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A new report by GSMA, an association that represents interests of over 750 mobile network operators globally, reveals a dramatic acceleration in mobile transactions during the COVID-19 pandemic as lockdown restrictions limited access to cash and financial institutions.
In its State of the Industry Report on Mobile Money 2021, the report notes that during the pandemic, demand for mobile money increased among businesses, governments and new services that previously relied on cash or other payment channels.
The report found that the number of registered accounts grew by 13 per cent globally in 2020 to more than 1.2 billion – double the forecast. The fastest growth was in markets where governments provided significant pandemic relief to their citizens.
“This strong and steady growth suggests that customers are using mobile money in more advanced ways and in all aspects of daily life. This marks a change from the early days of mobile money when the main use cases were bill payments and P2P payments in the form of occasional domestic remittances,” said Akinwale Goodluck, GSMA head of Sub-Saharan Africa.
For the first time, more than $1 billion was sent and received in the form of remittances globally every month via mobile money.
Despite early fears that transactions would decline as people worldwide suffered job losses and income cuts during the pandemic, it remains clear that diasporas continue to support family and friends back home.
As a result, the total value of transactions increased by 65 per cent to an annual total of $12.7 billion in 2020.
In working towards achieving the Sustainable Development Goals (SDGs), the GSMA remains committed to reducing inequalities among countries when sending money internationally.
According to GSMA’s research, mobile money provides an affordable channel for connecting people to vital financial resources.
The mobile money ecosystem has been strengthened by an increasing number of strategic partnerships established between money transfer organisations and mobile money providers.
As the COVID-19 pandemic negatively impacted people’s lives and weakened economies, regulators responded with a variety of measures aimed at reducing the impact.
The research found that the pandemic gave fresh urgency to the need for regulatory change to facilitate greater digitalisation. In many markets, transaction limits were increased to allow more funds to flow through mobile money.
Additionally, as demand rose for non-physical payments, some regulators classified mobile money agents and their supply chains as essential services. Over 50 per cent of mobile money agents were continuously active throughout the pandemic, which was crucial for service continuity and maintaining liquidity.
While some of the regulatory reforms made in response to the pandemic have been positive for customers and providers, the implementation and extension of fee waivers has had a negative impact on mobile money providers’ core revenue stream.
Mobile Money providers depend mainly on transactional revenues to sustain their business. Regulators are strongly encouraged to work closely with the industry to ensure sustainability going forward.