The economics of mobile money


2019/05/08 15:45

Mobile money has transformed the landscape of financial inclusion in developing and emerging market countries, leapfrogging the provision of formal banking services. This column explains how mobile money potentially helps ameliorate several areas of market failure in developing economies, including saving, insurance, and the empowerment of women. It illustrates these effects using examples from aburgeoning empirical literature and concludes that the system-wide effects of mobile money may be even greater than current studies suggest.


Mobile money is novel. It was barely heard of a decade ago.1 Yet it has transformed the landscape of financial inclusion in developing and emerging market countries, leapfrogging the provision of formal banking services (Figures 1 and 2). Mobile money is available in two-thirds of low-to-middle-income countries.2


Figure 1  Number of live mobile money services for the unbanked by region


Source: Data from the GSMA State of the Industry report (2017).


Notes: The first mobile money system was launched in the Philippines in 2001, and M-Pesa in 2007.


Figure 2 Growth of active (90 day) mobile money accounts by region


Source: Data from the GSMA State of the Industry report (2017).


Mobile money refers to financial transaction services potentially available to anyone using a mobile phone, including the unbanked global poor who are not a profitable target for commercial banks (Figure 3). An individual installs a mobile phone application on a SIM card, establishes an electronic money account with the services provider (usually a mobile network operator alone or in formal partnership with one or more banks, depending on the national jurisdiction), and deposits cash in exchange for electronic money.3 Even tiny amounts can be stored, withdrawn as cash, or transferred via a coded secure text message to others, without the customer or recipient having a formal bank account. Mobile phone technology has the advantage that users invest in the handset, while a (scalable) infrastructure is already present for widespread distribution of airtime through secure network channels, Figure 4. By adopting mobile money, under-served citizens gain a secure means of transfer and payment at a lower cost, and safe, private storage of funds.


Figure 3 Provision of banking infrastructure


Source: Data from the G20 Financial Inclusion Indicators database, World Bank.


Notes: This shows the position in 2011 a few years after the adoption of mobile money in Kenya. The first five regions refer to “developing only”.


Figure 4 Fixed telephone and mobile-cellular subscriptions: 2005 and 2017


Source: Data from the ITU World Telecommunication, ICT Indicators database.


Notes: Subscriptions are per 100 inhabitants. “Mobile phone subscribers” refer to active SIM cards rather than individual subscribers.

注:订阅是每100名居民。 “移动电话用户”指的是有源SIM卡而不是个人用户。

The technological innovation ameliorates the asymmetric information constraint faced by conventional banks in lending to the collateral-less poor. The movement of cash into electronic accounts tracks, for the first time for the unbanked, the real-time history of their financial transactions. Using algorithms, these records provide evolving individual credit-scores that eventually allow users to obtain a pathway to formal financial services accessed only through a mobile phone, e.g. to interest-bearing savings accounts, small loans, and insurance products. Hire purchase credit is possible through mobile money, permitting secure, remote purchases of costly durable items on a pay-as-you-use basis.4


Mobile payments in economies with deep financial markets are linked with pre-existing bank accounts.5 In largely cash-based developing or emerging countries, most users are unbanked. As mobile money systems evolve, and smart-phones become affordable in poorer countries,6 services could broaden (e.g. Figure 5) and link with those managed by banks and insurance companies. At the margins, this blurs the distinctions between mobile banking and mobile money. But the poorest will remain unbanked, relying on mobile money for basic financial services.7


Figure 5 Growth of a diverse payments platform


Source: Data from the GSMA State of the Industry reports (2016 and 2017).


Note: Bulk payments include salary and pension payments, and government or NGO transfers.


With the novelty and rapid growth of mobile money systems, the regulatory response has been caught off-balance. The regulatory environment shapes the viability and variety of business models, competition and innovation. Mobile money is big business, but ironically, it is not easily profitable (Aron 2017).8 Evidence suggests that enabling regulation promotes the profitability and sustainability of mobile money systems.9 Critical regulatory lessons are summarised by Aron (2019), Di Castri (2013) and Klein and Mayer (2011).

随着移动货币系统的新颖性和快速增长,监管响应已经失去平衡。监管环境塑造了商业模式,竞争和创新的可行性和多样性。移动货币是一项大生意,但具有讽刺意味的是,它并不容易盈利(Aron 2017).8有证据表明,启动监管可提高移动货币系统的盈利能力和可持续性.9 Aron(2019),Di Castri( 2013)和Klein和Mayer(2011)。

The economics of mobile money: The micro view


Mobile money potentially helps ameliorate several areas of market failure in developing economies.10


Lower transactions costs


Transactions costs are reduced for sending and receiving money, especially with inadequate transport infrastructure. These include the transport costs of travel; the travel time and the waiting time in long queues; coordination costs between individuals, between firms and suppliers or customers, and between government and individuals; and costs of delays and leakages acting like a tax (or complete loss through theft from insecure methods of money transfer).


Improved transparency


The impact of enhancing transparency through electronic records is far-reaching. Every deposit, withdrawal, transfer or payment transaction through mobile money creates a recorded financial history. This protects customers’ rights and fosters trust in business, promoting the growth of efficient payments networks. Mobile money makes international remittances more affordable and traceable. Tax collection could be improved through mobile payment, and avoidance reduced through more visible spending. Mature mobile money systems foster the formalisation of the economy, integrating informal sector users into business networks, formal banking and insurance, and linking to government through social security, tax, and secure wages payments.




Mobile money alters the nature of saving and increases saving through digital means.  For the unbanked poor, their ‘immersion in physical cash creates considerable frictions in their financial lives’ (Radcliffe and Voorhies 2012). Cash-based households save informally with risk of theft, e.g. cash under the mattress; accumulation of assets such as jewellery or livestock; and saving via informal savings groups. Mobile money electronic accounts safely store cash, though without paying interest, and offer possibilities for commitment savings accounts (Dupas and Robinson 2013), encouraging saving by the poor.

移动货币改变了储蓄的本质,并通过数字手段增加储蓄。对于没有银行账户的穷人来说,他们“沉浸在实物现金中会在他们的财务生活中造成相当大的摩擦”(Radcliffe and Voorhies 2012)。以现金为基础的家庭可以非正式地存放被盗的风险,例如床垫下的现金;珠宝或牲畜等资产的积累;并通过非正式储蓄小组储蓄。移动货币电子账户安全地存储现金,但没有支付利息,并提供承诺储蓄账户的可能性(Dupas和Robinson 2013),鼓励穷人储蓄。

Privacy and empowerment of women


Women or minority groups often face limitations in opportunities and access to property, an aspect of inequality that can produce widespread economic inefficiencies. Mobile money can alter bargaining power within the family, empowering female mobile money users. Greater privacy may influence both inter-household allocations (Jakiela and Ozier 2016) and intra-household allocations (Duflo and Udry 2004). Compared with cash receipts, the reduced observability of the timing and sizes of mobile transfers and the accumulated electronic balances, could protect savings for the recipient.

妇女或少数群体往往在机会和获得财产方面受到限制,这是不平等的一个方面,可能导致广泛的经济效率低下。移动货币可以改变家庭内部的讨价还价能力,赋予女性移动货币用户权力。更大的隐私可能会影响家庭间的分配(Jakiela和Ozier 2016)和家庭内部的分配(Duflo和Udry 2004)。与现金收入相比,移动转账时间和规模的可观察性降低以及累积的电子余额可以保护收款人的节省。

Risk and insurance


Living standards of the poor are at risk of communal shocks including pestilence, other natural disasters, conflict and medical epidemics; and idiosyncratic shocks including theft, damage to the homestead, illness and death. Formal insurance is typically absent, but family, clan and network ties can create informal insurance networks, monitored by trust relationships within the network (De Weerdt and Dercon 2006). Jack and Suri (2011) suggest how mobile money can facilitate risk-spreading. The geographic reach of networks can enlarge. Timely transfers of even small amounts of money can arrest serious declines otherwise hard to reverse. More efficient investment decisions can be made, improving the risk and return trade‐off. Mature mobile money systems allowing access to micro-insurance provide an additional buffer.

穷人的生活水平面临着社区冲击的风险,包括瘟疫,其他自然灾害,冲突和医疗流行病;和特殊的冲击,包括盗窃,对宅基地的破坏,疾病和死亡。正式保险通常不存在,但家庭,部族和网络联系可以创建非正式的保险网络,由网络内的信任关系监控(De Weerdt和Dercon 2006)。 Jack和Suri(2011)建议移动货币如何促进风险传播。网络的地理范围可以扩大。及时转移甚至少量资金可以遏制严重下降,否则很难扭转。可以做出更有效的投资决策,改善风险并回报权衡。允许获得微型保险的成熟移动货币系统提供了额外的缓冲。

Expanding network and labour market opportunities


Mobile money could alter the size and cohesion of social networks. Improved risk-sharing and cheaper, long-range remittances expand the scope of labour decisions to higher-risk but higher-return occupations, or migration to higher-return labour markets (Suri and Jack 2016). Reduced transactions costs of remittances might foster more liberal attitudes to migration from the homestead (Jack and Suri 2011), though distant migrants are less observable and accountable. There is huge scope for research on network formation or dissolution, and on migration and remittance decisions, using mobile money transactions data (Chuang and Schechter 2015).

移动货币可能会改变社交网络的规模和凝聚力。改善风险分担和更便宜的长期汇款将劳动决策的范围扩大到风险更高但回报更高的职业,或向更高回报的劳动力市场迁移(Suri和Jack 2016)。汇款的交易成本降低可能会促使人们更加宽容地从家园迁移(Jack and Suri 2011),尽管远程移民的可观察性和责任性较低。使用移动货币交易数据进行网络形成或解散以及移民和汇款决策的研究范围很广(Chuang和Schechter,2015)。

Empirical evidence from the micro literature 


Demonstrating welfare and risk-sharing gains from mobile money across countries could bolster the case for government and donor support, and investment. A burgeoning microeconomic empirical literature has attempted to quantify the economic gains of access to secure financial services through mobile money, and factors driving the adoption of mobile money. However, this literature is burdened by problems with data, methodology, and identification.


Data challenges 


Institutional and political regime changes affect the uptake of mobile money. In Côte d’Ivoire, for example, the cessation of conflict from 2012 was key to mobile money adoption (Pénicaud and Katakam 2014). Shifts occur over time in the relevance of determinants, e.g. cheaper, more capable smartphones widen access and ownership. In principle, one could test empirically for the effects of shifts and regime changes.


Empirical regressions will be mis-specified when omitting hard-to-measure variables linked to mobile money, such as spillover learning effects in the community, and technological and quality changes. Important observables, such as education quality and wealth, are typically poorly measured, which may exacerbate the biases. Definitional ambiguities can introduce measurement bias in mobile money usage.11 However, if privacy concerns can be overcome, new access to a rich seam of big data, the administrative mobile money transactions from business and individuals, presents an enormous research opportunity.12


Figure 6 Registered and active total accounts


Source: Data from the GSMA State of the Industry report (2017).


Note: This figure shows that of the 690,000 registered accounts in December 2017, only 168,000 were 30 day active (i.e. at least one transaction was performed in the preceding 30 days).


Challenges for empirical methods


The quantitative empirical work encompasses studies assessing the determinants of the adoption of mobile money (i.e. a proxy for usage of mobile money is the dependent variable), and studies of the effects of mobile money on microeconomic outcomes. Examples of the latter include whether mobile money promotes improved risk-sharing, food security, consumption, business profitability, saving and effective use of cash transfers.


Two selection problems are faced, raising the problem of ambiguous causality.13 The roll-out of mobile money by operators and their agents may not be random if they choose areas to operate in based on household and village characteristics. For instance, if wealth determines agent selection into a village (and wealth is not properly controlled for in regressions) this will exaggerate the effect of mobile money in promoting consumption. It is difficult to disprove self-selection by the agents toward more profitable locations.14 A second selection problem is undisputed: adoption of mobile money by individuals is influenced by factors both observable (e.g. education, urban dwelling and the use of banking services) and unobservable (e.g. susceptibility to risk, community learning spill-over effects and changes in technology preference) that may also be correlated with mobile money use. Thus, it is difficult to establish one-way causality using measures of usage of mobile money.


The dominant empirical methodologies in this field are randomised controlled trials (RCT),15 quasi-experiments with a difference-in-differences estimation strategy or the non-parametric method of propensity score matching, and instrumental variables. The methods have differing degrees of success in dealing with heterogeneity16 at the individual or household level. Another consideration is whether results can be “scaled-up” or “transported” to generalise to other contexts with different institutional structures.


Assessing the evidence 


A detailed, technical survey of a range of studies is presented in Aron (2017, 2018). The best of these studies exploits panel data. Amongst the most convincing analyses are the difference-in-differences analyses demonstrating how mobile money has fostered risk-sharing amongst informal networks after large shocks. The proposed mechanism stems from the reduced transaction costs. The focus is not on the direct effect of mobile money usage on welfare, but on how mobile money usage interacts with a negative income shock (e.g. a drought or flood), while controlling for household characteristics.17 In Kenya, Jack and Suri (2014) find total consumption of mobile money users is unaffected by negative income shocks while consumption drops for non-users, especially the poorest. For Tanzania, Riley (2018) further examines the potential beneficial spillover effects of mobile money to the rural village community following a negative shock.

Aron(2017年,2018年)对一系列研究进行了详细的技术调查。这些研究中最好的研究利用了面板数据。在最有说服力的分析中,差异分析表明,移动资金如何在大规模冲击后促进非正式网络之间的风险分担。拟议的机制源于交易成本的降低。重点不在于移动货币使用对福利的直接影响,而在于移动货币使用如何与负收入冲击(例如干旱或洪水)相互作用,同时控制家庭特征.17在肯尼亚,杰克和苏瑞(2014年) )发现移动货币用户的总消费不受负收入冲击的影响,而非用户,尤其是最贫困人群的消费下降。对于坦桑尼亚,莱利(2018)进一步研究了移动资金在遭受负面冲击后对农村社区的潜在有利溢出效应。

The Ugandan rural panel study of Munyegera and Matsumoto (2016a) supports qualitative evidence that education and wealth influence adoption. Several studies claim the beneficial influence of mobile money on reported savings (by saving method), and on saving flows (Demombynes and Thegeya (2012), Munyegera and Matsumoto (2016a), and Mbiti and Weil (2016)). However, the results are compromised by problems of ambiguous causality, and no robust and conclusive results can be reached. RCT studies in Mozambique and Afghanistan (Batista and Vicente 2016, Blumenstock et al. 2015b) suggest saving did not increase though saving methods switched to mobile money; these studies use small and specialised samples and are probably not generalisable.

Munyegera和Matsumoto(2016a)的乌干达农村小组研究支持教育和财富影响采用的定性证据。一些研究声称移动货币对报告的节省(通过储蓄方法)和节约流量(Demombynes和Thegeya(2012),Munyegera和Matsumoto(2016a)以及Mbiti和Weil(2016))的有益影响。然而,由于模糊的因果关系问题导致结果受到影响,并且无法获得稳健和确凿的结果。莫桑比克和阿富汗的RCT研究(Batista和Vicente 2016,Blumenstock等人,2015b)表明,虽然储蓄方法转向移动货币,但储蓄却没有增加;这些研究使用小型和专门的样本,可能不是一般的。

Far less satisfactory are several (non-RCT) welfare studies reviewed, where results are generally judged unreliable by Aron (2018). Problems of ambiguous causality for the mobile money usage dummy are centre-stage, and the use of various methods18 to mitigate this are not always convincing. Two stronger studies are for Uganda (Munyegera and Matsumoto 2016a) and Kenya (Suri and Jack 2016). The Kenyan panel study suggests consumption growth for female-headed households was positive with access to mobile money, with occupational shifts out of farming, and 2% of Kenyan households were lifted out of poverty. But the result is tempered by probable bias, see Aron (2018).19

更为令人满意的是几项(非RCT)福利研究,其结果通常被Aron(2018)认为是不可靠的。移动货币使用虚拟的模糊因果关系问题是中心阶段,并且使用各种方法来减轻这种情况并不总是令人信服。乌干达(Munyegera和Matsumoto 2016a)和肯尼亚(Suri和Jack 2016)有两项更强有力的研究。肯尼亚小组研究表明,女户主家庭的消费增长是积极的,可以获得流动资金,职业转移到农业,2%的肯尼亚家庭摆脱了贫困。但结果却受到可能偏见的影响,见Aron(2018).19

A convincing RCT welfare study by Aker et al. (2016) finds household welfare improved after drought for recipients of cash transfers through mobile money accounts in Niger. Intra-household bargaining power for women was promoted20 and their productivity improved by reduced transport costs, travelling and queuing time. Recipients were more likely to cultivate and market cash crops, and child diets improved. To reap such benefits, the mobile money infrastructure must be functional. Generalisability awaits replication across other locations, cultures, continents and time periods.

Aker等人进行了令人信服的RCT福利研究。 (2016年)发现在尼日尔通过移动货币账户进行现金转移的受害者干旱后家庭福利有所改善。促进了妇女的家庭内部议价能力20,并通过降低运输成本,旅行和排队时间提高了她们的生产力。接受者更有可能种植和销售经济作物,并改善儿童饮食。要获得这些好处,移动货币基础设施必须具备功能。通用性等待其他地点,文化,大陆和时间段的复制。

Final thoughts


Atkinson (2015) argued that economic inequality is often aligned with differences in access to, use of, or knowledge of information and communication technologies (e.g. Figure 7). He stressed that researchers, firms, policymakers and governments have the possibility to shape the direction and path of technological change. Aid agencies, donors and international agencies have strongly fostered the beneficial growth of mobile money and financial inclusion.


Figure 7 The percentage of people NOT using the internet in 2016

图7 2016年未使用互联网的人口百分比

Source: Constructed using data from the ITU World Telecommunication, ICT Indicators database.


Static, micro-data-based snapshots are liable to understate the system-wide benefits of mobile money. Micro-analysis misses the positive externalities linked to network growth and increased transparency and formalisation of the economy. The static analysis misses the likelihood that many benefits take time to accumulate even at the individual level, so the long-term benefits are likely to be greater.


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