Seizing the Opportunity for Financial Inclusion: Mobile Merchant Payments

POSTED BY Lauren Foye

A key channel for the future growth of mobile money services is their use for merchant payments. Through mobile money, customers are able to easily make payments for goods without the need for cash. This is particularly valuable when we consider consumers may have received mobile money via microloans or money transfers, thus there is no need to physically cash-out, and users can seamlessly use their money in-store. For merchants, benefits come not only from making their shops more accessible to a broader customer base, but also allowing features such as instant deposit into their accounts, as well as the security found in digital payment, as opposed to storing physical cash.

There is huge disparity between mobile money adoption and its use for merchant payments. FloCash, a mobile money provider based in the UK, reported in 2018 that over 70% of eCommerce payments in emerging markets still involve cash-on-delivery payment processes, which are expensive, inefficient and time-consuming for both merchants and buyers. This was supported by findings from the GSMA’s state of the industry report in 2017, which found that whilst an important aspect of mobile money, merchant transactions remain under-utilised. Juniper finds that the average mobile merchant payment per transaction will reach $5.36 in 2018, with the total value of these surpassing $9.7 billion in total, this will represent just 6.1% of the total mobile money transfer market.

However, the GSMA’s most recent global adoption survey had positive signals for the channel in the future. It found that merchant transactions are a key focal point for mobile money providers: 49% of mobile money providers participating in GSMA’s global adoption survey cited enterprise solutions as one of their top three strategic priorities for 2018, and merchant payments were rated the highest product priority for 2018 by 60% of respondents.

Juniper forecasts that mobile merchant transactions by unbanked individuals in emerging markets will grow from 1.8 billion per annum in 2018, to 3.8 billion by 2023.


Figure 1: Total Mobile Merchant Payment Transactions in Emerging markets (m), Split by 8 Key Regions in 2023: 3.8 billion

Source: Juniper Research