Mobile Money has become the most dominant financial service across the African continent with the latest GSMA study,  ‘State of the Industry Report on Mobile Money’, showing that accounts grew by 13 per cent globally in 2020 to more than 1.2 billion – double the forecast.

The growth is largely a result of dramatic acceleration in mobile transactions during the Covid-19 pandemic as lockdown restrictions limited access to cash and financial institutions.

The fastest growth was in markets where governments provided significant pandemic relief to their citizens.  

John Giusti, the GSMA’s Chief Regulatory Officer said that Mobile Money had emerged as a powerful tool for expanding the financial inclusion of women in low- and middle-income countries.

“This year’s report, however, found that across markets women are still 33 per cent less likely than men to have a mobile money account. The GSMA and its members are committed to closing this gender gap by addressing the barriers that prevent women from accessing and using mobile financial services,” he said.

For the first time, more than $1 billion was sent and received in the form of remittances globally every month via mobile money. Despite early fears that transactions would decline as people worldwide suffered job losses and income cuts during the pandemic, it remains clear that Diasporas continue to support family and friends back home.

As a result, the total value of transactions increased by 65 per cent to an annual total of $12.7 billion in 2020. 

As the Covid-19 pandemic negatively impacted people’s lives and weakened economies, regulators responded with a variety of measures aimed at reducing the impact.

The research found that the pandemic gave fresh urgency to the need for regulatory change to facilitate greater digitalisation. In many markets, transaction limits were increased to allow more funds to flow through mobile money.

Additionally, as demand rose for non-physical payments, some regulators classified mobile money agents and their supply chains as essential services. Over 50 per cent of mobile money agents were continuously active throughout the pandemic, which was crucial for service continuity and maintaining liquidity. 

While some of the regulatory reforms made in response to the pandemic have been positive for customers and providers, the implementation and extension of fee waivers has had a negative impact on mobile money providers’ core revenue stream.

 Mobile Money providers depend mainly on transactional revenues to sustain their business. Regulators are strongly encouraged to work closely with the industry to ensure sustainability going forward.  

However, others fear that while there is ample benefit to be gained from mobile money, fraud and cyber security challenges are likely to grow as threat actors are constantly coming up with more innovative tactics to compromise people’s wallets whether these pertain to traditional bank accounts or mobile wallets.

Bethwel Opil, Enterprise Sales Manager at Kaspersky in Africa said that going forward, it is therefore imperative that consumers remain vigilant and apply common sense to their transactions and engagements with mobile money services.

“Considering the significant growth and potential for mobile money and e-wallets, these payment platforms must maintain a high level of security and keep improving on it. Given the financial and reputational risk, no provider can afford to have its systems compromised,”

“However, security is only as strong as the weakest link in the chain. And like all other digital solutions, this is often the end user. Education is therefore the most critical component of mitigating the risk of social engineering compromises from people opening malicious links, sharing sensitive information, or falling foul of fraudulent schemes,”  added Opil.