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Advantages of Mobile Money | disadvantages of Mobile Money

This page covers advantages and disadvantages of Mobile Money. It mentions Mobile Money advantages or benefits and Mobile Money disadvantages or drawbacks.

What is Mobile Money?

• Electronic wallet service which allows users to store, send and receive money using their mobile device under financial regulation is known as mobile money.
• A digital wallet is virtual wallet which stores all the contents in digitized format which allows easy payments and other money related transactions.
• It can hold not only money but also coupons, loyalty points, value and membership cards etc.
• It provides support for financial services such as payments, transferring money, paying for goods and services using mobile device.

Mobile Money Interfaces

• The figure-1 depicts mobile money interfaces. Mobile money model consists of banks, MNOs (Mobile Network Operators), Payment Gateway Providers, Payment Processing Agents, Payment platform Providers, Mobile subscribers and customers.
• The examples of mobile money solutions include Alepo, Obopay, DeeMoney etc.

The system operates as back-end as service model from a secure cloud with offering as follows.
• Automated User and Merchant Onboarding
• E-wallets
• Card Payments acquiring and clearing for merchants
• Affiliates management
• E-shop Integration
• Payment Switch
• Closed and Open Loop Card Scheme management
• Mobile Money and Mobile banking
• Peer to peer loans
• Remittance Solutions

Benefits or advantages of Mobile Money

Following are the benefits or advantages of Mobile Money:
➨Using this solution, money can be transferred almost anywhere, even when there are no banks nearby. This increases accessibility in rural areas.
➨It enables cashless payments which reduces dependency on cash and allows tracking of transaction records. This increases financial security and reduces inherent risks of cash handling such as loss, theft or fraud.
➨Mobile money has lower transaction costs with improved security compare to credit card method.
➨Customers need not require middlemen for money transfers anymore. Hence it increases transparency.
➨It avoids long travel to send/receive money or to pay bills by standing in long queues. This provides great comfort to the customers.
➨Purchasing of online goods and services have become easier and provides more options based on pricing/features selection.
➨Mobile money system provides services to the people who are geographically inaccessible and/or having very low income.
➨Mobile money platforms are accessed through most basic mobile phones with low transaction costs.
➨They are distributed by vast network of agents which provides person to person contact and training to those who are unfamiliar with the mobile money technology.

Drawbacks or disadvantages of Mobile Money

Following are the drawbacks or disadvantages of Mobile Money:
➨The customers are required to obtain compliance from the respected banks.
➨Lack of interoperability between networks restricts reach and makes transactions cumbersome.
➨Adoption of mobile money usually requires multi-party involvement (viz. agents, governments, corporations etc.). The trust is needed between these in order to have successful mobile money platform.
➨The ignorance and illiteracy from people need to be reduced in order to have wide acceptance of the system.
➨It requires app to be installed which is not available in all the mobile phones. Smart phones are needed for this purpose.
➨It is advisable not to provide passwords and other details to anyone. Failing to do so will lead to scam and theft.

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