- Mobile payments have grown from 13 million accounts in 2010 to over 640 million accounts in 2023.
- In Sub-Saharan Africa, the share of people with mobile money accounts has increased from 12 percent in 2014 to 33 percent in 2021.
- A study showed that Kenya’s M-PESA system lifted 194,000 households out of extreme poverty.
Rapid growth transforms financial access
Mobile payments differ from traditional bank accounts. You don’t need a physical bank branch or internet connection. Instead, you use text messages for services like deposits, transfers, and payments via mobile phone, according to Our World In Data.
In 2010, there were only 13 million mobile payment accounts in the world. By 2023, this had reached over 640 million. That’s more than twice the total number of Netflix subscriptions worldwide.
Sub-Saharan Africa accounts for more than half of the world’s accounts. In 2023, there were over 330 million active mobile payment accounts in the region. That’s more than one account for every four people.
Bank accounts increase dramatically in Africa
In Sub-Saharan Africa, one-third of adults had a bank account in 2014. By 2021, this had increased to more than half. But the share that only had an account at a financial institution did not change during the period. This means that almost all growth came from those who got a mobile payment account.
In Malawi, a low-income country in Sub-Saharan Africa, the share of people with any form of bank account more than doubled between 2014 and 2021. This was largely due to a rapid increase in mobile payments. For every person with a mobile payment account in 2014, more than eight people had one by 2021.
In Togo, the share of people with accounts at financial institutions declined between 2017 and 2021, while the use of mobile payments more than doubled. Mobile payments don’t just help people access financial services for the first time. It also offers a preferred alternative for some who already use traditional accounts.
Greater flexibility in the labor market
When it becomes easier to send and receive money, people can make different decisions about where and how they earn their living. If you only handle money in the form of cash, you need to be close to your family if you want to give them money often and easily. You can’t move to a city far from your home village.
This geographical constraint disappears if you know you can send mobile money home cheaply and reliably. Mobile payments reduce the cost and difficulty of doing so, resulting in more people making the move.
In rural Mozambique, researchers conducted an experiment to understand the impact of mobile payments on employment. With access to mobile payment services, more people started moving from rural villages to cities, with a higher probability of finding a job with higher wages than farming.
A 2016 study in Science found that Kenya’s M-PESA mobile payment system increased household consumption levels and lifted 194,000 households out of extreme poverty. This corresponded to about 2 percent of all Kenyan households.
Protection against income shocks
Mobile payments function as protection against unexpected income shocks. When you’re limited to cash, only those who are physically close can help during unexpected crises. They must physically give you money when you need it most. Mobile payments change this dynamic: with a simple message, you can reach family or friends miles away and borrow just enough to maintain stability when times are tough.
A 2014 study in an economics journal found that households without access to mobile accounts typically reduced their spending by around 7 percent when hit with income shocks. In families with mobile accounts, consumption remained stable, protected by their ability to quickly receive support.
More efficient international aid
Mobile payments also change how people in rich countries can support people in the poorest. With a few taps on the phone, aid money travels directly to those who need it most, bypassing expensive middlemen and complicated logistics.
Foreign aid has saved millions of lives. USAID’s PEPFAR program alone is estimated to have prevented 25 million deaths from HIV. Foreign aid has helped the world come closer to eradicating polio.
But aid delivery has not always been efficient. It can be hampered by expensive administration, flawed designs, and sometimes corruption.
Mobile payments offer a simpler path. Organizations like GiveDirectly use mobile payments to send cash directly to recipients’ phones. For every $100 donated, $89 reaches families in need.
Barriers to adoption
The adoption of mobile payments has grown rapidly in some countries like Ghana while progress has been much slower in others like Nigeria. A major barrier to using mobile payments is still not having a mobile phone. The Global Findex 2021 survey asked adults without bank accounts why they don’t use mobile payments. Lack of money was the top reason. But the next most common was the absence of a mobile phone.
While three-quarters of Sub-Saharan Africans in the survey now own phones, many countries still have low ownership rates.
In Sub-Saharan Africa, 13 percent of adults without bank accounts said they didn’t use mobile payments because they didn’t have the necessary documents. This was a bigger barrier than the distance to mobile payment agents, or even the lack of a mobile phone in some countries.
Many people in Sub-Saharan Africa still lack formal identification. The World Bank found that in seven Sub-Saharan African countries, fewer than 60 percent of adults have an ID. In Togo, only 40 percent of adults have one.
Reasons for this include not having a birth certificate, high fees for obtaining IDs, or the difficulty of traveling to registration offices. Making it easier and cheaper to get an ID could boost access to mobile payments and help people find jobs, receive medical care, and vote.
In just over a decade, mobile payments have achieved what traditional banking couldn’t do in centuries: give bank accounts to billions of people in rural areas in developing countries. This technology changes how people manage their money, pursue better opportunities, and support each other.
Still, more than one billion people rely exclusively on cash. Many of them live in the poorest regions and in remote areas, where they could benefit most from financial inclusion.
