A new study has found that the total value of mobile money transactions in emerging markets will exceed $870 billion in 2026, up from $555 billion in 2021, representing growth of almost 60%.
This growth will be driven by the transition of mobile money vendors, such as M-PESA, to the PaaP (Payments-as-a-Platform) model. This model enables vendors to offer their users access to third-party services such as e-commerce; creating additional revenue streams.
The research, includes microinsurance, microloans, microsavings and mobile money transfer, identified PaaP as critical to increasing revenue for vendors, as smartphone adoption and user expectations grow.
The research recommends that vendors focus on building their ecosystems now by agreeing merchant partnerships to correctly leverage this opportunity.
Microloans Represent Fastest-growing Segment
The paper found that microloans will be the fastest-growing segment within mobile money, with growth of over 180% over the next five years. The research identified microloans as a key way in which service providers can increase their revenue by delivering banking-like services.
“While microloans are, by their very nature, small-scale, they are growing rapidly in significance, by enabling users to access credit as financial inclusion rises,” comments Research co-author Damla Sat.
“By offering these services to users, mobile money services can pre empt competition from banks, while increasing their average revenue per user; creating a virtuous circle.”
Africa & Middle East Leading Development
The research found that Africa and the Middle East will dominate mobile transaction values over the next 5 years, accounting for 56% of the global emerging markets value by 2026.
It recommends that vendors in Africa focus on expanding sophisticated mobile money services, such as microinsurance and microsavings, in order to best address this rapidly growing opportunity.