Mobile Money Market Forecast to Reach $16.2 Billion by 2025

Mobile Money Market is forecast to reach $16.2 billion by 2025, growing at a CAGR 25.9% from 2020 to 2025. Mobile money refers to paying money through your mobile devices without using the hard cash. Mobile money systems can provide a gateway for online financial service providers to tap large unexplored market avenues, as this technology has yet to be adopted by most of the population. Companies can open themselves up to other submarkets such as micropayments, data-based financial services and potential digital markets by developing digital financial capabilities. The increasing omnipresence of mobile phones is a driving factor in increasing the number of users of mobile money and changing the dynamics of digital finance solutions. Efficiency in money exchange is one of the major determinants of mobile money technology development. Increasing the efficiency of mobile money transactions can result in an increase in overall expenditure which can encourage companies to work towards the development of this technology. Use of transaction modes such as NFC / smart cards has speeded up the transaction process. In addition, the development of e-commerce websites has led to an increase in the number of online transactions that can be considered an attraction for the mobile money market.

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Mobile Money Market Segment Analysis - By Type of Payments

During the forecast period Proximity Payments segment is expected to grow at a CAGR of 36.4%. Mobile phones and POS devices are used to make proximity payments. A number of companies currently offer applications allowing proximity payments. It is further referred to as in-store payments with respect to payment through a merchant's POS terminal in the case of a retail store or in-location payments. For short distances and work, proximity payments are specifically enabled when both the payer and the payee are present in the same place. This payment system uses either barcodes or contactless interfaces to initiate the mobile money transaction. This is done through Near-field communication (NFC)-based technology present on an NFC-enabled phone, which has comprehensive details about the mobile wallet placed in the cloud or debit / credit card. This payee information is stored on the device in the POS terminal which is read by the corresponding NFC reader. Proximity payments differ markedly from remote payments, as it involves the presence of payment card details from one's own bank account and does not require any relation with a payment processor to facilitate the transaction. The increasing adoption by brick- and mortar-based companies of mobile payment technologies further drives demand for proximity payments.

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Mobile Money Market Segment Analysis - By Transaction Mode

The QR Code Segment is projected to grow during the forecast period at the highest CAGR. QR codes or quick response codes are unique 2-dimensional barcode systems that are only looking for a scan to start a mobile payment process. These codes have been an unforgettable part of expanding mobile money. The adoption of QR codes has been the most cutting-edge version of contactless payments. Their affordability has also made them a popular choice among most merchants, compared to NFC. These do not require any additional devices to make the payment, other than a smartphone with a functional camera. These codes made mobile wallets exceptionally easy to use. With no requirement for any additional infrastructure and backed by the deals and offers provided regularly by the payment service providers, paying with QR codes has definitely outperformed NFC payments and has become a great means for contactless payments in-store.

Mobile Money Market Segment Analysis - By Geography

APAC is expected to dominate the global Mobile Money market with a share of more than 32.9%. The region is at the forefront in adopting mobile money solutions, owing to the increased penetration of smartphones in this region, which offers operators the opportunity to launch advanced mobile wallet services. The rapid adoption of eCommerce further contributes to the increased utilization of electronic payment mechanisms, including mobile money services. Growing mobile money solutions have helped bridge economic opportunities and drive regional financial inclusion. Because of its vast population and the evolving nature of their economies, there is a lack of direct access to financial services for many in this region. Traditional banking results in high operating costs and it is difficult to set up those banks in rural and remote areas. Mobile-based solutions, however, help reduce operating costs and serve a diverse population, thereby promoting financial inclusion through bridging economic opportunities.

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Mobile Money Market Drivers

Increasing Adoption for Mobile Point of Sale

Mobile point of sale has really taken advantage of the smartphone's ability to accept payment on the spot. mPOS is the technology that frees all businesses from their brick-and-mortar and in-store transactions. mPOS device limits liability because transactions are encrypted and card information is not stored on the mPOS device, which minimizes the risk of security breaches and makes it easier and quicker to comply with regulations. Biometrics such as fingerprint and facial recognition can also be used with mPOS to confirm customer identities during payment, adding another level of security to mobile money payments. With mPOS, staff can see past transactions, online browsing history, loyalty rewards, and other things that help staff understand the customer's need. These features have not only added to customer satisfaction but also improvement in staff performance.

COVID-19 Impact

The COVID-19 pandemic has had a significant impact on the mobile money market, as consumers and businesses are forced to change their buying habits. There has been an incredible spike in the adoption of mobile wallets, as contactless payments have become vital for purchases. Avoiding cash and card transactions to keep COVID-19 from spreading has prompted many subscribers to try out mobile wallets. Since the COVID-19 crisis complicates every day, consumers become accustomed to digital payments, making mobile money important for each transaction.

Mobile Money Market Challenges

Lack of Security and High Cost of Smartphones

Not all mobile phones offer mobile banking. Sometimes, installing apps on your phone requires you to use the Mobile Banking feature that's available on the high-end smartphone. If the customer does not have a smartphone, then Mobile Banking usage will be limited. A transaction such as money transfers is only available on high-end phones. Regular use of Mobile Banking may result in additional fees charged by the bank for the provision of the service. Mobile banking users are at risk of receiving fake SMS and scam messages. Loss of a mobile device often means criminals can access your mobile banking PIN and other sensitive information. This is expected to hinder the market growth,

Market Landscape

Technology launches, acquisitions, and R&D activities are key strategies adopted by players in Mobile Money Market. Mobile Money Market is expected to be dominated by major companies such as Vodafone, Google, Orange, FIS, Paypal, Mastercard, Fiserve, Airtel, Gemalto, Alipay, MTN, PAYTM, Samsung, VISA, Tencent etc

Acquisitions/Technology Launches

In November 2019, Google, a digital payments provider, launched Google Pay for business apps, targeting small and medium size businesses, helping them transfer each rupee earned by the merchant directly into their Unified Payment Interface (UPI)-linked bank account.

In November 2019, Paypal partnered with Paykii, a leading bill platform provider to launch Xoom, PayPal’s international money transfer service in Jamaica. Customers in the US, UK, Canada, and 37 markets across Europe can use Xoom’s fast and easy money transfer service to securely pay electricity, telephone, internet, cable, mobile network, water, loan, and insurance bills in Jamaica.

Key Takeaways

The growing ubiquity of mobile phones is a driving factor in increasing the number of mobile money users and changing the dynamics of digital finance solutions. Efficiency in money exchange is one of the key determinants of the development of mobile money technology.

Proximity payments differ markedly from remote payments, as this involves the presence of payment card details from one's own bank account and requires no relationship to facilitate the transaction with a payment processor. The increasing adoption of mobile payment technologies by brick- and mortar-based enterprises further drives demand for proximity payments.

QR codes or quick response codes are unique 2-dimensional barcode systems seeking only a scan to start a mobile payment process. These codes were an unforgettable part of growing mobile money. The most cutting-edge version of contactless payments was the adoption of QR codes.

The global mobile-money market is expected to dominate APAC. Due to the increased penetration of smartphones in this region, which offers operators the opportunity to launch advanced mobile wallet services, the region is at the forefront when adopting mobile money solutions.

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