The concept of Mobile Money has greatly reduced the cost of international remittances, according to GSMA report ‘Driving a Price Revolution: Mobile Money in International Remittances’.
The average cost of sending US$200 to an international country via the global money transfer operators (MTOs) is 6% of the amount of money. Meanwhile, using the Mobile Money, the average cost of the same transaction comes around 2.7%. This shows that the Mobile Money is almost 50% less expensive than the MTOs on an average. According to GSMA, Mobile Money is used by 400 million registered customers over 90 countries.
Commenting on the benefit offered by Mobile Money, John Giusti, Chief Regulatory Officer, GSMA said, “While today mobile money services are largely used for domestic transactions, international transfers represent the fastest-growing segment of mobile money services. In just a few years’ time, mobile money has moved from a purely domestic service to one that allows migrants to send remittances between more than 20 countries globally.”
Around 250 million people live outside their country of birth and regularly send money home. This adds to the economies of their home countries. In 2015, global remittances totaled US$581.6 billion, of which US$431.6 billion, or nearly 75%, was sent to the developing world. Hence, it is evident that Mobile Money contributes to the economies of the developing nation on a large scale.
The downside is the cost of international transfers. It remains high and affects the income of remittance recipients. High fees for remittance transactions forces senders to use informal remittance channels, increasing anonymous cash-based transactions and creating new risks for financial integrity.
“Through mobile money services, the industry is directly supporting the goal of expanded financial inclusion for migrants and their families by reducing international remittance costs, as captured in UN SDG10.c. The potential gains of achieving this target could be as high as US$20 billion in additional income for remittance recipients,” Giusti continued.