Vodafone’s M-Pesa mobile money transfer service is actively used by over 19.9 million people across 11 countries. In a number of markets, customers can now receive loans, pay for goods and services, and access critical information for growing and managing their business.
Financial services regulators can encourage the development of these nascent services through proportionate, appropriate regulation and regular dialogue with mobile money providers.
Vodafone’s M-Pesa mobile money transfer and payment service is the leading mobile money product in the world. It has in excess of 19.9 million active users across Africa, the Middle East, Asia, and Europe. Across the M-Pesa footprint, there are over 273,000 active agents and M-Pesa processed 3.4bn transactions in the year from April 2014-April 2015 (up 21% year-on-year).*
Since M-Pesa was first launched in Kenya in 2007, it has had a transformative impact on the lives of millions of people who previously had limited or even no access to banking services, while also helping governments to advance important public policy objectives.
M-Pesa has significantly improved financial inclusion by opening up a range of banking services, which were previously out of reach for a vast number of customers, particularly those living in rural areas with little or no banking infrastructure. It has also allowed users working in cities to send money home securely to family and friends living in villages.
The spread of M-Pesa is contributing to the stability and integrity of the financial system in countries where it is used, as transactions shift from cash to electronic form. This in turn stimulates economic growth and generates demand for more sophisticated financial products in these markets.
The success of mobile money has upended the traditional model of financial services and demanded new thinking from regulators and policy-makers. Vodafone works closely with these and other stakeholders to expand the benefits of M-Pesa and to ensure strong consumer protections.
While the approach taken by regulators in each country has differed, three characteristics have had a particularly significant impact on the spread of mobile money:
First, the sector has grown fastest where mobile operators have been licensed directly by the financial services regulator. The introduction of new ways to deliver financial services means that we need to shift from regulating institutions (banks) to regulating services (e-money). Authorities that have adopted this service-based approach have encouraged investment and promoted competition in a way that is directly benefitting consumers.
Second, where the regulation of outlets is proportionate, mobile money providers are best able to achieve the scale required to reach the unbanked. This means that regulators set clear and robust standards for the selection and governance of outlets, while also giving mobile money agents the freedom to undertake core tasks such as the registration of new customers and the management of their facilities.
Third, the standards for opening a mobile money account should reflect the size of the transactions allowed. Getting this right has a practical impact on financial inclusion, as poor, excluded consumers are those most likely to be unable to meet the high documentary standards required to open a traditional bank account. They are also those most likely to benefit from the ability to transact in small amounts that pose little risk to the financial system.
A growing number of countries are now supporting mobile money as a tool for achieving broader policy goals. Vodafone’s experience with M-Pesa has shown that, when such objectives are underpinned by smart, progressive regulation and an open dialogue, there are profound benefits to be had by consumers, governments and private enterprises alike.
Across the M-Pesa footprint, there are over 273,000 active agents and M-Pesa processed 3.4bn transactions in the year from April 2014-April 2015 (up 21% year-on-year).*
* All figures correct as at 31 March 2015