M-Pesa, a joint venture between Vodafone and Safaricom and operated with the backing of banks such as Citibank and Commercial Bank of Africa, continues to be the most successful mobile money deployment globally with over $130 million revenues in FY 2011.
M-Pesa’s coverage is continually rising and currently covers over one-third of Kenya’s population with over 13 million subscribers. M-Pesa allows its users to load money on their mobile devices by making deposits with M-Pesa agents residing in rural and remote areas with limited or no banking facilities. The deposited money is exchanged for ‘e-float’ which can be used for making payments or money transfers. Kenya, with 22 million mobile subscribers and approximately 60% unbanked population, is a huge market for M-Pesa.
Despite the success of mobile money service in emerging markets, its adoption is still not widespread due to various challenges pertaining to lack of a well developed regulatory framework for mobile payments, maintenance of cash floats by agents residing in rural and semi rural areas (who are required to make regular trips to far away banks for maintaining cash floats), lack of technical know-how among users, and mandate by a few mobile payment services for subscribers to have bank accounts - making mobile money a challenging proposition for the unbanked rural population.
Service providers need to set the right price for mobile banking service making it attractive for agents and affordable for users. Tavess also believes that service providers' strong focus on localized mobile banking services provided at an affordable price is a step in the right direction towards growing ARPU in this burgeoning mobile money market.
Deepika Bansal is a telecom market analyst at Tavess. For more information contact [email protected] or go to www.tavess.com/