Using Trusts to Protect Customers’ Mobile Money Funds

Mobile money is a payment and storage service that uses ‘e-money’—a form of stored value that is not a bank deposit. This note focuses on mobile money services provided by non-banks, such as a mobile network operator (the provider).
In this non-bank model, customers exchange cash for e-money at an agent. The e-money, once acquired, is stored on the server of the phone company. These funds are not protected by the sort of prudential regulation that applies to banks (because they are stored on the server of a phone company, not a bank). This note explores how a regulator can protect customers’ funds like these from loss.