Monday, 03 October 2016 22:34

Mobile to dominate US$520 billion money transfer market

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Mobile to dominate US$520 billion money transfer market Image courtesy of Stuart Miles at freedigitalphotos.net

There has been a significant upsurge in international remittance activity in the past two years, with a number of cross-border mobile remittance services now being deployed, according to analyst firm Juniper Research.

In a new study just published, Juniper says that the value of domestic money transfers, including operator money and social media money services, will reach US$520 billion in mobile transactions by 2018.

That’s a rise of nearly 200% from an estimated US$178 billion last year.

According to Juniper, by 2018 the share of domestic money transfer services, by mobile transaction values are forecast to be:

•    Domestic P2P: 45%

•    Cash-In: 21%

•    Cash-Out: 17%

•    Bulk Disbursement (G2P): 14%

•    Domestic Airtime Top-Up: 2%

Report author Nitin Bhas says that, typically, P2P (person to person) domestic transfers show higher usage in developing markets, including M-Pesa, Airtel Money, Orange Money and MTN Mobile Money, supplemented by users making social transfers in developed markets via services such as Venmo and WeChat.

“However, the bulk of activity is currently occurring via WeChat and Alipay within China, with growth fostered by ‘red envelope’ promotions at the Lunar New Year," Bhas says.

He says regulation is still a challenge for mobile money operators, with his report arguing that over-regulation continues to be a “key inhibitor” in the licensing process for mobile money services.

“This can be complex, both in terms of the number and nature of licences that are required by service providers,” Bhas says.

“Additionally, the services which the national government (often via its central bank) will permit a service provider to offer vary significantly.”

According to Bhas, in some markets, regulations for mobile money transfer may simply not have been defined, or “may be in the process of being defined and then applied retrospectively”.

“Furthermore, existing rules may stipulate that only financial institutions may possess money licences, thereby inhibiting the opportunity for players such as MNO (Mobile Network Operators).”

Other key findings of the Juniper research are:

•    In 2015, Africa & Middle East had 235 million registered mobile money users, representing the largest share of the global market.

•    International remittances via mobile will exceed US$25 billion by 2018, driven by higher value mobile transactions.

To read Juniper's whitepaper "Disrupting International Remittance", click here.

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Peter Dinham

Peter Dinham is a co-founder of iTWire and a 35-year veteran journalist and corporate communications consultant. He has worked as a journalist in all forms of media – newspapers/magazines, radio, television, press agency and now, online – including with the Canberra Times, The Examiner (Tasmania), the ABC and AAP-Reuters. As a freelance journalist he also had articles published in Australian and overseas magazines. He worked in the corporate communications/public relations sector, in-house with an airline, and as a senior executive in Australia of the world’s largest communications consultancy, Burson-Marsteller. He also ran his own communications consultancy and was a co-founder in Australia of the global photographic agency, the Image Bank (now Getty Images).

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