Mobile Money: The Key to Financial Inclusion in Emerging Markets by@adebola

Mobile Money: The Key to Financial Inclusion in Emerging Markets

Mobile Money is the term used to refer to the technology that facilitates the movement of money between individuals and businesses who may not have a Bank account domiciled at a traditional bank. 40% of Nigerians aged 15 do not own a bank account and thus excluded from formal financial services. Mobile Money transactions can be completed in many ways with the use of a mobile device to move money to individuals or businesses who have a mobile phone number and are on the same telecom network’s network. In Nigeria, thanks to NIBSS, inter-bank transfers are completed nearly instantly.
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Adebola Adeniran

RoR and JavaScript Engineer. Chief of Staff @Moni.Africa

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What is Mobile Money?

For the uninitiated, Agency Banking/Mobile Money has blown up across Africa and Asia in the last decade. Pioneered by telecom service providers like Vodafone and Safaricom with mPesa in Kenya in 2007, the global Mobile money market now processes over $490bn in transactions yearly.

Mobile Money or Agency Banking is the generic term used to refer to the technology that facilitates the movement of money between individuals and businesses who may not have a Bank account domiciled at a traditional bank. This may be in terms of CICO (Cash-in-cash-out) transactions — where a customer might exchange cash (cash-in) for electronic value or vice versa.

Mobile Money transactions can be completed in many ways. One way is with the use of a mobile device to move money to individuals or businesses who have a mobile phone number and are on the same telecom network — this is the most common form of Mobile Money transactions in East and West Africa.

Mobile Money transactions can also take place via Mobile Money Agents — individuals who are licensed by a Mobile Money Service Provider to collect cash deposits and provide cash-out services on the company’s behalf. In most cases, these individuals acquire the licenses, devices and set up stalls using their own capital.

In the United States, a cashier at your local Walmart or Walgreens can be considered a mini Mobile Money Agent since they can collect cash deposits and add the equivalent dollar amount to your CashApp app with the CashApp PaperMoney feature.

Why Mobile Money?

Around 40% of Nigerians aged 15 and over own a bank account. That means, more than half of young Nigerians do not own a bank account and are thus excluded from formal financial services. This presents a huge opportunity for Mobile money and Agency Banking platforms to bring the unbanked and underbanked into formal financial services.

Since 2010, the number of Banks per capita (100,000 adults) in Nigeria has dropped from 7 to 4. For context, the number of Banks per capita in the US is 32. On the surface, the reduction in the number of physical banks might seem great since the internet and mobile phones are now widely available.

Many banks have found ways to lean out their operations by introducing internet and mobile banking services — a testament to the level of innovation within the Nigerian financial technology space. In Nigeria, thanks to NIBSS, inter-bank transfers are completed nearly instantly. I’ve previously recorded a time of 2 seconds from the time I hit send on my Kuda app to receiving it in my UBA Bank account. This is not the same experience in other parts of Africa — in the Ivory coast, for example, Bank to Bank transfers can take up to 3 days to settle.

The CBN (Nigeria’s Financial regulator) has also initiated several policies to encourage individuals to go cashless. Despite these advancements in the financial services space in Nigeria, when we look a little closer look into the situation of things, the CBN tells us that the amount of cash in circulation in October 2021 rose by 4.6% to 3 trillion naira ($7.3 billion) compared to the same period the month before — proving, once again, that cash is still king and a major portion of the population still like to transact in cash. The love for cash based transactions is also prevalent in Vietnam, where over 80% of transactions are cash based. While we believe that a major portion of the Nigerian population is only comfortable with cash, we believe that with the widespread adoption of mobile phones, better technology can be deployed to bring more people into formal financial services by meeting them where they are i.e without the need for formal banks; cue — Mobile Money and Agency Banking.

In Nigeria, the volume of POS transactions processed in 2021 alone was over $8bn and the sector continues to grow year on year. Over the next decade, and with the continuous innovation and investments surrounding mobile money, we should see more and more people being able to access basic financial services bearing in mind that they may never own a bank account at a traditional banking institution. The big bet is on Mobile Money services to accelerate this future.

With that said, Let’s take a look into how a typical Mobile Money or Agency banking transaction works.

How does Mobile Money/Agency Banking Work?

Mobile Money transactions can be completed in a number of ways:

Sometimes, they are completed using a mobile phone over a mobile network, Other times, they’re completed using a card issued by a Digital bank or a traditional financial institution and a Mobile POS Terminal. In many cases, they’re completed with an Agent receiving cash from a customer and making a transfer from their mobile phone to the wallet/bank account of the recipient.

Regardless of what method is used, transactions are usually completed within 5 mins — a testament to the innovation that has occurred within the space.

When a transaction is completed using a mobile phone alone, your phone number serves as your account number, and your wallet/account balance is stored on your mobile device — either via the app or via a menu option on your mobile phone added by your telecom provider.

Getting on the mPesa network is as simple as buying a sim from Safaricom. With your sim in your mobile phone, you’re ready to participate in the mobile money revolution. You can begin transacting with other users and Businesses on the mPesa network.


With a mobile phone as cheap as $5, you can pay bills, send money to other mPesa users, take a loan, and more. In rural areas without Banks or where the closest bank is too far away from residents, mobile money Agents (mPesa Agents in this case) facilitate cash deposits and withdrawals — think of a human ATM.

Here’s a walkthrough of a transaction at a typical Mobile Money Agent.

  1. Picture a Shop owner running a small business that sells groceries. At the end of the day, this Customer takes all the cash they’ve received from their daily sales and walks to the nearest Mobile Money Agent close to them — usually, these Agents are much closer to the customer’s location than a physical Bank.
  2. The Shop Owner takes the cash they’ve collected to a Mobile Money Agent who collects the cash and deposits the same value in the customer’s wallet less the transaction charges.
  3. The Shop owner is happy — they have value in their wallet which they can use to purchase more goods or send to their family member’s wallet on the same telecom network in a neighboring city. The Mobile Money Agent is also happy since they’ve made a commission for processing that transaction.

Mobile money agent in Kenya. CGAP Photo (Geoffrey Isaboke via Communication for Development Ltd)

Mobile money agent in Kenya. CGAP Photo (Geoffrey Isaboke via Communication for Development Ltd)

In most of Sub-saharan Africa, this is how most Mobile Money transactions go.

In Nigeria, it’s a little different.

The most common trend in the last few years has been a network of Agents spearheaded by giant payment companies or MMOs (Mobile Money Operators) such as Opay, Moniepoint, Paga, Xpressteller, and more. Typically, these MMOs deploy Mobile POS terminals that Agents can use to start their own Agent Banking business.


With increasing innovation in this space, MMOs have started to deploy android based devices that can process card transactions and print receipts. These devices can also be used to pay bills, purchase airtime, perform inter-bank transfers, and more — meaning that the customers of these Agents can perform all the services they’ll typically do at a traditional bank at a Mobile Money Agent.


Ivory Coast has the largest population of adults with a Mobile Money account in all of West Africa — at 75%. In stark contrast to that, only 20% of the adult population owns a Bank account.

What’s the difference between a Mobile Money Agent and a POS Agent?

A mobile money merchant. Image credit: Espen Eichhöfer via Deutsch Bank.

A mobile money merchant. Image credit: Espen Eichhöfer via Deutsch Bank.

Traditionally, in most of West Africa and East Africa, Mobile Money has been a medium for carrying out financial transactions where the store of value is in a wallet on a mobile phone device linked to a customer’s mobile phone number. Transactions are facilitated on the network of the Telecom operator’s the user is subscribed to — popular options include MTN in Benin Republic, Oranje in Guinea and Safaricom in Kenya.

In Benin Republic for example, where MTN’s MoMo is dominant, users move money around using their MoMo wallet which can be done using an App on their Mobile device or using USSD shortcodes from their mobile phone. MTN processed $709m in transactions in July of 2021 with only a quarter of the entire population of Benin Republic as active users!

To paint a better picture, over 11m Mobile Money accounts were registered in 2021 compared to 2m Bank accounts proving the mass adoption of mobile money.

Until recently when the Central Bank of Nigeria awarded PSB (Payment Service Bank) licenses to Telecom Operators in Nigeria, MTN was unable to replicate their MoMo model in Nigeria. Since obtaining that license, MTN has registered MoMo (short for Mobile Money) as a payment bank in Nigeria and are beginning to scale their Agent network across the country. With Telcom companies now playing in the financial service space, it means more competition for the likes of TeamApt’s MoniePoint, Opay and Palmpay amongst others — who are Mobile Money Operators but not telecom service providers. For MTN, the numbers are already there since they have the largest subscriber base in Nigeria.

At Moni, we think about Mobile Money a little differently. Because of the variations in how Mobile Money operates around the world, we like to think about Mobile Money in the sense of mobility — we see Mobile Money as any digital system that allows the banked, underbanked and unbanked to participate in financial services by removing/reducing the barriers to participation associated with traditional financial institutions; this may be via the use of Mobile POS terminals, Mobile Phones that double as POS terminals, QR codes linked to QR Cards/Mobile Devices (like in the case of Wave Mobile Money) or scan to pay apps.

Looking at Mobile Money and thus Mobile Money Agents in this way, allows us to build a suite of products to cater to Mobile Money Agents and their lifestyle.

How much does a Typical Mobile Money Agent Make?

Revenue earned by Mobile Money Agents can vary swiftly from place to place. While some areas are high volume and high traffic — consider a market for example, other areas may be high volume but low traffic. In a busy market, a Mobile Money Agent is likely to process over 100 transactions within a day with high volumes. On the other hand, in a residential/commercial area under development, a mobile money Agent may not see a lot of foot traffic but may process a high volume of transactions as vendors and contractors move money around.

In Nigeria, we’ve seen that Mobile Money Agents are able to do an average turnover of N2.4m (~ $5000) a month. Assuming normal charges on transactions, a Mobile Money Agent may earn around N3,500 (~ $8) per day which works out at roughly N100k ($215) a month. With more float, and/or with a better location, Mobile Money Agents can 10x their earnings. In Benin Republic, a Mobile Money Agent can earn around CFA70k depending on the number of transactions they complete and the Agent’s location.

On average, in the Nigerian market, the cost of acquiring a Mobile POS Terminal is around N20k — N25k(~$54). Besides the cost of acquiring a terminal, Mobile Money Agents will also need to get a location for their business and may need to pay rent for the space. In our experience, many Mobile Money Agents use existing Mom and Pop outlets — which may or may not belong to them —  as their primary place of Business.

Starting a Mobile Money Business in Africa is not all rosy despite all the innovation occurring in the space. For one, individuals interested in starting their own Mobile Money/Agency Banking outlet need working capital to get started — this working capital may not be readily available, in which case they’d need to take a loan from friends and family since a traditional Bank will not offer them that level of credit without collateral.

Besides the issue with working capital, in Benin Republic, setting up shop as a MoMo Agent can take anywhere from 2–4 months due to the paperwork and bureaucracy involved.

There’s still room for more innovation within this space. Mobile Money transactions are still expensive in many parts of Africa and wave is one of the companies tackling this problem with up to 70% lower fees on Mobile Money transactions.

Wrapping Up

To wrap up, we’ll continue to see innovation in the Agency Banking and mobile money space across Africa as technology companies find ways to help the banked, unbanked, and underbanked access financial services through Agency Banking networks or as we like to call them at Moni — human ATMs.

Recently, Moni was admitted into Y Combinator’s YC W22 batch. Our approach to lending is different. We’re aware of the major problem Mobile Money Agents face across Africa - float or working capital for their businesses. At the same time, we are also aware that traditional institutions may be unable to provide credit to Mobile Money Agents because they’re unable to satisfy the Bank’s credit requirements.

At Moni, we provide credit/float/working capital to Mobile Money Agents using a CoFi (Community Financing) model based on their social reputation. Our model allows Agents to facilitate more transactions thus ensuring that they earn more and prosper!

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