A $10bn market for mobile money transfers, dominated by airtime top-ups
Oct 29, 2013
International mobile money transfers will exceed $10bn for the first time this year, according to a new report from Juniper Research. However, the report found that the cost and complexity of regulating cash transfer had led many service providers to instead focus exclusively on airtime top-ups.
Whilst established money transfer organisations such as Western Union and Moneygram are seeing significant growth on mobile, only a handful of specialist companies – such as eServGlobal’s HomeSend – are succeeding. In many cases, early entrant service providers had failed to establish a critical mass of mobile wallets in recipient markets, reducing the opportunity for inbound remittance.
“Service providers must first obtain licences for each remittance corridor; they face due diligence and risk assessment checks, which may in turn oblige them to introduce additional mechanisms to address any issues which emerge,” said report author Dr Windsor Holden. “All these processes are time consuming and expensive.”
But while the report claimed that regulatory complexity had been the primary hurdle, resulting in slow growth for international cash remittance, transaction volumes have surged in the airtime top-up market, where service providers are not required to obtain money licences. The report found that average annual airtime top-ups across key remittance routes were in excess of average individual mobile spend levels in receiving countries, thereby covering recipient phone bills for the year.
The report also found that nearly 400m mobile phone users worldwide are expected to use their handsets for mobile money transfer by 2018. However, the traditional stronghold of mobile money services – sub-Saharan Africa – is facing problems as mobile money taxes threaten the growth of domestic money transfer services.
The ‘Mobile Money Transfer – Send & Spend’ whitepaper is available to download from the Juniper website together with further details of the full report and the attendant Interactive Forecast Excel, which enables clients to interrogate the assumptions behind Juniper’s forecasts and create alternative future outputs.
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