The mobile money market has been growing at a rapid pace for the past 10 years. The number of live services has increased from 7 in 2006 to 277 in 2016, according to the GSMA. However, we estimate that the global market size in revenue terms remains relatively small.

The GSMA is an association representing the interests of mobile operators worldwide. Their annual report on the state of mobile money can be found at www.gsma.com. The GSMA estimated that there were 174m active mobile money users on a global basis at the end of 2016 (note there is a specific definition of mobile money for the report which excludes mobile banking and payment services offered by banks to their existing customers). The report does not produce figures on revenues but we can make an estimate of the market size based on the reported revenues of M-PESA, which is the largest and most successful of the mobile money services.

M-PESA was formed in Kenya in 2007 by Safaricom (a company controlled by Vodafone). As of the end of March 2016, the company had 16.6m active service users and revenues of Ks 41.5bn (see table below). In dollar terms this was approximately $400m, and represented 21% of Safaricom’s total revenue.

Selected Information for M-PESA in Kenya

The annual revenue per active customer at M-PESA was therefore $27 in 2015-16. Applying this to the global number of active customers reported by the GSMA, global revenues for mobile money providers would have been $4bn. However, M-PESA is by far the most advanced and successful service so we could apply a discount of 50% to this figure and it would be closer to reality – that would mean a global market size in 2016 of around $2bn.

This is still very small in the context of the financial services market. For example, Capitec Bank in South Africa, which has mainly (though not exclusively) focused on lower income and underserved customers, had revenues of $860m in 2015-16 from its 7.2m customers. Also, bear in mind that Visa Inc. had global revenues of $15bn in 2015-16. The challenge for mobile money services is that income per customer is very low, as is clear from M-PESAs figures.

Growth rates in mobile money are of course quite high. In the case of M-PESA, revenues have grown at 29% per annum in the past 5 years and the company is expanding into new products and services which will enhance growth. The number of active mobile money users on a global basis increased from 134m in 2015 to 174m in 2015, a growth rate of 30%. Nevertheless, growth of 30% per annum in revenues for the next 10 years would only lift global the global market size to around $28bn so still some way to go to become very significant for the financial services industry.

Michael Pearson, 5th January 2017 (Updated 14th March 2017)