Mobile Money Spreads to Asia

IMF Blog, September 30, 2019

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Mobile money enables basic-phone users to make cash transfers, pay bills, and send money abroad without a bank account.
Described as a "game-changing innovation" for the world’s poor because it is easy and cheap.
The IMF’s Financial Access Survey shows growth in mobile money accounts across regions, with continued epicenter in sub-Saharan Africa and increasing takeoff in Asia.

South Asia has experienced an average annual growth rate of 46 percent in mobile money accounts over the past five years—the highest across all regions.
Bangladesh, Indonesia, and Pakistan are cited as examples of countries in Asia experiencing high mobile money growth.
Sub-Saharan Africa led early expansion after the launch of M-PESA in Kenya in 2007; Kenya, Tanzania, and Uganda saw rapid expansion and the region still leads in the number of mobile money accounts.
In some sub-Saharan African countries, mobile money accounts now surpass bank accounts.
Mobile money also continues to grow in some fragile states.

Large gaps in bank account ownership combined with high cellphone access:
- Afghanistan example: only 200 out of 1,000 adults have bank accounts but more than 80 percent of the population has access to a cellular phone.
Transaction growth example:
- Value of mobile money transactions in Afghanistan grew by a factor of four in the past five years—to 1.2 percent of GDP in 2018.
Distribution through agent networks:
- Mobile network operators employ agents—typically small, local retail stores—to offer services in remote areas where banks have limited reach.
- In Afghanistan, there are, on average, three mobile money agents compared to one or less automated teller machine or commercial bank branch every 1,000 square kilometres.
Expansion of mobile money services helps meet significant pent-up demand for financial services.

As mobile money becomes more pervasive, governments will need to create regulations to:
- Protect new customers against fraud.
- Mitigate liquidity risks—the inability of service providers to return funds on demand.

Esha Chhabra, Bidisha Das — September 30, 2019 (Chart of the Week)