Mobile Money Adoption Research Articles

The Utilization of Mobile Money Services in Small Scale Enterprises:A Case Study

Mobile money is an electronic wallet service that allows users to store, send and receive money using their mobile phone. This research is an effort to find out the adoption and utilization of mobile money services in small sized enterprises located in Gaborone, Botswana. Inevitably, other aspects such as different types of transactions carried out using mobile money services in small business, customer’s perception on quality of mobile money service providers, impeding factors of mobile money adoption are also studied for wider understanding of the subject. The findings of the study show that small enterprises use mobile money services to carryout transactions but the level of adoption is not significant. The study revealed that transactional costs and connectivity issues are major barriers of adoption of mobile money services. In conclusion the study recommended that the service providers must improve the connectivity issues and reduce transaction charges in order to increase the utilization of mobile money services

Embrace Plastic and Mobile Money or Face Demise: Experiences of Subsistence Micro and Small Entrepreneurs in the Bulawayo Metropolitan Province, Zimbabwe

This study sought to find out whether subsistence micro and small entrepreneurs in the Bulawayo Metropolitan Province, Zimbabwe had embraced plastic and mobile money for their business transactions; the circumstances that had led to their adoption, if they had; whether or not they had experienced any challenges compared to cash transactions and the consequences of their non-adoption. The study employed a survey method involving sixty five randomly selected subsistence micro and small entrepreneurs. Self-administered questionnaires were used to elicit responses which were converted to qualitative data through thematic coding. Frequencies and percentages were also used. Firstly, all the participants in the study were using plastic and mobile money, with 63 percent using both Ecocash and swiping; 26 percent were using mainly Eco cash, and approximately 11 percent, were using swiping. Secondly, about 80 percent of the respondents indicated that they had been forced by the cash shortage to use plastic and mobile money upon realisation that their continued denial of this mode of transacting would lead them into entrepreneurial oblivion. Thirdly, the use of plastic and mobile money were bedevilled by numerous challenges. Fourthly, insistence on cash had led to continuous loss of customers and revenue. The study concluded that subsistence micro and small entrepreneurs had embraced plastic and mobile money despite the challenges faced. The study recommended that the concerned stakeholders, namely, policy makers, banks and service providers create an enabling environment with the necessary infrastructure to enable smooth operations in the adoption of plastic and mobile money.

Digital financial innovations in the twenty-first century

Purpose Premised on the assertion that financial digitalization is currently the panacea and game changer in delivering progress towards the sustainable development goals (SDGs) through universal financial inclusion, especially in developing countries, the purpose of this paper is to establish the moderating effect of transaction tax exemptions in the relationship between mobile money adoption and usage and financial inclusion. Design/methodology/approach A semi-structured questionnaire was used to collect data from 379 micro, small and medium enterprises (MSMEs), which use mobile money services drawn from the Northern District of Gulu in Uganda to provide responses for this study. The predictive relevancy and the effect size of the model were determined by running partial least square algorithm through structural equation model (SEM) with 5,000 bootstrap samples in SmartPLS-SEM 3.0. Findings The findings indicated that all the latent variables of transaction tax exemptions showed significant and positive impact on mobile money adoption and usage to advance financial inclusion in developing countries. Moreover, when combined together, the overall SEM predictive model revealed a significant moderating effect of transaction tax exemptions in the relationship between mobile money adoption and usage and financial inclusion. This implies that transaction tax exemptions on digital financial innovations such as the mobile money services can stimulate economic growth through increased level of financial inclusion labeled as the main enabler in achieving the SDGs by the year 2030. Research limitations/implications Whereas data were collected from users of mobile money services, the samples were drawn specifically from MSMEs’ owners located in the Northern District of Gulu in Uganda. Thus, users located in other districts were not included in the sample for this study. Similarly, this study limited itself to only financial services offered through the mobile money platform. It ignored other digital financial channels such as the internet and electronic banking. Practical implications Going forward, in order to improve the economic well-being of households at the “bottom of the pyramid,” governments in developing countries should embrace the significant role of transaction tax exemptions in promoting digital financial innovations such as the mobile money services for increased level of financial inclusion. The governments in developing countries where mobile money has greatly spurred financial inclusion should not only reduce the existing transaction taxes on mobile money services but scrap it off in order to champion progressive increase in the level of universal financial inclusion prescribed as a key enabler in eliminating global poverty, especially in developing countries. Originality/value This study hints on the moderating effect of transaction tax exemptions in the relationship between mobile money adoption and usage and financial inclusion. The paradox in the current trends on transaction taxes on mobile money services, especially in developing countries remain a dearth in the nascent global FINTECH ecosystem.

Trust: mediator between mobile money adoption and usage and financial inclusion

PurposeRecently, a large body of research has been devoted on the role of trust in shaping different types of transactions, especially in rural financial development. Trust is a set of expectations shared by all those who engage in an exchange. Indeed, the “rule of the game” suggests that no trusting party in a transaction should act opportunistically. Consequently, this study aims to establish the mediating effect of trust in the relationship between mobile money adoption and usage and financial inclusion of MSMEs in developing countries with a specific focus on rural Uganda.Design/methodology/approachA quantitative survey-based study was used and responses obtained from 379 MSMEs located in northern Uganda were analysed using partial least square-PLS version 3.0. A semi-structured questionnaire was developed from scales and items used in previous studies referenced in internationally recognised journals to elicit responses from the MSMEs. Structural equation modelling was used to test the models to arrive at a final empirical model derived from the data.FindingsThe authors found evidence that trust enhances mobile money adoption and usage to increase the scope of financial inclusion of MSMEs in developing countries. Moreover, when individual effect was determined, trust also had significant and positive effect on financial inclusion. Thus, the study results imply that trust enhances mobile money adoption and usage to improve the level of financial inclusion of MSMEs in developing countries.Research limitations/implicationsThe study used cross-sectional data to document the relationship between mobile money adoption and usage and financial inclusion and to establish the mediating effect of trust in the relationship. Future research could use relevant longitudinal data to verify other benefits of trust.Practical implicationsThe results present trust as a significant factor for FINTECH financial services marketing and growth. Specifically, data privacy and effectiveness of the mobile telephone network is more likely to help consumers to bridge the gap between participation and non-participation on the mobile money platform. Customers’ data sent over the mobile network of providers should be protected from unnecessary access and usage by Mobile Network Operators (MNOs) staff and unauthorised persons and agents. Data protection protocols should be set by the MNOs to avoid unnecessary access and use of customers’ data.Originality/valueGlobally, Fintech scholars have examined the role of mobile money in promoting financial inclusion. However, there is insufficient evidence on the mediating effect of trust in the relationship between mobile money adoption and usage and financial inclusion, especially among rural MSMEs. This study invents a novel direction on the importance of trust in creating transaction efficiency by eliminating opportunism and fraud with in the Fintech ecosystem.

Beyond the neoliberal-statist divide on the drivers of innovation: A political settlements reading of Kenya’s M-Pesa success story

Abstract While there is now broad consensus that innovation is a key driver of productivity growth, debates about the state’s role in promoting innovation remain polarised between two competing analytical and ideological paradigms. The first is neoliberalism, which confines the state to correcting market failures, ensuring competition and supporting the innovative force of the private-sector. Drawing on the developmental state phenomenon, the second calls for a strong and visionary state to drive innovation by targeting industries for investment and protecting firms until they are ready to face competition. The literature broadly falls within these camps, identifying innovation as a market- or state-driven process. This paper challenges both, arguing that there are multiple pathways to innovation, many of which represent a messier middle ground. The case of Kenya, which has become a hotbed for mobile money innovation since launching its pioneering M-Pesa service in 2007, is used to make this argument. Neoliberal and statist accounts fail to explain this story, which needs to be framed in relation to underlying power relations that span this divide. The M-Pesa success has played out within a highly-particularistic and patronage-based political context, whereby the interests of key groups within Kenya’s political settlement have crystallised to shield M-Pesa's parent company Safaricom, whose ownership structure and strategic partnerships draw in elites from across the political spectrum, from competition. This has afforded Safaricom space to innovate with M-Pesa, engendering a form of ‘developmental patrimonialism’ within which it has become a vehicle for rents to be centralised and deployed within strategic industries according to a long-term vision, with profits parcelled back to elites through generous dividend pay-outs. Concluding, the paper calls for more nuanced political economy understandings of the drivers of innovation, and mobile money adoption in particular.

Mobile money adoption and households’ vulnerability to shocks: Evidence from Togo

ABSTRACTWe investigate the determinants of mobile money adoption process and whether its use helps households in Togo to be resilient to predictable and unpredictable life events. Using ordered logit and sequential logit models, our results show that in the adoption process, households benefit from weak ties of social groups such as religious group and informal saving group for the adoption of mobile money. We equally find that being client of banks or microfinance institutions act as powerful channels from one step to another in the process. Besides, our findings reveal that households whoever use mobile money seem to be more resilient to climatic shocks such as drought, irregular rain, soil degradation, erosion and fertility reduction and to shock that affect households’ assets (non-climatic: high prices of agricultural inputs). However, the picture is more contrasted when the individuals are classified by disadvantaged groups such as rural people, women, less educated and people with low incomes.

Digital Payments: Impact Factors and Mass Adoption in Sub-Saharan Africa

This study explores impact factors that affect the adoption of digital payment systems in sub-Saharan Africa. In this article, we investigate the impact factors that subject-matter experts consider most important to the success of FinTech payment models. The data and their responses are evaluated through the lens of Christensen’s market-creation theory, which contends that the adoption of market-creating innovations by a mass swathe of heretofore non-consumers “pulls” framework conditions into place, including missing infrastructure and enabling regulation. Then, we compare the findings with the literature and three case studies of mobile money adoption in Kenya, South Africa, and Nigeria. This study addresses a gap in the literature regarding the payment and money transfer segment of FinTech innovations in Africa using a multiple case study methodology. We drew together information from multiple sources, including semi-structured interviews, archival data in the form of industry and regulatory reports, and observational field notes. Our findings suggest that enabling environments (Kenya) do jumpstart adoption and difficult frameworks (Nigeria) do evolve. This study will help FinTech innovators, academics, and policymakers to understand how technology and framework conditions impact payment business models in Africa.

Is Fintech Good for Bank Performance? The Case of Mobile Money in the East African Community

Mobile money, a technology-driven innovation in financial services, has profoundly penetrated the financial landscape in Sub-Saharan Africa, including banks. Yet, besides anecdotal evidence, little is known about whether mobile money adoption enhances or worsens bank performance. Combining hand-collected data with balance sheet data from Bankscope for a panel of 170 financial institutions over the period 2009-2015, we find a strong positive and significant relationship between the time elapsed since banks’ adoption of mobile money and their performance considering an array of proxies of bank profitability, efficiency and stability. In further investigations, we show how bank specialization and size alter such an association. Our results are robust to using instrumental variables, controlling for bank and macro level confounding factors, bank fixed effects and considering alternative measures of bank performance and mobile money adoption. Furthermore, we show that enhanced income diversification and broadened access to deposits are possible channels through which banks involved in mobile money improve their performance. Overall, our findings highlight the bright side of cooperation between banks and mobile network operators in the provision of mobile money.

Mobile Phone for Financial Inclusion: Mobile Money Adoption in the West African Economic and Monetary Union

Mobile money, defined as the use of mobile phones to conduct financial transactions, can bring many benefits to individuals, particularly in developing countries. Yet, very little is known about the factors behind its adoption. This study uses nationally representative individual-level survey data on the West African Economic and Monetary Union (WAEMU) countries from the Global Financial Inclusion Database and employs logistic models to highlight drivers of mobile money adoption. Our results show that having a bank account, being in the workforce, receiving domestic remittances, owning a mobile phone, and having a national ID favor mobile money adoption when measured as a global state. Moreover, being female, better educated, and wealthier increase the likelihood of adopting mobile money. Taking mobile-money adoption as a four-step process, we find similar results: having a bank account; receiving domestic remittances; and being in the workforce, younger, female, better educated, and wealthier facilitate mobile money adoption. Furthermore, we take into account the particularity of each WAEMU-member country and find some disparities in the determinants of both measure of mobile money adoption. These findings are of particular interest to the design of policies that foster financial inclusion and target disadvantaged groups.

Is there a bottleneck for mobile money adoption in WAEMU?

The main vision of governments in the countries of the West African Economic and Monetary Union (WAEMU) is to include financially the unbanked adult populations by developing digital financial services. This paper aims then at investigating the driving factors of mobile money adoption and the policies package that may alleviate the bottlenecks of the low digital financial inclusion in that area. Using both country and individual-level data from the World Bank database, we made first, a cluster analysis and thereafter a logistic regression to investigate both the macroeconomic and microeconomic driven factors of mobile money adoption. We found that country characteristic including literacy rate, labour force, mobile infrastructure and banking infrastructure in terms of numbers of ATM per 1,00,000 people are the main macroeconomic determinants of mobile money adoption. In addition, being young, man, educated, relatively richer and even banked increases the likelihood of adopting mobile money in WAEMU.

Les déterminants de l’adoption du mobile money : l’importance des facteurs spécifiques au Cameroun

Cet article identifie, à l’aide d’un logit simple, les déterminants de l’adoption du mobile money au Cameroun. Il s’agit des avantages offerts, de l’information disponible et de la proximité des points de vente. Des facteurs socio-économiques permettent d’affiner la compréhension de ces facteurs spécifiques. Au final, les recommandations faites aux opérateurs de télécommunication sont relatives à une communication optimale sur l’usage du produit, à une augmentation de l’offre des points de vente, à une interopérabilité permettant de bénéficier des effets de réseaux et au développement de nouveaux services de paiement dans des secteurs à haute fréquentation.Classification JEL : E42, O33, O35.

Mobile Money

Access to financial institutions is difficult in developing economies and especially for the poor. However, the widespread adoption of mobile phones has enabled the development of mobile money systems that deliver financial services through the mobile phone network. Despite the success of mobile money, there is a lack of quantitative studies that unveil which factors contribute to the adoption and sustained usage of such services. In this paper, we describe the results of a quantitative study that analyzes data from the world's leading mobile money service, M-Pesa. We analyzed millions of anonymized mobile phone communications and M-Pesa transactions in an African country. Our contributions are threefold: (1) we analyze the customers' usage of M-Pesa and report large-scale patterns of behavior; (2) we present the results of applying machine learning models to predict mobile money adoption (AUC=0.691), and mobile money spending (AUC=0.619) using multiple data sources: mobile phone data, M-Pesa agent information, the number of M-Pesa friends in the user's social network, and the characterization of the user's geographic location; (3) we discuss the most predictive features in both models and draw key implications for the design of mobile money services in a developing country. We find that the most predictive features are related to mobile phone activity, to the presence of M-Pesa users in a customer's ego-network and to mobility. We believe that our work will contribute to the understanding of the factors playing a role in the adoption and sustained usage of mobile money services in developing economies.

Mobile money adoption and spending behaviour: the case of students in Ghana

PurposeThe purpose of this paper is to investigate how the use of the mobile money technology among students affects their spending behaviour.Design/methodology/approachThe study reports interesting findings by using a random sample of 506 students from the University of Ghana and applying ordinary least squares regression technique.FindingsThe findings suggest that active use of mobile money services has significant influence on students spending behaviour. On a monthly basis, students who use mobile money spend on the average 20 Ghana Cedis more than their colleagues who do not use mobile money. Students who use both mobile money and ATMs jointly spend nearly 13 Ghana Cedis more than their counterparts who use either of them.Social implicationsThe implication of this finding is that mobile money technology which provides easy access to money can increase spending behaviour of students and reduce the tendency of savings. The authors therefore conclude that although technological growth should not be curtailed given the numerous benefits technology accrues to society, its use must be controlled, in particular, when it comes to using it as a medium of exchange so as to minimize the negative influences (such as indiscriminate spending).Originality/valueThis paper studies the post-adoption behavioural responses of mobile money users particularly among students in Africa which is rare in the literature.

Friends or Foes?: Mobile Money Interaction With Formal and Informal Finance

Access to and usage of formal financial services are important determinants of financial inclusion and yet, informal mechanisms still dominate the financial system in developing countries. In this context, the purpose of our paper is to investigate how the growing effort to harness mobile money may play a role to overcome barriers that prevent people to access formal financial services. Using a unique dataset obtained from an individual-level survey conducted in Burkina Faso, we explore the interplay between mobile money innovation as a deposit instrument and pre-existing formal and informal financial instruments. Our main findings show that, overall, the use of mobile money is not associated with deposits using formal and/or informal financial instruments. However, a closer investigation reveals suggestive evidence that it increases the probability of participants in informal mechanisms to make deposits in a bank account. Moreover, considering disadvantaged groups, we find for women, irregular income and less educated individuals that mobile money may increase their probability to make deposits in a bank and/or credit union accounts. Given the low access to formal financial services in developing countries, our findings taken together indicate how the increasing adoption of mobile money may act as a stepping-stone towards financial inclusion.

Financial Inclusion, Shocks and Poverty: Evidence from the Expansion of Mobile Money in Tanzania

We estimate the effect of mobile money adoption on consumption smoothing, poverty and human capital investments in Tanzania. We exploit the rapid expansion of the mobile money agent network between 2010 and 2012 and combine this with idiosyncratic shocks from variation in rainfall over time and across space in an instrumented DiD methodology. We find that adopter households are able to smooth consumption during periods of shocks and maintain their investments in human capital. Results on time use of children and labor force participation complement the findings on the important role of mobile money for the intergenerational transmission of poverty.

Financial Inclusion, Shocks and Poverty: Evidence from the Expansion of Mobile Money in Tanzania

We estimate the effect of mobile money adoption on consumption smoothing, poverty and human capital investments in Tanzania. We exploit the rapid expansion of the mobile money agent network between 2010 and 2012 and combine this with idiosyncratic shocks from variation in rainfall over time and across space in an instrumented DiD methodology. We find that adopter households are able to smooth consumption during periods of shocks and maintain their investments in human capital. Results on time use of children and labor force participation complement the findings on the important role of mobile money for the intergenerational transmission of poverty.

Examining Trust and Risk in Mobile Money Acceptance in Uganda

Mobile money adoption can contribute to achieving Sustainable Development Goals in Uganda but the factors affecting its sustainable adoption remain largely unknown. This paper explores the extent to which mobile money users’ trust and risk perceptions affect mobile money services adoption of in Uganda. A survey was conducted with 438 mobile money users from Uganda and data was analyzed using Partial Least Squares (PLS) Structural Equation Modelling (SEM). From the results, we obtained new empirical evidence for applying trust and risk perceptions for analyzing mobile money acceptance. We found that mobile money users rely on the structural soundness of mobile money services providers and their ability to provide mobile money services with low perceived risk. Performance expectancy, perceived risk and structural assurance significantly influenced behavioral intention to adopt mobile money. Trust belief did not significantly influence behavioral intention. These results help us to understand and promote mobile banking services in underdeveloped countries, which is of practical and scientific interests. We finally provide practical implications for mobile money services providers, commercial banks and central banks in Africa.

The (non-)emergence of mobile money systems in Sub-Saharan Africa: A comparative multilevel perspective of Kenya and Nigeria

Mobile money systems are radically transforming the lives of a large fraction of the Sub-Saharan population. The emblematic success story of M-Pesa of Kenyan telecommunications operator Safaricom has received wide acclaim for being both the first company that launched mobile money and its mass adoption in just a few years. Despite efforts to replicate this success in other countries in Sub-Saharan Africa, many are struggling to get mobile money off the ground. This paper aims to contribute to a better understanding of the mechanisms that explain these differences by using a comparative case study analysis of Kenya and Nigeria that are comparable in many respects but are extreme opposites in their adoption of mobile money. Theoretically drawing on a combination of a multilevel perspective of sociotechnical transformation (MLP) and innovation ecosystems, we identify the idiosyncratic elements that play a role in the development of a critical mass of user and agent networks necessary for the survival of mobile money systems. We argue that while network externalities have contributed to a mass adoption of mobile money in Kenya, the different institutional and industrial conditions in Nigeria suggest that network externalities are taking much more time to be generated there and that achieving similar adoption rates as in Kenya might therefore just be a matter of time.

Does mobile money use increase firms’ investment? Evidence from Enterprise Surveys in Kenya, Uganda, and Tanzania

Private investment can be an important engine of economic growth in East African countries, which, despite recent growth rates, are still plagued with adverse economic conditions. Against this backdrop, there has been substantial penetration of mobile money, moving beyond simple person-to-person exchanges toward adoption by private firms. This study explores whether there is a relationship between firm adoption of mobile money and firm investment. Using firm-level data that are nationally representative of the private sector in three East African countries -- Kenya, Tanzania, and Uganda -- a positive relationship is found between mobile money use and the probability of a firm’s purchase of fixed assets. This relationship is attributed to reduced transaction costs, increased liquidity, and increased credit worthiness associated with the use of mobile phone financial services.

Can Mobile Money Help Firms Mitigate the Problem of Access to Finance in Eastern sub-Saharan Africa?

ABSTRACTMobile money is a mobile-phone-based financial tool that can transfer money safely and quickly across a wide geographical area. Mobile money has transformed the way businesses in Eastern sub-Saharan Africa operate. Nowadays, banks team up with mobile-money-service providers and pay interest on deposits and grant loans based on financial transactions in mobile-money accounts. In this paper, these recent developments are investigated in order to determine whether the adoption of mobile money by firms can actually help them mitigate the vexing problem of access to finance. To answer this question, the World Bank’s Enterprise Surveys Program data set for the year 2013 is used, thus making the study applicable to the present time. The results obtained, after controlling for a large number of firm-level characteristics and using a newly introduced measure to identify access-to-finance status of the firms, indicate that firms which use mobile money are more likely to obtain loans or lines of credit. Further analysis shows that the firms that use mobile money are more productive than other firms in the region.