Mobile financial services and MSMEs: How can financial regulators foster the use of mobile financial services among MSMEs?

This article is the second of a series of two blog posts looking at the issue of driving the uptake of mobile financial services among MSMEs. It explores different ways in which financial regulators can encourage the adoption of mobile money among MSMEs. This article was written by Claire Scharwatt from GSMA and Ricardo Estrada, the Digital Financial Services Policy Manager at the Alliance for Financial Inclusion.

As discussed in the previous blog of this series, getting more MSMEs to use mobile financial services and mobile money can result in having more inclusive financial systems. Consequent benefits include more efficient payment systems, more robust economic cycles with increased GDP and growth in real terms, increased job creation, in addition to all the related social welfare-related benefits, and certainly among the benefits the positive correlation between financial inclusion and financial stability is included, which is one of the main concerns of financial regulators worldwide.

Some regulators have already included in their mandates financial inclusion goals, either legally or operationally, while all financial regulators consistently pursue the objective of achieving sound and sustainable financial stability in the supervised formal financial systems. The recent financial crisis has underlined this even more and to a more systemic extent. Therefore, bearing in mind such two-fold aim regulators should consider how they can encourage increased uptake in mobile financial services among SMEs, without leaving aside the prudential approach. They can do that in several aspects including the following:


  • Developing enabling regulatory frameworks that promote both bank and nonbank-based models. Mobile money services are available in 93 countries through 271 services, 57% of which are operationally driven by non-banks, including mobile operators. GSMA’s annual Global Adoption Survey of Mobile Financial Services has consistently shown that of the fastest-growing deployments, the vast majority are driven by mobile operators. These facts highlight the importance of having regulatory frameworks that enable both banks and non-banks to provide mobile money services[1]. Where this is the case, interesting opportunities arise where deposit-taking institutions can leverage the wide uptake of mobile money linking bank accounts to mobile money accounts thus making a number of mobile money customers eligible for mobile savings and mobile credit products, therefore driving up overall financial inclusion levels.


While developing enabling regulatory frameworks, financial regulators should try to draft all related policies pursuing the inclusiveness of all critical players in the economy, including MSMEs as a critical customer segment. Regulations of all levels and hierarchies[2] should combine the usual financial stability objectives with the financial inclusion objective, and at the same time they must ensure that all mobile financial services providers are competing in a level playing field that addresses the technical implications of the nature of the services being provided.


  • Establishing a true Risk Based Approach and proportionate regulations. In order to pursue the improvement of financial inclusion levels for MSMEs and the uptake of mobile financial services, regulators should incorporate risk based approaches which are proportionate to the risks posed by the different types of customers served by the regulated mobile financial services providers. For example, it’s important to allow MSMEs to have higher account and transaction limits than other types of customers, in fact, regulators can even consider to customize the prudential requirements separately for Micro, Small and Medium enterprises according to the different levels of risks presented by each category.


The existence of specific merchant accounts with different account and transaction limits as individual accounts also allows mobile money providers to offer a number of specific functionalities to merchant account holders, which can help them to even better manage their financial flows, such as the availability of online portals with the possibility to easily download their transaction history.

A number of risk-mitigation measures can be developed to ensure the safe and secure use of mobile money services by MSMEs, in line with the 2012 FATF recommendations around proportional AML/CFT standards, bearing in mind at the same time the importance of steadily driving the uptake of mobile financial services.


  • Products and services allowed. In a number of markets, mobile money services are only allowed for limited use cases such as domestic P2P transfers and bill payments. In order to encourage the adoption of mobile money by MSMEs, it is critical to permit the use of mobile money for use cases which are more relevant for them namely merchant payments and salary payments.


Even though the nature of the supply of mobile money services comes from the providers’ side, the regulators should have regulatory frameworks in place that are not limiting the provision of new and innovative mobile money products to attend all relevant use cases. The regulatory and supervisory approaches towards all these products should always be required and enforced in a way that ensures financial stability without limiting the development of new products that will attract and benefit MSMEs.


  • Fostering MSMEs to be a part of the ecosystem in the network of cash points. Any successful mobile financial services ecosystem needs to have an efficient and large network of cash points where customers can perform all the basic cash-in and cash-out transactions. If MSMEs become a key reference within this network, their involvement in the usage of mobile money services will be easier and more natural. While many markets in Sub-Saharan Africa already allow mobile money providers to use MSMEs as agents, a number of markets in other regions have either had a more restrictive approach or are still waiting for more MSMEs to be encouraged to actively participate in the mobile money ecosystem.


While developing agents and cash point regulations, financial regulators can include provisions for MSMEs incentivizing their role as agents. Simplified requirements for MSMEs to be licensed and authorized as a valid cash points are advisable, including flexible criteria encouraging them to offer as many mobile money products as possible in order to build an interesting business case.


As a growing number of regulators and MFS providers are starting to look at MSMEs, the GSMA will continue to gather insights on this topic. Please share your experience as a comment below or directly at

The Alliance for Financial Inclusion addresses topics related to Digital Financial Services and SME Finance within their several activities and particularly in the DFS Working Group and the SME Finance Working Group. Comments and inputs are welcome directly at and



[1] Mobile Financial Services Basic Terminology Guideline Note No 1, March 2013, AFI MFSWG.

[2] Acts, laws, policies, regulations, circulars, guidelines and other common denominations used to refer to the regulatory instruments to be enacted.


Image courtesy of AFI

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