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Mobile Merchant Transaction Growth in Emerging Markets

Through its ubiquity and reach, the mobile phone has become an enabler of financial inclusion for developing nations across the globe. Many countries in areas such as Sub-Saharan Africa and the Asia-Pacific region have experienced the rapid adoption of 'mobile remittance' services.

Numerous telecom service providers have expanded and tailored their services to offer the world’s poorest populations access to more sophisticated products  -- such as personal savings and loans. Worldwide a large number of people who remain 'unbanked' are without a bank account or credit history.

Financial Services Market Development

According to the latest global market study by Juniper Research, the use of mobile devices to make retail and store payments will act as a driver for financial services inclusion of the unbanked in emerging markets.

The research forecasts that mobile merchant transactions by unbanked individuals will grow from 1.8 billion per annum in 2018 to 3.8 billion by 2023.


The new study found that Kenya and India will be core incubator markets for merchant services. Safaricom’s Lipa Na M-PESA product already has over 100,000 merchants enrolled, and by 2023, merchant payment transactions in the Middle East & Africa alone will surpass $16 billion per year.

The research acknowledged Mastercard as a key innovator in this emerging financial services sector. The company has launched a QR code-based solution with the aim of connecting 40 million micro and small merchants to its payments network by the end of 2020.

"Previously merchant payments relied upon SMS to facilitate transactions, with customers texting a code to initiate payment; thus the process was slow and inefficient. With QR code solutions, shoppers simply scan a merchant code to rapidly initiate the payment process," said Lauren Foye, senior analyst at Juniper Research.

Juniper analysts praised mobile merchant payments, as they make digital transactions accessible to a much broader segment of society. To nurture this offering, Juniper recommends that mobile network providers offer value-added services, such as microloans, analytical tools and advice for businesses, in addition to SMS-based marketing services.

Outlook for Unbanked Financial Service Offerings

However, Juniper cautions that associated mobile service tariff rates must remain low, citing the fact that Lipa Na M-PESA was obliged to impose a 50 percent reduction in transaction fees last year, both to address customer indifference and resist new competition.

Also, in some emerging markets, mobile money will provide those in financial need with greater access to welfare and state payments. While bulk dispersal (G2P) payments have had some success, with the GSMA reporting 27 mobile money providers offering such transactions at the end of 2017, many users have been concerned about rising costs, negating their effectiveness.

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