State of the Industry Report on Mobile Money 2018 Copyright © 2019 GSM AssociationThe GSMA represents the interests of mobile operators worldwide, uniting more than 750 operators with over 350 companies in the broader mobile ecosystem, including handset and device makers, software companies, equipment providers and internet companies, as well as organisations in adjacent industry sectors. The GSMA also produces the industry-leading MWC events held annually in Barcelona, Los Angeles and Shanghai, as well as the Mobile 360 Series of regional conferences. For more information, please visit the GSMA corporate website at gsma Follow the GSMA on Twitter: GSMA Lead author: Francesco Pasti Senior Manager, Mobile Money Services, GSMA, with the support of the wider GSMA Mobile Money team The GSMAs Mobile Money programme works to accelerate the development of the mobile money ecosystem for the underserved. For more information, please contact us: Web: gsma/mobilemoney Twitter: GSMAMobileMoney Email: mobilemoneygsma Mobile Money THE MOBILE MONEY PROGRAMME IS SUPPORTED BY THE BILL & MELINDA GATES FOUNDATION, THE MASTERCARD FOUNDATION, AND OMIDYAR NETWORK 2018 State of the Industry Report on Mobile MoneyFOREWORD 2 EXECUTIVE SUMMARY 4 MOBILE MONEY IN 2018 7 THE BIG PICTURE 8 2018 MOBILE MONEY HIGHLIGHTS 12 REGIONAL GROWTH 13 REACHING THE UNDERSERVED THROUGH INNOVATION 14 FOUR TRENDS SHAPING THE MOBILE MONEY INDUSTRY 18 CONCLUSION 34 Contents 2018 State of the Industry Report on Mobile MoneyForeword 2018 State of the Industry Report on Mobile Money 2For over a decade, mobile money has been transforming access to financial services around the world. The scale of mobile money continues to grow, with more than 866 million registered accounts in 90 countries and $1.3 billion transacted every day. The progress, challenges and most ground- breaking industry trends are explored in this years flagship report from the GSMAs Mobile Money team. For the worlds most vulnerable, especially displaced persons and women, the benefits of mobile money are real and far reaching. Fifty-five per cent of surveyed mobile money providers have now partnered with humanitarian organisations, an initiative closely supported by our Mobile for Humanitarian Innovation programme. In August 2018, our Connected Women team released the Gender Analysis and Identification Toolkit (GAIT), a machine learning algorithm that analyses mobile usage patterns, to assist operators in reaching underserved female customers with relevant and tailored products and services. We were also honoured to launch the GSMA Mobile Money Certification in April 2018, demonstrating the mobile industrys commitment to bringing safe, transparent, and resilient financial services to mobile money users around the world. To date, nine providers across three continents have successfully certified, collectively covering over 133 million mobile money accounts. The mobile money industry is now fast- evolving against a backdrop of increasing internet access and smartphone adoption. Successful providers are moving towards a 'payments as a platform approach', expanding their value proposition to a full range of third- party products and services to suit customers with diverse needs. This signals the start of a major shift in the mobile money industry, which will promote digitisation more broadly: mobile money customers will not just have access to an account, but rather to a full suite of services that are relevant to their daily lives, encouraging them to keep their funds in digital form and building resilience to financial shocks. Now more than ever, mobiles unparalleled global scale provides a tremendous opportunity to reach the 1.7 billion people who remain financially excluded. I am pleased to have been appointed to the United Nations Secretary-General's Task Force on Digital Financing of the Sustainable Development Goals to harness this potential, and I look forward to working closely with fellow Task Force members to unleash the power of technology and digital financing in all corners of the world. I hope that you enjoy exploring the 2018 State of the Industry Report on Mobile Money, which has been produced with the generous support of the Bill & Melinda Gates Foundation, The Mastercard Foundation and Omidyar Network. Mats Granryd Director General, GSMA Foreword 3 2018 State of the Industry Report on Mobile MoneyExecutive Summary 2018 State of the Industry Report on Mobile Money 4Providers are attracting new investments and forming strategic partnerships, leveraging data and innovative financial technologies, and developing robust and interoperable payments systems to diversify their revenue, product offerings and customer base. In 2018, following a decade of incredible growth, the mobile money industry is still getting the fundamentals right. Mobile money accounts continue to provide a gateway to life-enhancing services, such as healthcare, education, financial services, employment and social protections, which are reaching customers who have traditionally been underserved by the financial system. Many industry players have reached scale, and account registrations, activity rates and transaction values continue to grow steadily. While cash-in and cash-out transactions still represented the majority of mobile money flows in 2018, digital transactions grew at twice the rate, driven largely by bill payments and bulk disbursements. Successful providers are now looking to strengthen their value proposition with a full suite of use cases that serve diverse customer needs. This shift towards a 'payments as a platform' approach is at the heart of the industrys new direction. This years State of the Industry Report looks at how providers are navigating this dynamic and shifting ecosystem, which was shaped by four key trends in 2018: An enhanced customer experience. 2018 saw a dramatic increase in smartphone adoption in emerging markets, unlocking access to a broader customer base and allowing providers to offer a wider range of financial products and services through user-friendly apps. Interoperability also continued to be a strategic priority for the industry, not only to increase the utility of mobile money for users, but also to allow increasingly important use cases to scale up faster. The main drivers of digital growth in 2018 were bulk disbursements and bill payments a signal that mobile money providers are becoming strong partners for enterprises. Diversification of the financial services landscape. While large MNO groups still dominate Africas mobile money ecosystem, in Asia, fintechs and tech giants have entered the payments space and developed a range of customer-centric use cases, from transportation to food, medical and financial services, and amassed a vast number of partners, including financial institutions. Mobile money providers in both Asia and Latin America, including fintech players, are driving growth in the mobile payment ecosystem, and expanding from e-commerce to offer financial services such as credit. Now processing over $1.3 billion a day, the mobile money industry added a record 143 million registered customers in 2018. Executive Summary 5 2018 State of the Industry Report on Mobile MoneyIncreasingly complex regulation. As the number of players in the digital financial services ecosystem grows exponentially, regulation is becoming increasingly complex. Five main themes dominated the mobile money regulatory landscape in 2018: taxation, KYC requirements, cross-border remittances, national financial inclusion strategies and data protection. These developments call for a more nuanced evaluation of regulatory frameworks and collaboration between providers and regulators to achieve the mutual aim of expanding mobile money services. Expansion of the mobile money value proposition. In our 2018 Global Adoption Survey, close to 80 per cent of providers reported that most of their revenues are driven by customer fees. Many providers are now seeking to strengthen their value proposition with a 'payments as a platform' model. This connects consumers and businesses with a range of third-party services to meet their evolving needs, from enterprise solutions for micro-, small- and medium-sized enterprises (MSMEs) to e-commerce, credit, savings and insurance. It was not only these trends that captured our attention in 2018. Other compelling developments include reforms in Africas three most populated countries, Nigeria, Ethiopia and Egypt, which we expect to spark a wave of adoption which could lead to over 110 million new mobile money accounts in the next five years. Mobile money continues to play a vital role in financial inclusion. Globally, around 1.7 billion people still lack access to safe, reliable and convenient financial services. 1However, 31 emerging markets have seen an impressive increase in financial inclusion rates, which can be attributed to simultaneous growth in active mobile money use. Although much work remains to be done in closing the mobile money gender gap, there is evidence from the 2017 Global Findex that the mobile money gender gap has narrowed in 17 countries in Sub-Saharan Africa and in one country in Latin America (Bolivia). Our Global Adoption Survey data revealed a strong positive correlation between the percentage of female agents in a providers network and female customers. In this report, we take a closer look at these trends and unfolding industry stories. The full findings of this years State of the Industry Report on Mobile Money are based on the analysis of data collected through the GSMAs Annual Global Adoption Survey. om 17 poddly bythmoblmoyduty wt moth W th to h-/ h-out vlu 9 - W 31 om 17 ompdto54 17d13 13 4% , Ô, F F umoblmoyotvb 1. World Bank Group (2018). The Global Findex Database 2017. 6 2018 State of the Industry Report on Mobile Money om 17 poddly bythmoblmoyduty wt moth W th to h-/ h-out vlu 9 - W 31 om 17 ompdto54 17d13 13 4% , Ô, F F umoblmoyotvb 2018 State of the Industry Report on Mobile Money 7THE BIG PICTURE: Availability, adoption, accessibility and usage 2018 State of the Industry Report on Mobile Money 8In 2018, the mobile money industry added another 143 million registered customers globally with the total number of accounts reaching 866 million a 20 per cent year- on-year increase. As in 2017, most of this growth came from Asia, where 90 million new accounts were opened. East Asia and Pacific experienced the highest year-on-year account growth at 38 per cent, and the region now represents 11 per cent of registered accounts globally (Figure 1). Activity rates are stable at the global level: 34.5 per cent of the worlds registered accounts are now active, 3up from 33.9 per cent in 2017. Activity rates are once again highest in Latin America and the Caribbean (48.5 per cent), while the biggest increases are in Asia (East Asia and Pacific and South Asia) where activity rates in several countries increased by more than 10 per cent. While activity rates in Sub-Saharan Africa remain stable at 36.8 per cent, largely unchanged from 2017, the region added over 17.5 million new active accounts in 2018. In 13 African countries, 4over a third of adults are active mobile money users. Transaction values increased by 17 per cent in 2018, with 272 live deployments in 90 countries transacting $40.8 billion in the month of December. The industry is therefore now processing over $1.3 billion per day, and while cash-in and cash-out transactions still represent the majority of mobile money flows, digital transactions 5grew at more than twice the rate driven largely by bill payments and bulk disbursements. For the average active mobile money customer, this equates to 12 transactions a month worth $206. In its second decade, mobile money continues to reach new heights. Many industry players have scaled, 2growth in transactions and accounts is steady, and innovative solutions are being implemented to reach customers who have traditionally been underserved by the financial system. THE BIG PICTURE: Availability, adoption, accessibility and usage 2. Scale implies onboarding and activating a large proportion of a providers customer base and increasing the number of transactions per customer. 3. An active mobile money account is one that has been used to conduct at least one transaction during a 90-day period. 4. Benin, Botswana, Burkina Faso, Côte dIvoire, Gabon, Ghana, Kenya, Lesotho, Rwanda, Swaziland, Tanzania, Uganda and Zimbabwe. 5. Digital transactions are transactions which enter, leave or circulate the mobile money ecosystem in digital form, rather than through a cash conversion (cash-in or cash-out). 9 2018 State of the Industry Report on Mobile Money3.1% Latin America & the Caribbean 45.6% Sub-Saharan Africa 5.6% MENA 33.2% South Asia 11.0% East Asia & Pacific 1.4% Europe & Central Asia 6. Only countries with live mobile money services are represented. 7. World Bank Group (2018). The Global Findex Database 2017. 8. Ibid. Global spread of registered mobile money customers, December 2018 6 Figure 1. The potential of Indias payments banks While almost 80 per cent of Indias population is now banked, 7the country has one of the worlds highest inactivity rates, with nearly half of banked customers (48 per cent) yet to perform a withdrawal or transaction. 8This is the context in which payments banks began operating in 2016, and today there are seven in operation, three of which are MNO-led. Payments banks are financial institutions that accept small-scale deposits (up to Rs1 lakh, or about $1,407 each), but are not allowed to lend. They began operating after the central bank, the Reserve Ba