Today the mobile money for the unbanked programme is releasing the results of the 2011 Global Mobile Money Adoption Survey. The survey is, we believe, the most comprehensive attempt to measure the

The mobile financial service value chain can be disaggregated in a variety of different ways, giving rise to an interesting range of business models. This is good for customers and for the variety of players that seek to play a role in the mobile money for the unbanked ecosystem. But only a mobile operator can provide the communications channel to users.

In most markets, if you compare the margin that retailers earn from selling prepaid airtime to the commissions that mobile money agents earn buying or selling e-money, you will find that the former is almost always higher than the latter. This makes recruiting mobile money agents from your pool of airtime retailers tough, an issue we discussed in a sidebar in “Building, Incentivising, and Managing a Network of Mobile Money Agents”.

Mobile money platforms that rely on networks of cash-in/cash-out agents to take in and pay out cash need that network to be healthy in order to offer customers a compelling value proposition. The lynchpin of channel health is liquidity, but compliance with customer-due-diligence standards, merchandising standards, and so on are also important. A key success factor in ensuring channel health is monitoring: routine personal visits by representatives of the mobile money service provider to agent locations are the only way to assess to what extent agents are adhering to their obligations and offering customers a quality retail experience.

One of my first posts for this blog explored how mobile operators could exploit the network effects that characterize mobile money services by “subsidizing” early adopters—that is, by rewarding those who sign up and use a service early with deep discounts or bonuses to make up for the fact that there aren’t many other people on the network to transact with. It’s a classic pricing strategy in networked markets.

As I discussed in a recent blog post, what makes the economics of mobile money so different from the economics of traditional banking is the reduction in costs for cash in, cash out, and transaction processing. The lower these costs are, the lower fees for customers can be—making financial services affordable in a way that they never have been before. The use of independent retail agents is what, in the first wave of mobile money, has dramatically reduced the cost of cash-in and cash-out compared to doing so in bank branches. Recently, TigoPesa in Tanzania has taken this one step further.

It is no longer the case that Kenya is the only market where mobile money is scaling fast. In two neighboring countries, Uganda and Tanzania, mobile money is now reaching millions of customers. Two services in particular have grown particularly fast. Who’s behind them? Standard Bank in Uganda and the National Bank of Commerce in Tanzania.

Getting cash into and out of banks is expensive. Last year, Clara Veniard at the Bill & Melinda Gates Foundation wrote up the results of a costing exercise conducted with seven service providers in Asia, Africa, and Latin America to compare the cost of servicing a transactional savings account the traditional way—that is, by facilitating transactions at bank branches—with the cost of doing so using third-party agents outside of branches that are empowered to perform cash-in and cash-out transactions.

The magnitude of the difference is striking.

Central banks that seek to promote financial inclusion often have an explicit goal to increase the number of customers (or rural customers, or poor customers) that have bank account. It’s easy to understand this policy aim. After all, bank accounts are the foundation of my financial life, and probably of yours, too. But is it always the case that a bank account is the product that the poor could benefit the most from?

Last month FATF released a guidance paper on AML/CFT and financial inclusion. This is good news for mobile money because it offers national financial services regulators, who establish the KYC rules that mobile money providers must comply with, guidance on the ways in which a risk-based approach can be adopted to simplify customer due diligence procedures—improving the ability of service providers to advance financial inclusion.