Mobile Money
Mobile money is a stored-value account held on a mobile phone and run by a mobile network operator or other provider, letting users deposit cash, send and receive money and pay bills without needing a bank account.
Also called: mobile money account · mobile wallet · M-Pesa-style service · mobile financial services
The model became well known through M-Pesa, launched commercially by Safaricom in Kenya in March 2007. A customer registers with a phone number, hands cash to a local agent and receives an electronic balance. That balance can be sent to another phone by text menu or app, used to pay merchants and bills, or turned back into cash at any agent. No bank account is needed, and the service works on a basic phone.
Behind the phone, the provider issues electronic value against money it holds. In many markets this is regulated as e-money, and the funds backing customer balances must be kept in trust or safeguarded accounts at banks, separate from the provider's own money. The network of agents that convert cash to balances and back is what makes the service work; liquidity at the agent, both cash and electronic float, is a constant operational concern.
Mobile money has done more than any other channel to expand financial inclusion in sub-Saharan Africa, and it carries a large share of domestic and cross-border remittances. Wallets increasingly connect to bank accounts, card networks and international transfer providers, so a payment that starts in London can end as a balance on a phone in Nairobi.
For a remittance or payments business, a mobile money payout is a last-mile option with its own rules: wallet balance limits, tiered KYC, name-matching on the receiving number and, in many corridors, local licensing or a partnership with a licensed wallet operator.
In practice
Mobile money is regulated differently from country to country, as e-money, as a payment service or under specific mobile money rules. Balances are generally not bank deposits and may not be covered by deposit insurance.
Learn more on Money Wiki
This page gives the short answer. Money Wiki has a longer guide to Mobile Money, with more detail and background.
Read “Mobile Money & Digital Payments Directory” on Money Wiki (opens in a new tab)
Commonly confused with
| Term | How it differs |
|---|---|
| Mobile banking | Mobile banking is a bank's app giving access to an existing bank account. Mobile money is a separate stored-value account, often issued by a non-bank, that works without a bank account. |
See also
- Financial InclusionFinancial inclusion means individuals and businesses having access to useful, affordable financial services, such as accounts, payments, savings, credit and insurance, delivered responsibly. The first step is usually an account that can send and receive money.
- E-money DistributorAn e-money distributor is a person engaged by an electronic money institution, authorized or small, to distribute or redeem that institution’s electronic money on its behalf. It issues nothing itself and cannot provide payment services; the customer’s claim on the funds stays against the institution.
- RemittanceA remittance is a cross-border transfer sent by one individual to another — typically a migrant worker sending money home to family. It is distinct from a commercial payment between businesses, and regulators define it more narrowly than everyday speech does.
- Last MileThe last mile is the final step of a cross-border payment: getting value into a form the recipient can actually use, in their own country, in local currency. It is where most of the cost, most of the failure and most of the competitive difference in a corridor sit.
- Electronic Money InstitutionA firm authorized in the United Kingdom or in an EU member state to issue electronic money and to provide payment services. The e-money it issues is a claim its holders have against the institution, redeemable at par and expressly not a deposit, which is why the funds behind it must be safeguarded.
- Informal EconomyThe informal economy is the economic activity of workers and businesses that are not covered, or not adequately covered, by formal arrangements such as registration, tax, labour law and social protection. Most of it is legal work done outside those systems.