Is Digital Commerce the Future for Mobile Money Providers?

There are over one billion mobile money (MM) accounts in the world today, and the industry processes about $2 billion every day. This scale, together with the growing number of mobile money providers (MMPs) that have achieved profitability in recent years, have proven that financial services targeted at low-income populations can be financially viable – and even shockingly profitable.

However, MMPs risk becoming a victim of their own success if they do not seek new models. As mobile money usage rates grow, particularly in P2P transfers and merchant payments, users are keeping more of their money digital. This means that MMPs will find the cash in/cash out (CICO) transactions that have powered their account books to date begin to dry up.

Moreover, MMPs are facing increased competition from platform competitors in e-commerce like WhatsApp Pay, and from fintech startups like Chipper Cash. As these pressures grow, as discussed in our recent Profitability 2.0 report co-authored with GSMA, MMPs in emerging markets need to grow beyond a purely transactional model to avoid stagnating in the face of rapid fintech innovation (to include, for example, the revenue sharing agreements for financial services, data and analytics licensing, ecosystem partnerships, and more, as described in the report).

One promising area of growth is digital commerce. In the Catalyst Fund Inclusive Digital Commerce program, we have found that the ecosystem of digital commerce startups in Ghana is growing, but to expand further, these companies require precisely the sort of enabling services that MMPs are imminently able to provide. To serve these startups and partake in the growing digital commerce sector, MMPs should think about leveraging mobile money agent infrastructure as a platform that can serve as a middle layer for tech-enabled businesses and ecosystems. This approach can power the rapid and inclusive growth of digital commerce, while also providing MMPs additional sources of revenue.