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ADVANCED PAYMENTS REPORT 2014 – SPONSORED BY

14. Mobile payments in emerging economies

Mobile payments have been highly successful in transaction value is represented by P2P transfers.
developing countries. Mobile payment solutions in 84% of survey respondents agree that mobile payments will grow

developing markets beneft consumers by bringing faster in developing markets than in developed markets. Developing
economies have several characteristics that create the potential to
fnancial inclusion and reducing banking fees. deliver widespread, afordable mobile solutions. 85% of our survey
respondents attribute the faster growth opportunities to the lack of
M-PESA, Kenya’s mobile money system, is the leading example of how banking infrastructure in developing markets where nearly 65% of
this can rapidly be achieved. The system’s genesis was a microfnance the population is not banked.
loan-repayment tool, which quickly expanded into a comprehensive
The limited footprint of traditional brick-and-mortar branches,
money-transfer scheme. Launched in 2007, when less than 20% of the
the high cost of expanding existing infrastructure and a lack of
population was banked, it took only six years for 18 million Kenyans
disposable income available for basic utilities, such as banking
(two-thirds of the adult population) to use the service and transact 25%
services, are foremost among the many reasons for the lack of
of Kenya’s GNP over the network owned by Safaricom.
banking services. The emergence of branchless and mobile banking
Now, approximately 40% of Kenyans have a banking relationship solutions over the last decade drastically alter the economics
account, while those with no bank account or mobile payment of banking the unbanked and provide opportunities within the
solution are at a record low of 15%. developing markets.
As our survey results refect, mobile payments are very important Observation of successful mobile payment platforms in Russia,
for emerging economies. Since the launch of M-PESA, 150 Eastern Europe and the Middle East shows that limited mobile phone
solutions have been rolled out in 72 countries. A third of these penetration of the addressable market may not be an obstacle.
solutions are barely in their second year of operations and M-PESA was built upon a base of mobile users that was less than 35%
already 100 million customers are enrolled. Despite nearly 60% of when it was launched. What may be more important is educating
transaction volume used for airtime top-ups, a staggering 80% of consumers early in their mobile adoption and the concentration of
MNO market share. 1

Mobile Payments in Emerging Economies M-PESA was launched in the middle of a cycle
of exponential mobile phone adoption which
(% of respondents who agree or strongly agree)
introduced consumers to mobile payments as
they started using their frst mobile phones.
Mobile payments in developing markets make sense
because of lack of banking infrastructure 85%
In nearby Uganda and Tanzania mobile
penetration is 50% and 65% respectively –
Mobile payment services will grow at a higher rate than
in developed markets 84% already considerably higher than M-PESA’s 35%
2
rate in 2008. Although still respectable, the
Critical success factor for mobile payments in
developing markets is the size of the agent network 74% percent of households using mobile payments
in these countries is only one third that of
Mobile payments will drive GDP growth in developing
markets 64% Kenya’s. Despite higher mobile penetration
0% rates, it may take more efort to convert existing
20% 40%
60% 80% users to new applications and solutions.
100%

1 Source of data: (Georgetown University and Tavneet Suri 2009). 2 Source of data: (WorldBank, EIU).
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