Mobile money and small businesses: the next frontier

  • By Vince Kadar
  • Monday, November 16, 2020

Since it launched years ago with basic cash-in/cash-out functionality, mobile money has become an essential tool in the lives of millions of individuals. This is a tremendous achievement for an industry that’s only a decade or so old, and it sets up a very important question: what’s next? 

Micro, small, and medium enterprises (MSMEs), that’s what. Now that it has established itself as an essential lifeline at the personal level, mobile money is quickly making the leap into a mission-critical tool for business owners. In a recent report focused on innovative SME financing, the Global Partnership for Financial Inclusion (GPFI) notes that mobile financial services stand to become “a critical component in the digital transformation of SMEs…leading to better firm performance.” Forward-thinking mobile money operators are taking note of this opportunity, and they’re developing tools specifically designed for merchants. 

As you plan the growth strategy for your mobile money operation, consider how you might expand beyond personal finance solutions and tap into the needs of MSME owners. 

1. Improve access to financing for business owners 

The GPFI report used data from 135 countries to demonstrate that access to finance is one of the most serious obstacles facing small business owners. This can be a particular challenge in areas of the developing world, where micro- and small-businesses can have difficulty proving their value to traditional banks. Many can’t provide the formal credit history required to overcome this obstacle and access the financing they need. 

That’s where mobile money can make an enormous difference. Using the right mobile platform, business owners could provide sales metrics directly to their mobile network operator, who could then work with loan providers to furnish appropriate financing options. This is a pathway that bypasses the hangups of the slower, more traditional “big bank” loan scenarios, helping business owners access “just in time” loans they need to drive growth. Imagine a shoe store owner, for example, who can use his mobile money platform to finance his inventory, allowing him to carry the latest styles when they’re in peak demand. 

2. Support bulk salary disbursements 

Small businesses spend a lot of time moving money. They need a way to receive payments from customers, dispense payments to suppliers and service providers, and–perhaps most critically–distribute payments to employees and contractors. 

Without a digital solution, many businesses in the developing world have little choice but to rely heavily on precarious cash-based systems and money transfer services that charge high fees for distributing these payments. That leaves little room for a proactive financial strategy, and it’s antithetical to growth. 

Mobile money, already a proven solution for transferring money between individuals, provides an elegant answer. Features designed to allow single or bulk payments based on preset parameters–hours worked, for example, or a weekly salary–give business owners a simple and streamlined option for ensuring staff are paid on time, every time, without a logistical headache involved. 

3. Support business analytics

Mobile money operators seeking to differentiate themselves as they compete for MSME customers would be wise to shore up their analytical offering. This will be a key advantage for small business owners who move to a mobile money platform; by conducting their business digitally, they’ll accumulate the valuable transactional insights they need to make strategic decisions, identify inefficient or unnecessary business expenses, and pursue lucrative trends and opportunities. 

A big opportunity from small businesses

Mobile money has great potential as an essential tool for small business growth. Smart mobile money operators with an interest in expanding their market share have taken note; they’re homing in on the particular challenges that plague small business owners who have little or no access to traditional banking infrastructure, and they’re developing elegant solutions to solve those challenges and deepen their user engagement. 

At Telepin, we’ve already developed several of the features that are of particular interest to small business owners. Reach out to start a conversation about how we might help your mobile money operation tap into this underserved market.