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Fintech and the Future of Mobile Money | Combating the Crisis Together - YouTube
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[1]
Adoption of mobile money among
the unbanked population helps to
[5]
promote financial access
during the pandemic,
[9]
as they are likely the most
affected by the economic impact.
[22]
I am Majid Bazarbash from the Monetary
and Capital Markets Department of IMF.
[27]
The COVID-19 pandemic has
changed many aspects of our lives.
[32]
We have limited activities like
in person shopping or engaging in
[37]
social gathering, but some activities
are essential and can't be avoided.
[42]
Making payments becomes especially
challenging in countries where they have
[46]
limited access to digital banking.
[49]
Consider Kevin and Christine from Africa.
[52]
Kevin is a small business owner and he
deals with a lot of daily transactions on
[56]
a cash basis.
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Christine wants to order food and
both of them are reluctant to use
[62]
cash because of the pandemic.
Well, what can they do?
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They can use mobile money.
[68]
I'm Hector Carcel Villanova,
[70]
economist at the Statistics
Department of the IMF.
[74]
Mobile money has certain features that
have made it an interesting way of
[78]
increasing financial inclusion
of the unbanked population,
[81]
especially in low- and middle- income
countries. With mobile money transactions,
[86]
all that is needed is a rather
inexpensive utility phone.
[90]
This is facilitated by networks
of mobile money agents.
[94]
And storing value is as easy as
charging a mobile money account.
[98]
Mobile money services are provided
by mobile network operators or MNOs.
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There is no need to have a bank
account to send or receive money.
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This feature is particularly
important for those who are unbanked.
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Mobile money has a high
market penetration,
[115]
especially in low- and
middle-income countries.
[118]
Using mobile money allows
minimal physical contact.
[122]
The financial access COVID-19 Policy
Tracker is publicly available on the
[126]
IMF policy measures
against COVID-19 website.
[130]
The information in this tracker is
taken from publicly available sources,
[135]
inputs from other departments at the IMF,
[138]
as well as feedback received
from country authorities.
[141]
The tracker is a living document
and is updated on a regular basis.
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Our textual analysis of all information
gathered in this tracker reveals
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three main responses by country
authorities worldwide promoting
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the use of mobile money
during the COVID-19 pandemic.
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Cuts in transaction fees
were announced by regulators,
[164]
and some mobile money operators,
at the start of the pandemic,
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reducing mobile money costs and
providing temporary relief to customers.
[173]
This is why Christine will not need to
worry about transaction fees when buying
[177]
her food with a phone.
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Regulators typically impose
limits on mobile money accounts.
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To encourage social distancing,
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some countries decided to
increase these limits temporarily,
[188]
benefiting small business owners.
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This way Kevin could place larger
orders for his business using mobile money.
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KYC, or the 'know your
customer' onboarding policy,
[200]
consists of being able to identify
customers or gathering enough
[204]
information to detect possible risks.
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Easing KYC requirements during the pandemic
was aimed at encouraging customers
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to make payments through
mobile money services.
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In particular,
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we focus on recent challenges of a rapid
increase in mobile money use in the
[222]
economy by three main stakeholders:
mobile money providers,
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the payment system,
and mobile money users.
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Starting with mobile money providers,
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a reduction in fee income and
an increase in transactions
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translates into pressure
on profitability.
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Well, what's the solution?
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One way could be to raise revenues from
other lines of business, for example,
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by increasing fees on voice and data,
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but this may not always be
feasible. And in that case,
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a continued decline in profitability could
jeopardize the mobile money business model.
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Mobile money providers built on
mobile network operators benefit from
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economies of scale.
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Becoming a systemic player in the
payment system means that their failure
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is going to have severe
consequences for the payment system.
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The second aspect is regulatory arbitrage.
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It's important to support mobile
money in the time of the pandemic,
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but regulations should be careful
not to create an unbalanced
[291]
environment in favor of mobile
money providers.
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An increase in use of mobile money, while it's favorable,
[300]
it requires the funds and rights
of customers to be protected.
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We propose several ways that mobile money
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users could be protected.
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First mobile money providers should
segregate their own funds from
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trust accounts, which back
mobile money transactions.
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Second mobile money providers
should report to the payment
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system regulators on a regular basis,
[328]
and their operations should be
supervised regularly.
[331]
Finally, the legal environment should be
supportive of customers to make
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sure that their complaints
are treated in a fair way.
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It's important for countries to take a
holistic view when they are assessing
[345]
these measures and make sure
that they are sustainable.
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