What is mobile money and why is it important for Africa?

07 Dec 2021 - Category: Blog /
mobile money

Mobile Money is a fast and secure way to transfer money, make payments and conduct financial transactions through your mobile phone. Over the last fifteen years there has been a rise in mobile money across the world and in particular throughout countries in Africa.

So why is mobile money so common today and how has it become such an important part of daily life for so many people?

In this post we’ll highlight what mobile money is and why it’s important for Africa, exploring topics including:

  • What is Mobile Money?
  • History of Mobile Money
  • The Benefits of Mobile Money
  • African Countries that allow Mobile Payments
  • Value of having a Mobile Wallet
  • Using Small World

What is Mobile Money?

Mobile money is a way for people to receive, send and store money using their mobile phone. It is a technology that has developed rapidly over the last twenty years and is now one of the most convenient ways for people to manage their funds.

Mobile money is also sometimes referred to as ‘Mobile Wallet’. It is a way to become financially secure without using a bank account or debit card and without having to deal with any paperwork. Anyone with a mobile phone can within minutes start using a mobile money through their secure electronic account that is linked to their mobile phone number. There are hundreds of mobile money services around the world and they are particularly popular in Africa, Latin America and Asia.

With mobile money users can buy items in shops and online, they pay bills and top up their mobile airtime. The whole process is as simple as sending a text message which is part of why it has become so popular and such an important part of life for people in Africa.

The History of Mobile Money

Mobile Money is a relatively recent innovation that is generally said to have begun in 2002 with the project that became M-Pesa, one of the world’s largest mobile money transfer services and a partner of Small World. A company like M-PESA grew from humble beginnings to now have around 400,000 agents across seven countries which shows the meteoric rise mobile money has taken in the last twenty years.

Mobile money services, created to serve the underbanked, truly took off in 2007 when the first iPhone launched and smart mobile technology evolved to become more affordable. Quickly it became easy for everyone to have mobile phones and companies like M-Pesa saw the opportunity.

The Benefits of Mobile Money

Millions of people use mobile money everyday but what are the actual benefits? Why not just use a traditional banking service? Below we’ve highlighted the benefits of using mobile money today:

Fast - users can complete all their financial transactions and payments instantly without having to worry about delays. This is ideal for receiving money and it is also ideal for paying bills.

Convenient - Almost everyone has access to a phone in Africa so mobile money and mobile wallets are a convenient solution to any of their financial issues.

Secure - Funds in mobile wallets are protected by local regulations and your identity must also be checked to ward against fraudsters and people intent on using the service illegally

Direct - There is no middle man when it comes to mobile money. Users can send and receive money directly without worrying about any third party

Flexible - Users have a lot of options with a mobile wallet and when using mobile money. You can send, receive, store and spend money all from their mobile account.

Simple - Using mobile money is as simple as sending a text message. Mobile wallets are partly designed to facilitate financial accessibility for all kinds of people. Mobile wallets are simple to use even if you have no experience with banking or finances.

African Countries that allow mobile money

There are a number of countries in Africa that have a significant mobile payment industry. Kenya and Ghana lead the world when it comes to mobile money but they are not the only countries in Africa that have a mobile money presence.

Below is a list countries in Africa that significant mobile money services:

  • Botswana
  • Burundi
  • DRC
  • Egypt
  • Ethiopia
  • Ghana
  • Guinea
  • Kenya
  • Lesotho
  • Liberia
  • Madagascar
  • Malawi
  • Mauritania
  • Mauritius
  • Morocco
  • Mozambique
  • Namibia
  • Nigeria
  • Rwanda
  • Sierra leone
  • Somalia
  • South Africa
  • Sudan
  • Swaziland
  • Tanzania
  • Tunisia
  • Uganda
  • Zambia
  • Zimbabwe
  • Countries that use CFA franc currency
    • Benin
    • Burkina faso
    • Cameroon
    • Chad
    • Gabon
    • Guinea-Bissau
    • Ivory Coast
    • Mali
    • Niger
    • Senegal
    • Togo

The value of having a Mobile Wallet

The value of being able to make quick and easy mobile payments has increased during the pandemic. As it has become more difficult to visit banks in person and to conduct physical interactions, the mobile wallet has become an essential tool to enable financial accessibility. People need an easy way to transfer money to help to support their loved ones and the mobile wallet has been there to help.

For countries like Kenya and Ghana mobile wallets have been especially important in recent years. The Bank of Ghana published information in March of 2021 that showed that there were 14.7 million active mobile money accounts and 235,000 active agents. Similarly, in Kenya mobile money transactions surged by 52% in 2021 and across the country there are now around 67 million mobile money accounts.

Using Small World

Small World is the number one international money transfer service. We help millions of people all around the world send and receive money across borders. If you need to send money to Africa, Small World can help you.

You can support your loved ones via Small World’s money transfer services which include mobile services like Mobile wallet and Airtime top-up, as well as other services like Cash Pickup and Home Delivery. Click here to learn more about how you can make the most of our money transfer services.

Your first transfer online is always free of fees!

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