Everybody prefers cash in making payments. Why? One is able to own his or her money and a bargain can be placed on the table. On the other end, mobile money gives you few choices when it comes to control.
A report was compiled from a sample of 6,215 respondents aged 17-59, representing 150 million people across five countries: Angola, Democratic Republic of Congo, Ghana, Nigeria, and Uganda.
According to the report, 63 percent of adults in the region have no bank account. Patrik Hedlund, Senior Advisor, Ericsson ConsumerLab, says that for this large, unbanked proportion of society, cash is the predominant way of receiving and making payments, as well as saving and borrowing. Yet, since more people have mobile phones than bank accounts, mobile financial services offer a stepping stone to financial inclusion.
With M-PESA being the backbone in mobile money transfer, it’s weird to find out that most people don’t know how helpful the service is to them. An old guy in the slums or rural area may prefer hiding his money under the bed or hide a bottle filled with coins in a corner.
According to the report, consumers find cash easy to use, but the study shows that they also recognize the risk of theft and loss.
“Consumers have to make long journeys to reach the location where they can pay their bills,” Hedlund says. “Saving money and taking loans also becomes problematic in unbanked Africa, with many hiding cash in their homes and relying on informal lenders who charge high interest rates. So, mobile money is really beneficial to them – if they can use it.” The barriers to adoption of mobile money are basic. “Lower income people and the unbanked are the ones who are least involved in the formal financial system, due to factors such as distance to banks, education, and the inability to authenticate their identity,” Hedlund says.
Tech companies like Google are also coming up with easy ways of making payments. A good example is the newly released hands free app that allows users to pay for stuff using their voice.
The report states that 52 percent of the total population uses mobile money through agents, who help with registration and transactions such as cash-in and cash-out. Agents also play a role in driving demand for self-sufficiency. Of the 20 percent who use mobile money themselves on their own phones, one in four were encouraged by an agent to start using the services independently.