The new data released by GSMA along with the 2022 State of the Industry Report, provides a great opportunity to reflect on how the industry has evolved, what has been learned and what is still left to figure out after 15 years.

Key mobile money metrics show continued growth, but we rarely discuss the trajectory of that growth and what it might tell us about the future. In this article we analyze growth in deployments (providers), active accounts, and transaction volume and values (agents are analyzed in a forthcoming article). All show that while mobile money continues to grow, it does so at a sharply decreasing rate, begging the question if growth has plateaued.

New Mobile Money Providers are Rare

The GSMA State of the Industry Report on Mobile Money 2022, rightly points out that mobile money deployment has grown from 169 deployments across 71 countries in 2012, to 316 live deployments in 98 countries this year. That is a respectable average growth rate of just under 9% over the ten-year period. However, the growth rate has been quite uneven and recently looks like it is approaching zero.

From 2001-2008 there were 15 providers or less, so the low absolute numbers led to uneven growth rates. However, there is real dramatic growth in providers launching mobile money services in a blossoming period between 2008 and 2014. Since then, starting in 2015, growth rates have been in the single digits for the last seven years, including only a 2% annual growth for the last three years.

Active Customer Growth is Trending Towards Zero

Of course, provider growth is only part of the story. The internal growth of the individual deployments is also important. It is possible that while new deployments are increasingly rare, the ones that have survived, have thrived. For this, the first indicator to analyze is growth of active customers. Even though 30-day active customers is a low bar, it is an adequate indicator for this purpose and we get more into usage per customer later.

The data for active customers starts just as this period of mobile money deployment blossoming begins and shows soaring quarterly growth peaking at just over 50% towards the end of 2007, when there were only about half a million active customers globally.

Since then, there has been a steady decline in active customer growth, which has hovered in the single digits since March 2017. The trend line is further included to show that despite some of the fluctuations, it is reasonable to expect growth rates to approach zero soon. Decreasing growth rates are expected as a sector matures and growth from a larger base becomes serially more difficult. However, this is a seldomly cited trend in mobile money and therefore worth noting.

The Average Provider Finally has One Million Active Customers

The interaction of these statistics produces another insightful growth trend. Given active customers have been growing at a consistently higher rate than providers, active customers per provider have increased consistently over the years. It is interesting to observe that during the blossoming period of provider growth from 2008-2014, active customers per provider stayed relatively stable between 160,000 and 210,000 active customers per provider. These small numbers of active customers per provider will surprise many readers that are used to literature focused on the few very successful providers with tens of millions of customers. It was not until the end of 2021 that the average provider had over a million customers.

We recognize that an average is not the correct metric for this analysis given and we can comfortably assume this data is not normally distributed (it is skewed by a small number of providers with large amounts of customers). Ideally, a median figure would be provided, but that data is not publicly available for analysis. Therefore, if the few top providers were taken out of this data, most providers would have significantly less than one million active customers and are significantly smaller than many assume.

Transaction Volume and Value Growth is Curiously Correlated and Crashing

The next level of analysis looks at transactions. It is possible that even though we are seeing declining growth in providers and active customers, that each customer is making more transactions, showing these services are gaining more relevance for customers, and likely more revenue for the providers. For this analysis it is prudent to analyze both the number of transactions made (volumes) and the amount of money transacted (values).

Figure 3 below shows growth rates in both volumes and values from 2007-2021. It is easy to see they are highly correlated, and both are trending swiftly downwards. The close correlation between the growth rates is revealing because as product offerings change, we would expect to observe divergence.

For example, the most common transaction on a mobile money system is buying airtime which is a very low value transaction, but a high volume one as customers conduct it often. Assuming mobile money matures to develop further use cases like government to person payments (G2P) or merchant payments, which are most often cited as having the highest potential to evolve the systems, we would expect to observe the growth rate in values increase proportionately to the growth rate in volumes as both those new use cases are larger value transactions that occur much less frequently than airtime top-ups.

Another example to consider is that even if the product suite stays static, it is commonly understood that mobile money services serially reach more rural and low-income customers as they expand overtime. It is easiest to design and develop operations in urban and peri-urban areas where there is the infrastructure, population densities and economic activity to support it, and then expand to more challenging environments. However, we would assume that as that occurs, we would see average transaction values decrease as lower-income people conduct smaller transactions. The data does not clearly show that either.

Admittedly, the data does not show anything clearly and there are likely several interacting variables to unpack to understand it. A good start would be examining the few instances of divergence between the growth rates and then examining trends in product suites overtime (we do the latter in the next article). Overall, growth rates in volumes and values should approach zero very soon and their high level of correlation call in to question narratives on significantly diversifying product suites or demographics of customers. Further research is needed, which UNCDF strongly encourages.

Mobile Money is Decelerating and Technology-First Providers Need Inclusion

In conclusion, growth rates of new providers (deployments), active customers, and volumes and values of transactions are all trending steadily downward. If trends continue, they should reach zero in the next couple years. While it is premature to call a peak to the sector, especially with the prospective growth from countries like Nigeria and Ethiopia, the days of astronomical expansion seem to be historical.

It is also important to take a broader perspective on the sector and perhaps also a more modern one. This analysis can only be done because it stands on the shoulders of GSMA who painstakingly collects this data. IHowever, it is also limited because it only covers GSMA members’ who voluntarily report it. It is problematic that large mobile money services are not listed as contributing data (Airtel [Africa operations], bKash [Bangladesh], Somali operators [some of the most successful globally]), which means we must be careful in interpreting any conclusions.

However, potentially more significant is that mobile payments growth is increasingly common among non-GSMA member organizations, which is not captured. Global technology companies like PayPal, Block, Tencent, and Ant Financial dominate developed and emerging markets, but their data does not contribute to the above trends. In Africa, mobile wallets from technology companies like Paga (Nigeria), Wave (Senegal), Safeboda (Uganda), HelloCash (Ethiopia) are also not being captured in this data. Thus, another crucial perspective is that growth has shifted from telecom to technology companies in the mobile financial services world and we need to update our definitions and metrics to better understand it.

Note to Reader: This article is part of a #MobileMoney Mysteries series that uses the last 15 years of mobile money data provided by GSMA to reflect on progress in the sector and gauge where we are in answering some of the big questions still being debated.

PLEASE READ THE OTHER ARTICLES IN THE SERIES HERE.