This post is the second in a series highlighting the key role of the mobile money industry within the international remittances space.
In just a few years, mobile money has evolved from operating as a purely domestic P2P transfer service to enabling transfers between more than 20 countries globally. In a previous blog post, we focused on the customer benefits of sending and receiving international remittances using mobile money and discussed the immense potential of the mobile money industry to drive down cost for customers. To assess the impact of mobile money on reducing the costs of international remittances, the GSMA commissioned an independent data collection exercise, using the World Bank’s methodology [1].
Today, we are publishing key findings from this research, which indicate that mobile money is driving a price revolution in international remittances. Highlights from the research include:
- Sending international remittance using mobile money is, on average, more than 50 percent cheaper than using global money transfer operators (MTOs). Lower transaction costs can directly translate into additional income for remittance recipients, many of whom are underserved.
- Mobile money is well positioned to cater to the needs of low-income migrants, as it is particularly compelling for low-value remittances. Low-income migrants may find it more convenient to make low-value transactions on a frequent basis.
- Mobile money is an important tool for achieving the SDG target to reduce the cost of sending remittances [2]. GSMA research shows that where people were able to send international remittances from a mobile money account, the average cost of sending USD 200 using mobile money is 2.7 percent (compared to six percent using global MTOs).
- Mobile money is increasing competition, which is driving down the price of remittance services. Our research shows that global MTOs tend to offer their services at lower prices in markets where they are in competition with mobile money providers.
Beyond the reduction of remittance prices, the impact of mobile money supports broader policy objectives, particularly accelerating financial inclusion and strengthening financial integrity. Mobile money can act as a key gateway to financial inclusion, both for remittance senders and recipients, by allowing them to make digital payment transactions rather than simply reverting to cash. It is also a powerful tool to digitise large flows of informal transfers.
Ongoing research is needed to chart the impact of mobile money on remittances and, in turn, on progress toward SDG 10.c. The GSMA therefore encourages the international community to include mobile money as a key component of any policy initiative aimed at reducing the cost of remittances. Bold reforms are also needed to facilitate greater competition and lower prices to expedite the achievement of UN SDG 10.c. Regulators in some countries have acknowledged this and have moved to enable mobile money in the international remittance sector. We urge others to follow this example by supporting an open and level playing field in the international money transfer space, one that allows non-traditional service providers, such as mobile money providers, to compete with traditional remittance services.
The full publication explores these insights in further depth through the data analysis and through examples of different initiatives launched by mobile money providers.
Notes:
[1] GSMA commissioned Developing Markets Associates to provide an independent data collection exercise covering corridors where mobile money can be used to send remittances.
[2] By 2030, reduce to less than 3% the transaction costs of migrant remittances and eliminate remittance corridors with costs higher than 5%, https://sustainabledevelopment.un.org/sdg10