Mobile Money Expansion
In today’s rapidly evolving digital landscape, mobile money has emerged as a transformative force, revolutionizing the way we conduct financial transactions. From East Africa’s groundbreaking success with M-Pesa, to the emergence of digital wallets in Southeast Asia and the Middle East, the reach and adoption of mobile money have expanded exponentially. As telecom experts, it is essential to delve into the intricacies of mobile money, understand and identify ways to mitigate the risk and concern, and explore how it affects the industry overall. Let’s examine how mobile money has expanded over the last few years, review the concerns, and learn about progressive solutions emerging in parallel.
What is Mobile Money? (MFT)
Mobile money, also known as MFT (Mobile Financial Technology), refers to the use of mobile devices for financial transactions. It enables individuals to make payments, transfer funds, and conduct other financial activities using mobile phones or portable devices. With mobile money, users can bypass the need for traditional banking services, offering convenience, accessibility, and financial inclusion to a broader population. The GSMA stated that limitations during the COVID-19 pandemic were a culprit for driving mobile money usage as a safe option to shop, pay bills, and send money.
400 million: the estimated additional registered mobile money accounts than forecast in 2019.
In 2020, global daily transaction values exceeded $2 billion. The State of the Industry
Report on Mobile Money 2021 (covering data from 2020) suggested this could reach $3 billion a day by the end of 2022. This figure has been surpassed, with $3.45 billion transacted daily via mobile money in 2022.
Some of the fastest growing uses included bill payments, up 36% year on year, bank to mobile interoperable transactions, an increase of 36% year on year, and mobile to bank transactions, rose 47%).
Mobile Money Fraud in the US and Overseas
Access to mobile money services has transformed the lives of millions, especially overseas, where people were previously unbanked. As the adoption of mobile money services increases, so does the risk of mobile money fraud. Mobile money scams through SMS have become a prevalent concern in the United States. Fraudsters exploit vulnerabilities in communication networks to deceive unsuspecting users and gain unauthorized access to their financial resources.
However, the situation is not limited to the US. Several countries across the globe face similar and more severe challenges. Africa, the Middle East, and South Asia have the highest rates of mobile money fraud and experience various tactics, such as identity theft, SIM card swapping, unauthorized transactions, and phishing attacks, to target unsuspecting users.
The Middle East and North Africa – though still low in absolute numbers – were far out front in 2022 with a 39% year-on-year growth rate in registered accounts, followed by Latin America and the Caribbean at 13%. Meanwhile, South Asia accounted for 20% of all new accounts and East Asia and the Pacific are now home to more than one in five registered accounts – compared to one in ten in 2018.
Africa has seen a remarkable expansion in mobile money services, which can be attributed to several factors, including: limited access to traditional banking infrastructure, a large unbanked population, and the widespread adoption of mobile phones across the continent. As of 2022, Africa saw a 22% growth in transaction value to a whopping 836.5 billion.
Top 5 Fraud Issues of 2023 compared to 2019
How 1Route Helps Prevents Mobile Money Fraud
The surge of mobile money fraud has created various obstacles and poses significant concerns for the telecom industry. One of the looming questions is, “Are communications providers ready to take on the responsibility for delivering more advanced financial services over the phone?” Implementation of security measures continues to ensure the trust and confidence of users and institutions.
Our robust system analyzes each transfer and payment request at the initiated stage, employing Vicinity Checks, Real-time reporting, White, Gray, Blocklisting, and Watch Lists. The technology is compatible with TDM and SIP transactions, enabling comprehensive protection against fraudulent activities. By drastically reducing fraudulent transactions, 1Route helps bolster the integrity of mobile money services, providing peace of mind to individuals and businesses alike.
Impact of Mobile Money Fraud
The consequences of mobile money fraud extend beyond financial losses. Individuals and businesses suffer significant financial risks, which can lead to long-lasting repercussions. Fraudulent transactions can drain the resources of individuals relying on mobile money for their day-to-day payments. The negative impact on customer trust and financial stability can devastate businesses.
Despite the concerns surrounding mobile money fraud, the technology and accessibility continue to grow at an accelerated pace. While mobile money services are primarily focused on facilitating peer-to-peer transactions, the evolution of mobile money is expanding its reach into the broader financial industry. Partnerships between mobile money providers and traditional financial institutions are forming, enabling users to access a wider range of services.
Mobile money providers are also exploring innovative ways to leverage data and offer value-added services, such as credit scoring based on transaction history. Capitalizing on mobile money’s momentum requires continued innovation, regulatory support, and collaboration between mobile network operators, financial institutions, and telecom companies to unlock its full potential and drive financial inclusion worldwide.
Mobile money is expected to play a vital role in the global financial ecosystem as technology advances and security measures improve. However, industry stakeholders must remain vigilant, address concerns promptly, and implement innovative solutions, like those provided by 1Route, to ensure a secure and progressive future for mobile money.