The Transformational Potential of M-Transactions

This report aims to contribute to policy debate on the potential for mobile transactions (m-transactions) to have a transformational effect on access to financial services in low and middle income markets. It examines potential social and economic impact of m-transactions, some of the drivers of current activity and related policy aspects. Growth in access to mobile telephony in developing markets has created the possibility of delivering new financial services by leveraging secure, low-cost mobile networks and platforms. The report analyzes potential hurdles to the extension of m-transactions from its current base and suggests possible actions to lower these barriers. Conclusions include:

• Rapid spread of mobile telephony does not automatically mean rapid penetration into the low-income market;
• Development of suitable cash-in and cash–out mechanisms is an important hurdle to be overcome;
• M-transactions do not automatically transform the nature of or the scope for access to financial services;
• Policy makers should ensure an appropriate regulatory environment to encourage innovation in business models and partnerships.