Mobile Money, Interoperability, and Financial Inclusion

This paper investigates the role of competition on the behavior of mobile money companies and its corresponding effects on financial inclusion. Joining newly assembled data on mobile money fees through the WayBack machine, with sources on network coverage and financials, it examines the staggering across African operators and countries of platform interoperability – a policy that promotes transactions and competition across mobile money operators.

The results show that interoperability benefits users by lowering mobile money fees and their dispersion across operators. However, these positive effects are offset by a decrease in mobile towers and network coverage, especially in rural and poor districts, which, in turn, leads to a lower financial inclusion. The authors note that combining interoperability with subsidies for rural telecommunications delivers lower fees without hurting coverage.