Mobile money adoption in emerging markets to see $500b via PaaP
The value of mobile money transactions in emerging markets is set to increase by 33 per cent, or $500 billion, over the next four years to reach $2.1 trillion in 2027, according to a report from Juniper Research, which believes the adoption of payments-as-a-platform (PaaP) models will drive that growth.
Juniper said the PaaP approach enables third-party service providers to offer their products and services via mobile money apps. This delivers new revenue streams to mobile money operators and helps them more easily meet the “increasingly sophisticated” needs of their customers.
The report, ‘Mobile Money in Emerging Markets: Trends, Strategies and Market Forecasts 2023-2027,’ found that the use of such platforms will also attract a growing number of mobile financial services (MFS) users in emerging markets, with the total number of users expected to grow by about 40 per cent over the next four years to 411 million.
That growth “is a result of providers offering a variety of services, such as microloans and microinsurance, to satisfy growing user demand,” noted the firm, adding that for service providers to benefit from this demand, they need to invest in the technologies that enable them.
Report co-author, Cara Malone, said: “Vendors must effectively implement sophisticated MFS, or they will lose ground to rising competition.
“This can be best achieved through new approaches, such as leveraging existing data that operators hold to enable alternative credit scoring, allowing much greater lending opportunities.”
According to Juniper Research team, mobile money service providers need to “leverage data analytics to best retain customers and fight off rising competition.
“By gaining valuable insight into consumer behaviour and preferences, vendors can provide better-tailored services to end users. Combining this data with new third-party services via PaaP enables a more personalised service, which will boost customer satisfaction and revenues.”
Already, of the $836.5 billion mobile money transactions processed in Africa, West Africa recorded $277 billion.
According to the Global System for Mobile telecommunications Association (GSMA) with the $277 billion West Africa is ranked second after East Africa, which led with a transaction of $491.8 billion.
Central Africa came third with $57.6 billion, followed by Southern Africa at $5.3 billion and North Africa with $4.7 billion.
GSMA, which said the $836.5 billion transactions processed in Africa in 2022 represented a 22 per cent increase year-on-year, noted that the increase in transaction value, number of registered accounts and deployments observed across Africa as well as other parts of the globe significantly exceed industry expectations.
The growth in Nigeria can be attributed to the recent Payment Service Bank licence handed to MTN and Airtel by the Central Bank of Nigeria. They were additions to those of Globacom and 9mobile.
The report showed the volume of transactions processed in Africa in 2022 stood at 44.9 billion, representing a 21 per cent increase from the previous year, while the number of registered accounts grew from 648.23 million in 2021 to 781 million in 2022.
Globally, the total transaction value jumped from $1 trillion to $1.26 trillion between 2021 and 2022, while daily transactions through mobile money peaked at $3.45 billion, far above the $3 billion predicted in 2021.