A promising future for mobile money: Investment spike, separate entities, and confident regulators

The year 2021 has clearly defined the direction mobile money will take, backed by heavy investments and great momentum of mobile phone usage. To support this growth, David Lotfi, CEO and founder of Evina, explains two opportunities all mobile operators must seize in 2022 to truly benefit from the mobile money explosion.

A pandemic and financial need that sculpted the future of mobile money 

During the now two-year pandemic, the digital world has seen a noticeable increase in online activity, more specifically mobile activity. The need to not rely on physical banks or handle physical money has fueled the surge in mobile money transactions. In fact, according to the GSMA, 1.21 billion mobile money accounts were registered in 2020 marking a 12.7% growth, in 96 countries. The GSMA also states that the transaction values increasingly grew as well, with daily transactions exceeding $2 billion and transactions expected to surpass $3 billion per day by the end of 2022.  

This year also marked a spike in investments in the digital payments space, starting with fintechs and mobile money services. As mobile phone users are expected to reach half of the African continent’s population by 2025 according to the GSMA, internet penetration increases, and overall greater adoption of digital financial services, investors are betting all on mobile financial services. Just last month, Airtel Africa’s mobile money service received a $50 million investment by Chimera investments, backed by a previous $25 million investment by Mastercard. Mobile money is a particularly versatile payment tool that is used for a variety of different purposes, particularly in countries in Sub-Saharan Africa and South Asia. Mobile money is used to receive a monthly salary, pay bills, lend money, and make purchases online or in physical stores.

The attention mobile money has received by investors foreshadows the tremendous potential of mobile money this year. Mobile operators looking to pave the smoothest way for this explosive growth must first address the organizational body of their mobile money services. 

More independent mobile money services entities for robust growth in 2022 

Regulators of mobile operators have a well-defined set of regulations they must follow that specifically pertain to the telecommunication services they offer. As we have seen, mobile operators have been developing their financial potential and deploying mobile money services that have gained paramount daily transaction value. In most cases, MNOs have to comply with both the telco regulations and stricter mobile money regulations. This is extremely costly and complicated for mobile operators who must enforce a myriad of regulations. 

What we have seen in recent years, and what we will continue to see in 2022, is mobile operators creating a separate mobile money entity to be able to grow their business with greater ease and flexibility, following only specific mobile money regulations. Major mobile operators such as Orange and Airtel have initiated this organizational reconstruction, respectively with Orange Money and Airtel Money. Thanks to this set up mobile operators will be able to make their mobile money services a separate, independent company with the freedom to grow and become what it strives to be: a fintech. 

Fintechs in Africa have raised nearly $5 billion in 2021, and as sole mobile money providers, the companies will attract even more investments. Investors will be lured by the youngness of the business, where there is sill be room to grow and to decide what direction the child company can take. 

The freedom will also lie in the tools that mobile money providers can choose. The giant mobile operators already have dedicated tools and integrated processes for each specific activity, even when it comes to dealing with fraud. As a separate entity, the company can decide to choose the right anti-fraud tools, which are specific to a fintech company and the specific fraud-related challenges it faces. Mobile money can’t be treated like telecommunications, neither with the same regulations nor with the same anti-fraud solutions. Mobile money has its own specific needs, and with it, its own specific solutions. At Evina, we’ve developed a whole range of anti-fraud solutions that sustain mobile operators, to not only detect fraud but to do so while growing the business revenue. For mobile money, we have designed Mobile Money protect, a cutting-edge anti-fraud solution that tackles fraud attempts on mobile money services. 

Along with the creation of the separate mobile money entity,  there is a critical need to convince regulators to create enabling regulations for these entities to grow. 

Strengthened trust vis-à-vis the regulator and anti-fraud measures  

With the growing value of daily mobile money transactions, central banks and major regulators are seeking to regulate the large flow of money and protect the interests of all stakeholders. When fraud comes into play, regulators will automatically impose stricter rules that will limit the growth of mobile operators because they cannot be trusted to regulate themselves. It’s why it is in the interest of mobile operators to keep fraud at bay and have the right tools to manage these attacks. Major operators such as Airtel have already raised concerns regarding fraud on mobile money « What keeps me up at night frankly is the risks that are emerging through cyber [crime] » CEO of Airtel mobile commerce BV.

We have seen this phenomenon in plenty of markets: when responsible players implement Evina state-of-the-art anti-fraud solutions, entire markets have reaped the benefits, and payment methods such as direct carrier billing have been restored thanks to this renewed trust. Mobile Money Protect, Evina’s anti-fraud solution for mobile money payments, was designed to fend off fraud attacks on mobile money and help mobile operators reach new opportunities. 

This new year will be vital for mobile operators to explore where fraud-free mobile money will take them, as independent entities and in an environment that fosters growth with empowering regulators. 


The Fraud Observer

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