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Protection, Not Regulation – Making Mobile Money a Reality

  • By Timothy Roberts
  • Wednesday, October 10, 2012

recent article in the Economist discusses one of the big stumbling blocks faced by mobile money – regulation. The article outlines how in developing markets the success or failure of mobile money relies on how the government approaches regulating the market.

The challenge is an interesting one, as consumers in the developing world are the ones who really need mobile money, yet often there’s issues with corruption and nepotism which can work against the successful rollout out of mobile money. Kenya’s M-PESA is truly one of the world’s success stories:

A World Bank report found that M-PESA users are a third more likely to have some savings than their peers. Mobile transactions are more traceable than cash,making it harder for corrupt officials to embezzle undetected. And lately Kenya has discovered a further benefit: the success of M-PESA has provided the foundation for a group of start-ups in Nairobi that are building new products and services on top of it.

With these type of results when mobile money is done well, it’s time for government to figure out how to make mobile money work for them. Issues like security, consumer protection and more can be overcome once there’s an understanding of how much value mobile money brings to citizens and how it can benefit the government.

The push should be for protection, not regulation, and a focus on getting these services to consumers now. The positive gains seens by M-PESA and other deployments like the one in Papua New Guinea by Digicel show it can be done and provide aroadmap for success.