MOBILE money transactions represent a substantial portion of domestic economic activity in many countries across sub-Saharan Africa. In countries such as Kenya, Tanzania and Zambia, mobile money transactions volumes and values even exceed domestic electronic funds transfers (EFTs), according to their respective central banks. Despite the runaway growth of mobile money, there is still a dearth of research into why people in many markets prefer mobile money payments to the alternatives.
While much has been written about the benefits of mobile money in driving financial inclusion, there is less literature regarding the consumer’s experience and preferences. Do people see a difference between traditional currency and mobile money? What do they prefer and why?
The process of obtaining a mobile money account is easier than getting a bank account, with regulated basic identification validation with mobile money operators as effortless with minimal paperwork. Basic validation provides a user with entry-level transaction limits. In addition, users can complete additional validation for higher transaction limits. However, entry-level transaction limits are sufficient for most users to settle their routine household and business payments.
Mobile money users also find it easy to load value into the mobile money wallet through an EFT from their bank account or via a widespread agent network that can convert physical cash into mobile wallet value. Some users opt to receive their salary payments directly into their mobile money wallet.
It is also convenient to spend mobile money. Users simply enter the phone number or merchant number of the person or entity they want to pay and complete the transaction at the click of a button. Mobile money is widely accepted and anyone with a phone and mobile number can receive a payment. By contrast, the adoption of card terminals, especially within the informal sector, is low. Mobile money is used to pay municipal bills, school fees and rent, to name a few.
The recipient in a mobile money transaction receives funds instantly and can acknowledge receipt by viewing the cleared funds in their account. Mobile money transactions do not require a proof of payment or experience a delay of a day or two in clearing funds, as is the case with most EFT transactions.
System stability emerged is also a key factor that drives adoption. The mobile money system is never down, with a service that is available 24 hours a day and seven days a week. This is something that most banks and card processors aspire towards.
With mobile money, the payer is levied a transaction fee. Users are aware of this small fee and are happy to pay, given the convenience of the mobile money payment experience.