If you have lived anywhere in Africa in the last 2 years, or been following movements in the financial industry on the continent recently, then you have probably heard of mobile money.
If you have not, here is a quick summary: mobile money allows people to send and receive money via their mobile phones and physical agents.
Mobile money originated in Kenya to help people borrow and pay small loans. The product’s history is really interesting and people have been using it in equally interesting ways, especially as it relates to lending, all here.
Though really popular in East and West Africa, it is currently available in more than 80 countries around the around (more popular where people do not have bank accounts). But it does not exist in the same way in the U.S. or Europe.
Taking Mobile Money Global
This question of whether mobile money would take off in the U.S. or Europe was one my uncle actually brought to mind. I went to visit him soon after I arrived in the U.S. and he asked what I am doing in Ghana. I told him that alongside my business and projects, I work for a tech startup in the financial industry (ie. fintech).
He immediately drew the connection to Mobile Money and mentioned that he had recently seen the founder on BBC. I have yet to find the clip he was referring to but according to my uncle, the founder was discussing bringing mobile money to the European market.
No, It Won’t Work
At first thought, my response is that there is no need for mobile money in the U.S. or Western Europe. Mobile money works in Africa because many Africans do not have access to formal banking institutions, meaning no access to debit or credit cards. Therefore, they need this platform to cheaply and effectively send and receive money.
In the U.S. and Europe, if I need cash and I do not have it on hand or in my account, I can just swipe my credit card.
Credit cards make borrowing and lending easy and fast, which is essentially the problem mobile money solves. But instead of a company, you get that money through someone in your network, whether a family member, friend, or your employer.
What If We Changed Beliefs Entirely?
But what if we turned the whole thing on its head? Meaning, what if mobile money came to the U.S./European market and people began to adopt this African “communal mentality” where instead of depending on credit card companies to source funds for petty expenses and purchases, we relied on friends and family?
Would that change our reliance on credit in the U.S.? Would we look at debt differently? Would we borrow as often if we had to borrow from each other rather than anonymous companies?
What implications would it have for the poor and middle class in these markets who are highly dependent on credit?
It is important to note that apps like Venmo and CASH have already penetrated social payments in the U.S./European market. People can technically send money to each other via their phones and can withdraw this money through their bank accounts, but this money is not available until 3 days later. In this sense, Venmo and CASH are positioned to be social payment platforms, and not do social lending like mobile money where the money is received immediately.
It stands to see whether mobile money will ever move to or take off in Europe or the U.S.
Credit card companies may not necessary be happy and might keep that from being a reality.
Nonetheless, this is an important thought exercise: to take a product, intrinsically African in its utility, to the world.