mobile phone number.

Emerging markets will be the key source of future mobile connections growth, particularly in Africa and Asia-Pacific, according to research firm, Ovum. Between 2012 and 2017, Ovum expects that there will be 1.6 billion new mobile connections across the world, with 61% of these coming from Asia-Pacific. While connections growth in Asia-Pacific will begin to slow towards the end of the forecast period, the region's 4.4 billion connections in 2017 will make it the greatest contributor to global connections. Growth in the Asia-Pacific region will largely be driven by the 'big three' emerging markets of China, India, and Indonesia, which will have three billion connections between them in 2017.

Carrie Pawsey, telco strategy analyst at Ovum, said; 'While Asia-Pacific will generate the most new connections, Africa will be the fastest-growing region. African mobile connections will grow at a compound annual growth rate of 6.5% between 2012 and 2017, increasing from 683 million in 2012 to 935 million in 2017.

'While connections growth is important, the biggest issue for emerging market operators will continue to be around revenue growth and how to remain profitable with a customer base of low-ARPU users. Both Nokia and Airtel's CEOs talked about the need for cheaper devices. The strategies of operators in Vietnam, India, Pakistan, and Tanzania demonstrate how telcos can operate in markets where ARPU is below $3 per month. While the correlation between high ARPU and profitability is not absolute, operators still need to take action to improve the amount of revenue that they make from each connection. This is of paramount importance to operators in markets where ARPU will be less than $5 per month in 2017.'


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