Banking services and payment solutions are an important economic pillar of any community because they ease the fundamental process of business exchanges. In the recent past, innovations in the banking sector have changed the conventional notion of recognized monetary organizations such as banks (Mas 124). The capacity to engage in financial transactions in an efficient, secure, and timely manner is an inherent part of the current generation. Mobile Money technology has transformed societies particularly in the developing nations. Precisely, the innovative utilization of mobile devices in offering financial services to customers has empowered people to open a virtual account, safe money, withdraw and transfer cash value in a way that is cheap, easy and secure. Some of these technologies include PayPal, M-PESA, and PAGA (Lal and Sachdev 10).
Research has indicated that mobile money demonstrate a synergy of two sectors that previously operated independently – financial services and mobile telecommunications (Mas 124). The success of Mobile Money technology has taken advantage of their distinct capabilities to both deliver and improve the financial services. In most parts of the developing nations, the revolution towards mobile money technology is a product of customer-centric model of invention. Moreover, in such areas, there has been a fast rising penetration rate of the internet and access to the mobile cellular network (Beck et al.11).
In addition, solutions offered by mobile payments in the emerging economies have been used as a way of prolonging financial services to the society to the groups of people referred to as the “under banked” and “unbanked”, which is approximately more than 50 per cent of the total adult population across the globe (Mas 125). Reports highlighted in the recent past, nearly half of the people across the globe are unbanked. Therefore, these payment networks are normally utilized for micropayments. Furthermore, the mobile technologies are turning out to be core tools for PSPs aiming to accomplish new opportunities for growth (Lal and Sachdev 11). Based on information from the European Payment Council (EPC), the new mobile cash technology offers a nonstop enhancement to the operations effectiveness and efficiency, subsequently, leading to savings of costs and a rise in the business volume Van der (Boor, Oliveira, and Veloso 1594).
The invention of mobile money technology such as M-PESA in countries such as Kenya has surpassed the operations of systems such as Western Union across the globe (Beck et al.11). More importantly, the success of these technologies has been critical in the lives of the people because of its low cost and convenience through the mobile phone. More than 3 billion adults in the world lack a bank account. However, more than 50 per cent of these adults possess a mobile phone. The application of these phones to save, receive, and send money illustrate that a large number of officially economically excluded individuals have a way of handling money (Boor, Oliveira, and Veloso 1594).
The ecosystem of mobile money includes a diverse range of stakeholders such as Mobile network Operators (MNOs), Distribution Agents, and Consumers as well as Regulatory Authorities, Merchants, Banks, and Partners (Mas 127). The technology also enables the customer to buy prepaid airtime, salary payments, bill payment and value services. it has quite cheaper because users only pay 0.01 per cent of the amount as the transactions fees (Lal and Sachdev 10). Additionally, the commission system helps the network to be more appealing to distribution agents and users. the infrastructure of mobile money requires information technology partners to organize necessary processing servers, which they may outsource or build. In this regard, software is used to process requested services from the mobile phones (Boor, Oliveira, and Veloso 1595). It also enables automatic integration with larger financial institutions such as banks, and logging transactions. Since the banks possess long-term relationships with customers, extensive branches and larger client base, they serve as influential partner in the implementation of mobile money technology (Beck et al.11). Significantly, as the volume of transactions in mobile money increases to reach millions of dealings per day, the banks’ core value propositions is their extensive experience in handling money.
The consumers are the main users of the mobile money technology and they conduct transaction utilizing their mobile phones or devices managing a communication system which the processing servers can comprehend (Mas 130). Besides, the SIMToolKit and USSD are technologies that can facilitate authentication and can be automated to work from SIM cards of various mobile phones (Wazoel and Pretorius 3). Through the mobile interface, customer can apply services accessible on the mobile money network. They are only required to register and open an account where the personal data of the customer is linked with their mobile phone number. Similarly, the processing server records the information in what is referred to as e-wallet (Beck et al.13).
The requests of services from the customer mobile phones are transmitted to the Mobile Network Operators systems to the processing servers, which deals with requests linked with bill payment, funds transfer, account management and account creation (Boor, Oliveira, and Veloso 1596). After completing every request, the processing server delivers a notification to the agent and the customer. For instance, the customer is updated on the status of the fund transfer in both the recipient and sender of the money. Meanwhile, the distribution agents normally function as the points for cash-in and cash-out (Lal and Sachdev 12).
Additionally, the distribution agents enables the customers to deposit the money they which to transfer as well as withdraw from their accounts. They are very beneficial especially to the unbanked populations with moderately low levels of literacy. Therefore, they empower customers to build and perceive a comprehension of the solution (Mas 131). They ensure the success of the whole networks of mobile money by being the frontline contact via which the consumer can develop proficiencies. Agents offer customer service such as information training on the way to use the services. The regulatory authorities are instrumental in the sustainability of these networks as they develop policies, and guidelines on areas of innovation, efficiency, and value creation (Boor, Oliveira, and Veloso 1597). On the other hand, banks help to convert digital money to actual currency and vice versa.
Conclusion
Mobile money technology is a key milestone in the economic development of the current generation (Wazoel and Pretorius 3). It assists customers especially in the unbanked population to use their mobile devices such as phones to receive, save or send funds easily and conveniently. The innovation has diverse range of stakeholders such as regulatory authorities, banks, Mobile Network Operator (MNO) and customers (Lal and Sachdev 13). the technology is widely used in emerging economies where it has transformed lives.
Work Cited
Beck, Thorsten, et al. "Mobile Money, Trade Credit, and Economic Development: Theory and Evidence." (2015).
Lal, Rajiv, and Ishan Sachdev. Mobile Money Services: Design and Development for Financial Inclusion. Harvard Business School, 2015.
Mas, Ignacio. "Savings as forward payments: Innovations on mobile money platforms." Financial Inclusion for Poverty Alleviation. Routledge, 2017. 124-135.
Van der Boor, Paul, Pedro Oliveira, and Francisco Veloso. "Users as innovators in developing countries: The global sources of innovation and diffusion in mobile banking services." Research Policy 43.9 (2014): 1594-1607.
Wazoel, Edison, and Philip Pretorius. "The role of the transaction assurance, perceived cost and the perceived innovation in the decision to continue using mobile money services among small business owners." The African Journal of Information Systems 10.2 (2018): 3.
