Mobile Money in MEA: Transformation, Opportunities, and Challenges

The banking sector in the MEA region is being revolutionised by mobile money. Discover all about the opportunities for financial inclusion and growth.

Dec 14, 2023 - 2 min.
Picture of: Branka Miljanovic
Branka Miljanovic

Mobile money is currently a hot topic of discussion and has the potential to revolutionise payment transactions worldwide. Mobile money is an electronic payment system enabling financial transactions via mobile devices. It offers an alternative to traditional payment methods such as cash or credit cards and is particularly popular in regions with limited access to traditional banking services. Read this blog to find out what advantages the payment system offers, how it works and why it is so important in the MEA region in particular.

How mobile money works

Similar to prepaid credit, mobile money enables convenient electronic money transfers. The mobile phone number is linked to the bank account. This also means that the ability to make financial transactions is not reliant on Internet access. A mobile phone signal is all that’s required.

This allows users to send money directly from their mobile phones to other users. Users normally only require a mobile phone and a SIM card to access mobile money services. Consumers can use the system to deposit money into their mobile accounts or withdraw money from authorised agents. Originally introduced as home banking, it also opens up opportunities for non-financial companies to operate payment services.

In addition to transfers, the main functions of mobile money services include paying for goods and services, account-like money storage and the payment of bills.

Mobile money is transforming banking in the MEA region

The MEA region is home to some of the world's strongest economies, whose citizens have considerable purchasing power. Examples include the Gulf Cooperation Council region with countries such as Qatar, the United Arab Emirates (UAE).

Mobile money has triggered a veritable financial revolution in these countries, particularly in rural areas. Millions of people now have access to financial services without relying on traditional bank accounts.

The upturn is particularly noticeable in Africa, the world’s largest market for mobile money, where more than half of the population has no access to credit or bank accounts. This payment trend has changed the game's rules in a region where almost 60 per cent of the population often has no access to traditional banking services. According to the World Bank, more than half of all mobile money accounts worldwide – over 400 million registered users – are located in Sub-Saharan Africa. What’s more, many of these countries still have a high number of mobile phone users.

Key role in overcoming global challenges

The worldwide COVID-19 pandemic, in particular, highlighted the advantages of mobile money and took it to a new dimension. Particularly for the most vulnerable communities suffering from poverty, disease and economic difficulties, this technology is proving to be indispensable. In Bangladesh, where an estimated 68 per cent of the population have access to mobile phones, but only 15 per cent have a bank account, the ongoing development of mobile money could enable almost 50 per cent more people to access financial services.

However, there are other advantages: 

  • Changing lives for people with no access to banks
    Mobile money removes barriers for billions of people who were previously locked out of financial services. This in term promotes economic growth and individual fulfilment.
  • Global networking of millions of people
    Mobile money connects people worldwide by enabling convenient payments to friends and relatives. It even makes it easier for family members abroad to send money without a bank account.
  • Financial relief and humanitarian aid
    The ability to receive money via mobile phone enables access to life-changing services. From insurance to small business loans, mobile money gives millions of people access to financial services, especially in countries like Nigeria.
  • Less corruption and more security
    In some countries, mobile money reduces the level of corruption and bribery frequently associated with official payments. The ability to access services without any personal interaction with officials increases transparency. Financial accounts also remain protected by local financial regulations.

Secure authentication options for mobile money

To prevent fraud and ensure secure user identification in mobile money systems, simple and seamless access to content and functions is crucial. Complex passwords, lengthy procedures and transaction fees represent obstacles that are becoming less and less important in today’s digitalised and mobile world. Efficient methods for secure authentication are, therefore, essential.

In particular, biometric procedures, which are used as an additional factor as part of two-factor authentication (2FA), guarantee not only maximum security but also a seamless customer experience without much effort on the part of the user.

 

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