GSMA Identifies Barriers to Mobile Money Adoption in Emerging Markets 

Emma Okonji

With more than 866 million registered mobile money accounts globally and $1.3 billion processed daily, mobile money serves as a critical infrastructure for start-ups looking to increase digital payment adoption among their customers in emerging markets, yet they face challenges of adoption, according to the latest report from the General System for Mobile Communication Association (GSMA), the global body that represents the interests of mobile operators world-wide.

Inspired by this development, the GSMA Ecosystem Accelerator and Mobile for Development Utilities teams hosted an online clinic diving into mobile money adoption strategies specifically for start-ups in emerging markets in Africa and Asia Pacific.

While analysing the report from the online clinic, Senior Manager for Inclusive Fintech, Anant Nautiyal, and  Data and Insights Director, Nika Naghavi, who work in the GSMA Mobile Money programme, gave an overview of the mobile money industry in some selected emerging markets as it undergoes crucial technological and organisational transformations.

According to them, when it comes to driving mobile money adoption, start-ups from emerging markets face a range of different challenges depending on the context and sector that they operate in. They listed some of the barriers to include: Educational and digital literacy barrier; Product design barrier and Affordability barrier.

For Educational and digital literacy barriers, they explained that for many start-ups, particularly those operating in rural or low-income settings, their customers are first time mobile money users. “Addressing education and digital literacy barriers is therefore critical for driving mobile money adoption and providing greater access to the start-up’s product offering,” Nautiyal said.

Citing Nigeria and Ghana as some of the emerging markets in Africa, Naghavi said: “In rural Ghana, Safe Water Network (SWN), operates mobile money-enabled prepaid household meters, and water treatment and distribution stations. Initially, their users lacked trust in the technology. To resolve this challenge, SWN partnered with MTN Ghana to tackle educational and product design barriers through interactive group work-shops and one-one sessions, as well as a promotional campaign offering prizes to the ‘super-star’ mobile money users. Though cash still represents a significant proportion of total payments, the impact of the joint-campaign is evident.”

According to him, Gham Power develops solar microgrids and solar water pumps, which heavily relied on digital payments for cash collection in rural Nepal and so partnered with mobile operator Ncell, and eSewa, a digital wallet provider, to leverage their agent networks. Gham Power invested in training agents with video tutorials and ensured that agent incentive structures were designed to drive digital payment adoption among rural customers.

In the area of Product design barrier, the report said product design barrier could include language restrictions, lacking suitability for basic and feature phones, and the limitations of finances, culminating in poor customer experience and user experience, and therefore poorly designed products not suitable for targeted users.

According to the report, SWN realised the importance of communicating with its customers and employed the use of SMS notifications to communicate about deductions from customers’ MTN mobile wallets – fostering an environment of trust and transparency with low-income users. Given the low smart phone penetration in Senegal, MaTontine, a start-up from Senegal had to ensure that its product offering could operate on basic and feature phones, whilst facilitating trust in their digital service for their female users.

The report also noted that affordability was also a barrier, when mobile money transaction fees account for a significant proportion of the average end-user utility bill payment, which it said, could be a significant barrier to adoption, along with weakening the economic case for mobile money adoption for businesses that rely on small frequent transactions (such as pay-as-you-go). “This is particularly true for first-time mobile money users and in nascent mobile money ecosystems, where fees are often interpreted as an insurmountable entry cost. Given the immense operational cost savings from high mobile money adoption, SWN decided to absorb the mobile money transaction fee charged to its customers in order to ensure widespread adoption among its customer base,” the report added.