Money transfer via mobile phones has expanded to 16 percent of the total population in sub-Saharan Africa, according to a new World Bank study that provides a global picture for how people save, borrow, make payments and manage risk.
The Global Financial Inclusion Database, or Global Findex, has found only 3 percent of the population in the rest of the world take advantage of money transfers through mobile phones.
In sub-Saharan Africa, take-up of mobile money services, pioneered by Kenya-based Safaricom's M-Pesa service, has been boosted by the fact that traditional banking is hampered by transportation and other infrastructure problems.
"Money transfers through mobile phones is a form of increasingly nontraditional banking that often doesn't require users to travel or set up an account at a brick-and-mortar bank," according to a statement issued by World Bank.
"Such mobile banking allows account holders to pay bills, make deposits or conduct other transactions via text messaging," the World Bank noted. Kenya, where 68 percent of adults report using a mobile phone for money transactions, has seen particularly impressive growth in this market.
According to the study, three-quarters of the world's poor do not have a bank account, not only because of poverty, but also because of the cost, travel distance, and the amount of paperwork involved in opening one.
"Nearly two-thirds of the unbanked cite poverty as the obstacle to financial access, but about a third also blame the cost of opening and maintaining an account or the bank's being too far away, which means long bus rides for many," said Asli Demirguc-Kunt, the Bank's director of development policy and chief economist of the Finance and Private Sector Network.
In markets like Uganda, mobile money transfer services have become a revenue generator, with players hotly competing for users as margins on voice services have been driven down over the years. MTN Uganda, for example, has more than 2 million registered customers after launching in March 2009. MTN reported recently that US$100 million gets transferred over the service every month.
The four mobile money offerings in Uganda including MTN Mobile Money, Airtel Money, Warid-Pesa and Uganda Telecom's M-Sente are largely similar, allowing registered users to load money into their accounts, make transfers to other users, buy recharge vouchers as well as withdraw money.
The services have been positioned differently though. MTN positioned their offering as a way to send money to others, just like M-Pesa in Kenya.
Subsequent offerings had to find ways to differentiate themselves. Airtel's Money, which was launched in March this year, touts itself as being much more than money transfer, allowing its users that have formal bank accounts to access them.
UTL's M-Sente presents itself as a general payment method with "simply pay with M-Sente," while Warid Telecom's Pesa markets itself as the "true mobile money service," as users can send money across all rival networks.
In addition to money transfer, other types of transactions are beginning to emerge. In March the MTN Group and Western Union took mobile money transfer global to allow the more than 2 million customers of MTN's mobile money transfer service in Uganda to add funds to their accounts, which they can send through Western Union's system. They can receive money via the same system from anywhere in the world.
Western Union has similar agreements with Safaricom's M-Pesa in Kenya, Vodacom in Tanzania, Telmar Madagascar and Inova in Burkina Faso, and other such agreements are in the works.
Locally, the National Water and Sewerage Corporation (NWSC), the water utility in Uganda, has closed hundreds of its agency offices around the country and is encouraging customers to pay their bills via mobile money services. Payments via mobile phones are also catching up in other sectors as companies realize they can cut collection costs.
World Bank Group President Robert Zoellick said that providing financial services to the 2.5 billion people who are "unbanked" could boost economic growth and opportunity for the world's poor. Data in the bank's survey was collected by Gallup using the Gallup World Poll Survey.