Mobile money is becoming huge globally. Is Pakistan keeping up? By Ahtasam Ahmad
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here was a time when phones were meant for calling and that was it. Within a decade of cellular phones becoming popular, however, phones began to double as not just a device for calling and messaging but as cameras, computers, calendars, clocks, and so much more. For the vast majority of the world, mobile phones are their primary computing device which they use the most. And its uses are continuing to grow. In 2022, the transactions involving ‘mobile money,’ which refers to payment services operated under financial regulation and performed from or via a mobile device (these include your bank app, QR codes, and services like JazzCash and EasyPaisa in Pakistan), increased to an all time high of more than $1 trillion globally. The world also saw an 18 percent increase in user accounts - all according to a report of the Groupe Speciale Mobile Association (GSMA) titled “State of the Industry Report on Mobile Money 2022.” Pakistan has also been highlighted in the report, which points out the development in the Pakistani market ranging
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from growing user accounts to an uptake of digital financial services like loans and insurance. However, it went on to highlight the regulatory and socio-economic barriers that exist in the country’s ecosystem which can hamper the pace of adoption for mobile money amongst the masses.
The Industry
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he mobile money service includes; transferring money and making and receiving payments using a mobile phone. While the service must be available to the unbanked. Also, the service must offer a network of physical transactional points which can include agents, outside of bank branches and ATMs, that make the service widely accessible to everyone. The agent network must be larger than the service’s formal outlets. The organization specifically excludes products and services linked to the traditional banking networks from its definition of mobile money to give a holistic view of the intended market segment. In Pakistan the Digital Financial Services operators fall in the ambit of this study. As per the PTA annual report 2021, “The m-banking network has expanded to over 534,460 m-banking agents and 74.6
million m-wallet accounts. This network has enabled more than 2.2 billion annual transactions worth over PKR 8 trillion in 2021.” However, only 45.6 million of the accounts are classified as active user accounts.
The adoption of Mobile Money
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he mobile money market has great potential to grow in the low and middle income countries as per GSMA. The case for Pakistan is no different, 70 percent of the country’s population is unbanked as per World Bank’s Global Findex Report and this provides an opportunity for existing and new services providers to bring in a substantial amount of customers. However, the process is hindered due to inherent problems in Pakistan’s socio economic structure. The primary barriers to adoption of mobile money include; lack of awareness, infrastructural limitations, internet penetration, smartphone possession and lack of documentation. These characteristics are not unique to Pakistan rather shared amongst the population living in the low and middle income countries. One of the aforementioned barriers, Lack of Documentation, primarily pertains to an absence of official ID amongst the adult
