Mobile payment systems fostering financial inclusion

  • 21 Aug
  • 2 min

The growing use of portable phones to make payments in-store or online will be one of the key drivers of financial inclusion, predicts a recent report by Juniper Research.

The number of ‘unbanked’ persons, i.e. people all over the world who do not have a bank account of any kind, is still very high. According to a World Bank report published in April this year, some 1.7 billion adults find themselves in this situation today. However, fully two thirds of these people own a portable phone, which could help them to access financial services. Digital technology is widely seen as key here. A recent report by market research and advisory firm Juniper Research forecasts that mobile tools  will continue to promote financial inclusion. The number of phone-based payments to commercial businesses (‘merchant mobile payments’) by unbanked persons in emerging markets is set to rise from 1.8 billion during the year 2018 to 3.8 billion in 2023, say the report’s authors.  Leading countries when it comes to developing services to commercial businesses will be Kenya, where the pioneering M-Pesa solution is now being used by 70% of the population; and India, where digital wallets are equally popular and likely to be in use among 80% of the urban population by 2022. Juniper further predicts that the number of merchant mobile payments made in the Middle East and Africa will rise to over 16 billion a year by 2023.

The report points to Mastercard as a key innovator in this field with its Masterpass QR-code solution, which is replacing SMS for this purpose. The US-based corporation has set a target of connecting 40 million retailers and traders in the Small & Medium-Sized Business and Very Small Business categories to its payment network by the end of 2020 – which is also an excellent means of ending financial exclusion.  Meanwhile mobile payments appear to have a great future ahead of them  in the developed world as well, including for making in-store purchases. Moreover, there are persistent rumours that the Zelle app run by a group of 30 banks and financial institutions in the United States, which – like Venmo and the Cash app developed by Square Inc –  enables users to send money to individual people, is about to extend its scope to cover payments to small businesses such as gardeners and hairdressers. However, unlike the Kenyan and Indian initiatives, you need to have a bank account in order to use the Zelle solution.  

By Sophia Qadiri