New GSMA publication on mobile money profitability

This post is co-written with Nicolas Vonthron.

Mobile operators that have expanded into mobile money are already aware of the indirect benefits it can generate, such as customer loyalty and savings on airtime distribution. But is mobile money profitable? It can be, but getting there requires heavy on-going investments in operational expenditures (OPEX) and a shift away from cash-based transactions to a mature digital ecosystem. This paper evaluates the profitability of mobile money by estimating profit margins for three different scenarios, and highlights the internal challenges mobile operators may encounter along the way.

Measuring the profitability of mobile money is not the same as measuring the profitability of core GSM activity, like voice and data. Mobile money is first and foremost an OPEX business, driven by agent commissions, marketing, and personnel expenditures. It cannot compete with EBITDA margins of ~35% now seen in GSM, but the capital expenditure (CAPEX) required to launch and run a mobile money business is significantly lower. Operators and financial officers should therefore compare mobile money and GSM businesses based on free cash flow generation, that is, approximately EBITDA minus CAPEX.

Mobile money profitability over time


In the start-up phase, mobile network operators (MNOs) should expect to invest six to eight times the revenue units generated by mobile money. EBITDA margins will take a hit during this period, but senior management should resist the temptation to reduce mobile money OPEX when core GSM business comes under pressure. Mobile money deployments need time and resources to deploy a robust agent network and to acquire and educate customers. Profitability should not be a focus at this stage, although operators may choose to quantify the indirect benefits of mobile money to bolster the overall business case.

As mobile money enters a high-growth stage (when an MNO acquires at least 15% of its GSM base as active mobile money customers), both OPEX and the revenue generated from rising transaction volumes increase. Modest, positive margins of two to five percent are expected at this stage. The challenge then becomes transitioning from a system based on a costly cash-in/cash-out network to a mature digital financial ecosystem. In addition to creating a compelling value proposition for consumers, operators must also integrate their platforms with a range of institutions to stimulate digital transactions. For deployments with high numbers of over-the-counter (OTC) transactions, the transition to digital is more complex, and heavy investments in customer acquisition are needed to drive the adoption of mobile wallets.

In a mature, ecosystem-based deployment, the ratio of digital to cash-based transactions widens. In this stage, deployments can expect healthy profit margins of more than 20% and cash flow margins to exceed 15%, making mobile money more attractive relative to its core GSM business. These estimates do not include the potential financial gains from adjacent revenue pools, such as credit scoring services and other data analytics for mobile money usage, or the new products a mature ecosystem can enable.

The GSMA encourages the transition to a digital financial ecosystem, which will not only make mobile money a more profitable venture for MNOs, but potentially unlock broad economic and social benefits as well.

Download the publication or view the summary introduction.

Join the Conversation (2 comments)

  • Great publication. Just want to point out that for “incoming transactions” international remittances typically generate revenue, rather than cost. The report states a cost of 0.5%, but in my experience that cost will always be 0 and often the revenue will be 1-1.5% of face value.

    This makes int’l remittances a very attractive growth avenue, as they both generate revenue and get cash into the wallet ecosystem.

  • Thanks, Jeremy! Great point on international remittances. Many operators, indeed, generate revenue from incoming remittances. Our analysis erred on the conservative side. Additionally, international remittances only comprise 5% of incoming value in the mature ecosystem scenario we define. If we change the cost and revenue assumptions to what you suggest, all else equal, net profit margins would rise by two percentage points in the mature ecosystem scenario.

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