According to the United Nations, remittances are contributing toward achieving Sustainable Development Goals (SDGs), which include poverty alleviation, zero hunger, good health and well-being, quality education and gender quality1. In recent years, the use of mobile money technology has helped the remittance industry further the realization of these goals.
Through our strategic partnerships in Africa and other developing countries, we continue to see the positive effects of remittance sent to mobile wallets. For instance, in Kenya, M-Pesa allows unbanked and under banked people to receive money directly to their phones from their loved ones in the diaspora. As one of the most dependable money transfer services in the globe, Xpress Money believes mobile wallets have a key role to play in the evolving remittance landscape. Earlier, many of the people who now receive remittances to their mobile wallet didn’t have access to the perks of the formal financial system as banking services were not accessible. While some may not possess the required documents like utility bills; others found the paperwork tedious. For some people, the distance they had to travel to receive the remittances was discouraging. The adoption of mobile money technology offered convenience and helped increase financial inclusion as mobile money agents are in the vicinity of their neighbourhood. Without a doubt mobile wallets have changed the way unbanked and under banked individuals receive remittances. Here are a few ways remittance beneficiaries use their mobile wallets:-
Starting a business
An analysis on the use of mobile wallets revealed that the increased access to mobile money had reduced poverty in Kenya; approximately 2% Kenyan households had found a way out of extreme poverty as of 20172. Earlier most unbanked and under banked individuals were engaged in subsistence activities however, with mobile wallets beneficiaries were able to set up their own businesses. They could now contribute to the growth of their communities through businesses rather than merely catering to the immediate needs of their households.
Access to basic financial services
Mobile wallets also make it easier for beneficiaries to benefit from basic financial services and build financial resilience. They can save for a rainy day or towards the expansion of their businesses. These savings may even earn interests for them. Thanks to the data generated from the use of mobile wallets, it’s now easier to extend credit facilities to beneficiaries. In addition, with micro insurance policies being integrated into mobile wallets, beneficiaries can also direct their remittance payouts toward reducing their exposure to uncertainties like health or natural disasters.
New spending options
Under banked and unbanked individuals traditionally depend on cash remittances. Unequivocally cash is the preferred mode of payment within the financial ecosystem of many developing countries. However, beneficiaries who have adopted mobile money technology gain an edge in terms of convenience and security. For instance, in the event of the 2016 banknote demonetization in India, the spending capacity of people reduced by almost 70 percent. With access to cash being a challenge People opted for mobile money technology as it was extremely handy to pay for transportation, household expenses, utility and education3.