Why People Use Mobile Money (It Has Nothing to do With the Often Publicized Features)

There has been quick growth in the mobile money sector in Africa particularly Kenya where it all began. Its also been rising gradually in Cameroon by means of Orange Money and MTN Mobile Money with MTN Mobile Money owing most of its growth to a partnership with state owned universities which made it the only method of paying school fees (I think its horrible for a state owned institution to enter such a monopolistic partnership with a corporation).

I have observed that most of what the companies advertise to be the advantages of mobile money is not necessarily why the few customers who use it, signed up (judging from how my friends use it). What they advertise revolves basically around the following points:

  • Security.
  • Fast peer-to-peer transfers or remittance (Not true because while the transactions take seconds, most customers stand in queues at cash out/cash in locations making it approximately the same in speed as other local remittance solutions).
  • Cheaper fees for remittances (True).
  • Method of payment at store (Partially true. My judgement is based on my friends and as of the moment only fuel, electricity and water bills can be paid using mobile money. None of my friends own cars so they only use for bill payment)
  • Online shopping (Please don’t make me laugh, only Kaymu and its sister companies listed at the top of their page use mobile money and no one in my circle has shopped from them)

The reality is that the mobile/electronic payment revolution which mobile money was poised to bring (hence replacing electronic cards like VISA, Master Card, etc) is not happening because of limited support by merchants both online and offline owing mostly to the normal inertia to change and the horribly documented APIs which scare local developers from building on top of these platforms. Its still heavily cash based i.e people pay cash in, transfer it to another person who then cashes out. The other under-publicized feature of its use as a regular old savings account and that what many of my friends use it for. In short the stuff you see in ads where someone buys in a shop with mobile money is a myth and the other ads where people use it to transfer funds with smiles on their faces is also another myth. I don’t see smiling people in mobile money service center queues.

In short the stuff you see in ads where someone buys in a shop with mobile money is a myth and the other ads where people use it to transfer funds with smiles on their faces is also another myth.

So why do people use it mostly as a savings account when they offer no interest rates? Why do they use it like a regular savings account instead of getting an account at a bank or micro-finance? Well talking with 10 of my friends their reasons are:

  • You can deposit very small amounts into your account: I put this first as its surprisingly their greatest reason for using it. Meanwhile banks and micro-finances don’t necessarily have a minimum amount you can deposit in your account, there is an awkward stare you get from the cashier when you go to deposit 500 FCFA ($1) which you don’t get when you do same at a mobile money sales point. I think its because mobile money agents think it may be for paying a small bill so it not that awkward. It should be nine of their business but a lot of people don’t want to be belittled and will rather wait till they have a reasonable amount to deposit before going to a bank but that's never the case with mobile money
  • Little work in creating an account: All you need to do is meet an agent on the street who gives you a form to fill, and takes a pic of your ID card. Compared to banks and micro-finances which ask for photocopies of your ID card and passport size photographs.
  • No initial payment fee: Banks and micro-finances require a registration fee and minimum balance in your account (which is still like a fee since you withdraw with the difference being you can get upon closing your account. How many people go to open an account and are concerned about the day they will close it?)
  • Since their savings are small, they care but do not mind losing whatever small interest may come along if the used a proper savings account.
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