'Mobile money' is a term that refers to services that enable the transfer of funds or payments using mobile devices that do not rely on traditional banking or payment systems.
It excludes "mobile banking services that offer the mobile phone as just another channel to access a traditional banking product, and payment services linked to a current bank account or credit card, such as Apple Pay and Google Wallet", and instead serves "unbanked and underbanked" consumers predominantly based in the developing world, GSMA said.
In its report, GSMA said that, at the end of 2014, there were 103 million 'active' mobile money accounts in the world (77-page / 1.92MB PDF), up 41.7% on 2013 figures. It said this suggests that "the industry is getting smarter about what it takes to prompt usage of the service".
"The industry has gotten more intelligent on the cost of acquisition, and operators are increasing investment and testing innovative tools to better serve active users and reward usage," GSMA said. "Since the analysis on customer journey in 2013, we have seen operators increase investments in active acquisition through outbound calling centres, reiterating and refining agent training programmes and leveraging targeted [below-the-line] campaigns."
"This year, operators have also been more vocal about their use of transactional data to build a clearer view of the behaviours and needs of their customers, particularly in tough markets. Supporting early stage customers through to regular usage is no longer a blind spot, and an increasing number of operators are successfully doubling down on tactics that drive activation," it said.
According to the GSMA report, the rollout of mobile money services is hampered by barriers such as strict regulation, low levels of investment and a lack of collaboration across industry.
Particular challenges arise in the rollout of mobile money services into "harder-to-reach" rural areas and in countries with a relatively low population, the report said.
"Today, 54 developing countries do not have a live mobile money service," GSMA's report said. "70% of these countries have a population of less than 10 million. A small addressable market size makes it harder to build a business case for investment in mobile money, since it is more difficult for a mobile money service provider to achieve scale, lower costs and reach profitability."
"In addition, many of these markets are small territories, where it can be harder to build a P2P use case. While this doesn’t mean that mobile money cannot succeed in these countries, these factors seem to reduce the appetite of operators and banks to invest in mobile money launches," it said.
Telecoms and payments law expert Diane Mullenex of Pinsent Masons, the law firm behind Out-Law.com, said a recent tie-up between mobile money service providers in Kenya and Tanzania points the way for future expansion of the mobile money market.
The agreement between Millicom and Vodafone to link their respective Tigo Pesa and M-Pesa mobile money systems together will allow users of each service in Tanzania - four million Tigo Pesa users and six million M-Pesa users - to transfer money to one another for the first time.
"Collaboration opens up enormous potential for the mobile money market," Mullenex said. "By making rival systems interoperable, providers of mobile money services can make their offering more useful and relevant to consumers. Building usefulness and relevance can lead to further opportunities to build in more sophisticated services and functionality in future."
GSMA predicted that mobile insurance, credit and savings services will "reach scale" in a number of markets across the world and that there would be a move towards greater interoperability of the systems that support mobile money services.
"Providers of mobile financial services will need to engage with regulators and standard setting bodies to create more enabling regulatory environments to allow these services to flourish, fostering sustainable investment in the services that underpin a strong digital financial ecosystem," it said.
