Introducing the Mobile Money Regulatory Index

An interactive tool to measure the effectiveness of mobile money regulatory frameworks.

Over the past decade, mobile money has been a driving force of financial inclusion in emerging markets. Mobile money has proven to be a safe and efficient money transfer and payments solution for the unserved and the underserved. Yet, more than one billion people in the world who have access to a mobile phone still lack access to a formal account at a financial institution.

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A 2016 study by the GSMA and the Harvard Business School found that enabling regulation is an important predictor of success in mobile money services. Enabling regulation has a material influence on market outcomes, helping to drive mobile money adoption and to increase the volume of mobile money transactions. Today, the most successful providers overwhelmingly operate in markets with enabling regulation. On the other hand, non-enabling regulation can stifle investment, limit the rollout of new services and raise costs for consumers, all of which can negatively affect adoption and activity rates.

In 2013, the GSMA identified six principles that define enabling regulatory frameworks. The result was a binary categorisation of regulation as either enabling or non-enabling. As the industry and regulatory context has evolved, however, so has the need for a more nuanced evaluation of regulation. In this context, over the past year, GSMA Mobile Money and GSMA Intelligence have studied the regulatory frameworks in more than eighty countries to develop a tool that assesses their effectiveness in creating enabling environments for mobile money operations. The result is the Mobile Money Regulatory Index.

The Mobile Money Regulatory Index focusses on the indicators that have the most profound impact on the development of scalable and responsible mobile money businesses that can sustainably reach the underserved and foster digital financial inclusion.

The Index analyses six broad enablers: authorisation; consumer protection, transaction limits; know-your-customer (KYC); agent networks; and investment and infrastructure environment. Each enabler is weighted according to its role in shaping markets in which mobile money can thrive. The analysis includes both qualitative and quantitative techniques to arrive at the scores. The assessment has included an analysis of the prevailing regulatory instruments in each of the focus countries.1 This has been supplemented by interviews with several technical experts and regulators.

The Mobile Money Regulatory Index is intended to support dialogue between regulators and mobile money providers on reforms that can promote market growth. For the development community, the Index will help identify subject areas and markets where technical assistance to governments and regulators can have the biggest impact.

Importantly, regulation does not exist in a vacuum. Local contexts will inevitably affect how a regulatory framework impacts the adoption of mobile money. Nevertheless, we hope that this Index will help stakeholders to identify and address the most significant regulatory barriers to the growth of mobile money, while also stimulating further debate on the key drivers of an enabling regulatory framework.

In the coming weeks, the GSMA will publish a report outlining the analysis underpinning this tool in further detail and discussing other findings from our research. In the meantime, we welcome your feedback on the Mobile Money Regulatory Index at mobilemoney@gsma.com.

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Footnotes

[1] We studied regulatory instruments that were in force during the time of the study and every effort has been made to ensure the accuracy of the data.

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  • After a half decade, the rapidly evolving world of mobile money and the 6 principles identified in 2013 that enabled regulatory frameworks could use an update. A 7th principle grew in prominence significantly in 2018 – impacting mobile money adoption and activity rates: forms of taxation on a variety of uses of mobile money. Taxation of mobile money has become a defining moment for mobile money and financial inclusion. Nations that committed to the Maya Declaration know that taxing mobile money defies that pledge. Taxation of mobile money is a fork in the road for continued progress with mobile money and the companion advance of financial inclusion. After introducing taxes on mobile money, some nations have seen MSOs’ mobile money use plunge 50%. This is a flight from mobile money as citizens shift to other forms of transacting that do not have punitive fees on use of their money. For many of the recently financially included, taxing any activity using their own money is a violation of trust that can be expected to have consequences that extend beyond mobile money to all forms of DFS/MFS. Government ‘compromises’ of lower tax rates on new taxation on mobile money uses are a near term ruse. Once the beachhead/paradigm of taxing mobile money is institutionalized, it is inevitable that future policy makers will make attempts to continually raise tax rates. Taxation of mobile money has quickly become a key issue for future elections in impacted countries.

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