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International mobile phone remittances likely will top $10 billion this year

Regulatory complexities force many providers to concentrate on airtime topups

International mobile phone remittances likely will top $10 billion this year

International remittances via mobile phones will exceed $10 billion for the first time this year, according to a new report from Juniper Research. However, it found that the cost and complexity of regulating cash transfer had led many service providers to focus exclusively on airtime topups.

According to the report, only a handful of players—such as eServGlobal’s HomeSend along with established money transfer organizations Western Union and Moneygram—were seeing significant traction on mobile. It argued that in many cases, early service providers had failed to establish a critical mass of mobile wallets in recipient markets, reducing the opportunity for inbound remittance.

However, the report claims that regulatory complexity had been the primary hurdle. As report author Windsor Holden says, “Service providers must first obtain licenses for each remittance corridor; they face due diligence and risk assessment checks, which may in turn oblige them to introduce additional mechanisms to address any issues which emerge. All these processes are time consuming and expensive.”

But while international cash remittance growth has been slow, transaction volumes have surged in the airtime topup market, where service providers are not required to obtain money licenses. The report found that average annual airtime topups across key remittance corridors were in excess of average individual mobile spend levels in receiving countries, thereby covering recipient telecommunications bills for the year.

Other findings from the report include:

  • Nearly 400 million mobile phone users worldwide are expected to use their handsets for mobile money transfer by 2018.
  • Mobile money taxes in subSaharan Africa are threatening the growth of domestic money transfer services.

More information

John Ginovsky

John Ginovsky is a contributing editor of Banking Exchange and editor of the publication’s Tech Exchange e-newsletter. For more than two decades he’s written about the commercial banking industry, specializing in its technological side and how it relates to the actual business of banking. In addition to his weekly blogs—"Making Sense of It All"—he contributes fresh, original stories to each Tech Exchange issue based on personal interviews or exclusive contributed pieces. He previously was senior editor for Community Banker magazine (which merged into ABA Banking Journal) and for ABA Banking Journal and was managing editor and staff reporter for ABA’s Bankers News. Email him at jginovsky@sbpub.com.

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