Rethinking the mobile money business model to capitalise on adjacencies

This blog post was co-written by lara Gidvani and Janet Shulist 

Mobile money providers today face new prospects to expand or redefine top-line growth by considering new ‘adjacent revenue streams’ that are closely linked to their core payments product offerings. We define adjacent revenue streams broadly, to include all opportunities where the mobile money service can leverage its key assets (such as the agent distribution network, customer base, and/or customer transaction data etc.) to offer new services to existing and new customers and businesses. For example, adjacent revenue streams might include offering digital credit or simple investment products. These adjacent streams go beyond the traditional transaction fee-based revenue earned from individual and business clients, and present an opportunity (and in some markets, a necessity) to rethink mobile money profitability.

This post explores why providers are looking at adjacencies and what potential opportunities exist.

Why MNOs are exploring adjacencies

There are three core reasons why mobile network operators (MNOs)are exploring adjacent revenue streams with mobile money:

  • Adjacent revenue streams can complement the transaction-based business model. The business case for mobile money is challenging, and based on the ability to increase ecosystem transaction volumes by customers over time. While MNOs who successfully develop mature, ecosystem-based services can expect healthy profit margins of more than 20% and cash flow margins to exceed 15%, this takes upwards of five years or more.


  • Globally, margins in the payments business are being squeezed by both increased competition and a downward pressure on fee-based revenue. Though McKinsey expects global payments revenues to increase at a relatively stable rate of 6% annually in the next five years, with Asia and Latin America leading the way, they also report a squeeze on margins in both EMEA and North America—more mature payments regions—on fees generated from domestic transactions, and net interest margins. This is potentially a sign of things to come. Further, increased competition from internet players such as Alipay, SnapCash, and government-backed programmes can exert a downward pressure on pricing.


  • To meet the broader policy and commercial goal of digitising cash transactions, some operators seek to decrease or eliminate price frictions for consumers. Digitising cash is perceived as an opportunity that presents future revenue prospects, which can eclipse current transaction revenues from mobile money. This interest is fuelled by the new availability of data and a belief in the commercial opportunities that it can bring. Mobile phones provide digital access and are a critical source of data—mobile captures much of our digital footprint, and can shift an “invisible” consumer to a “visible” one. For some providers, this prize may warrant near zero fees to attract users—a strategy familiar to users of Google and Facebook.

Potential adjacent revenue streams for operators

Here we will consider two ways MNOs can capitalise on adjacent revenue streams:

Leveraging the mobile money platform to grow the ecosystem


Growing the mobile money ecosystem by increasing the proportion of digital transactions is critical to realising healthy profit margins for the mobile money business. But providers can gain more than transaction revenue by leveraging its assets: the payments channel, knowledge of their customer base, and distribution to develop or deliver a new ecosystem product. For example, providers may derive adjacent revenue streams from delivering financial products, such as savings or insurance, partnering with e-commerce providers, or acquiring merchants:

  • In China, Alipay’s wallet allows users to channel small savings into Yu’eBao, a money market fund where users accrue interest on small sums and withdraw money anytime.
  • Providers are investing in acquiring a merchant network to generate a convenience fee from merchants for accepting digital payments, to scale customer transaction behaviour, or to provide higher value merchant services (credit, intelligence etc.).
  • Providers are finding opportunities to partner with e-commerce providers to offer distribution and payments services to combat logistics challenges and cash on delivery.


Monetizing transaction data


In the payments space, providers can leverage transactional and customer data to offer credit scoring, business intelligence services, and targeted marketing analytics. Google and Facebook pioneered this approach, providing basic services for free (e.g. search and social networking), while using the data derived from these interactions to earn revenue through targeted marketing and advertising, as well as to develop new products for a growing customer base.

Supporting credit provision is one important way to monetise data. Although in many markets, e-money issuers are not permitted to lend, there is still an opportunity to participate in alternative credit scoring and/or the provision of credit services in partnership with approved lenders. For instance, M-Shwari uses a customer’s M-PESA usage to determine a credit score. Other data examples from companies such as Lenddo, Tala, Cignifi and FirstAccess include payments and savings transactions, call detail records, or even social media data.

Payments data can also support business intelligence. offered customers a way to analyse and benchmark their card spending habits, and leveraged that data to develop proprietary analytics to better understand and serve merchants and other service providers. In 2012, Capital One acquired them for their expertise.[1]

How to get there

In pursuing adjacent revenue streams, operators will need to ensure they build on existing customer relationships and trust to offer higher value services. Particularly when monetising payments data, providers and their partners must focus on maintaining and gaining the trust of their client base even in the absence of solid policy and regulatory frameworks, by ensuring that data is managed securely and used for stated purposes.

Providers will also need to find cutting-edge partners with a shared vision to offer new products that customers value. Many adjacencies may require specialised expertise or licenses or the potential to aggregate transactions. Partnerships will need to strike the right commercial agreements and will be accelerated by simple technical integrations.

Over time, we anticipate more providers will experiment with alternate business models, primarily driven by supplementing transaction revenues from adjacencies.



[1] and read more in from the Bill & Melinda Gates Foundation and EY India: Alternate revenue models for Payments Banks in India