Integrating mobile money and e-commerce: what are the challenges to overcome?

This is the first of a series of blog posts on e-commerce and mobile money, and it focuses on the key challenges to overcome in order to successfully integrate. The blog is based on GSMA’s work with e-commerce providers, mobile money providers, payment gateways and is complemented by demand-driven research.

In emerging markets, increasing smartphone adoption and growing internet penetration is fuelling the expansion of e-commerce. E-commerce has become a significant tool in unlocking job creation and innovation for small and medium-sized enterprises (SMEs) in developing countries. Further, the World Bank’s Global Findex database shows that in key mobile money markets, e-commerce is being used by low-income and rural people. However, in these markets, over 70% of e-commerce payments involve cash-on-delivery payment processes, which are expensive, inefficient and time-consuming for both merchants and buyers.

As a source of funds integrated in the phone, mobile money presents a compelling solution, particularly in countries with low card penetration. We believe that in markets where it is already established, mobile money could become a key enabler of e-commerce payments. Additionally, mobile money adoption could be driven by e-commerce payments in other regions, such as Southeast Asia, where there are opportunities for growth of mobile money.


Source: GSMA intelligence, McKinsey Global Institute, GSMA Analysis and interviews. Sub-Saharan cash-on-delivery figures do not include South Africa.


Integrating mobile money into e-commerce solutions however, presents its own issues, including lengthy technical integration and poor customer experience.

For instance, mobile money providers may face challenges to integrate their mobile money APIs with e-commerce merchants due to a lack of clear documentation, ownership, and allocation of tasks to third parties in the integration process. Where APIs are well-documented, integrating payment solutions can take less than a week. However, in most cases the integration period ranges between three and six months.

Poor mobile money payment user experience results in high drop-offs: Users are often instructed to follow 8-10 step processes independently, and are forced to enter numerous details (merchant numbers, reference codes, amounts) precisely, creating multiple chances for error. In addition, drop-off points are also due to network failure, lags in sending the messages and expiration of the short timeframe users have to validate the codes.

Poor user experience is not only limited to the payment aspect of the integration—the delivery and refund / exchange processes are also at the core of the online purchasing experience. Delivery in most emerging countries is typically slow and inefficient because of the poor address system in cities and lack of widespread reliable delivery services in non-urban areas . The refund / exchange process is also complex and lengthy, with customers often only being able to receive vouchers in place of a faulty or non-desired item.

Our demand-driven research found that trust also remains a major consumer issue. When selecting a payment option, even customers with access to digital payments prefer cash-on-delivery. Similarly, customers who try paying via mobile money but drop-off will revert back to cash and think twice before trying digital again. Additionally, users often distrust the quality of the merchandise, and prefer paying cash-on-delivery as a means of bypassing a lengthy and tedious refund process if they are unhappy with the quality.

The evolution of payments in developed countries, and most recently in China and India, shows that cash-on-delivery declines as consumers become more trusting of online merchants and more confident about the security of digital payments. As mobile money providers continue building trust, the question then becomes: how can mobile money providers become stronger partners for e-commerce players, and partake in and support this fast-growing industry? To explore this topic, the next blog will drive insights from Southeast Asia.

Read the second blog in the series

Read the third blog in the series