Exploring advantages and disadvantages of Mobile Money
Mobile money has revolutionized financial services, especially in regions with limited access to traditional banking. By using mobile devices, users can send, receive, and store money without needing a bank account, bringing financial inclusion to underserved communities. However, while mobile money opens up new opportunities, it also comes with potential challenges. In this guide, we will delve into the key advantages and disadvantages of mobile money, helping you understand its impact on modern finance and its fit for your needs.
What is Mobile Money ?
• Mobile money, on the other hand, is a broader term that encompasses various financial services delivered
through mobile devices, particularly in regions with
limited access to traditional banking infrastructure.
• It includes services like mobile payments, money transfers, and basic financial transactions, often provided by
non-bank entities, such as mobile network operators (MNOs) and third-party mobile money service providers.
• Mobile money services are especially significant in regions where a large portion of the population is unbanked or underbanked.
It enables individuals to access financial services without needing a traditional bank account.
• 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.

• 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.
Mobile Money Examples: M-Pesa (Safaricom, Kenya), GCash (Globe Telecom, Philippines), Tigo Pesa (Tigo, Tanzania), Paytm (INDIA), PhonePe (INDIA) , Google Pay (Tez) in INDIA and so on.
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
Advantages of Mobile Money
Following are some of the notable benefits of mobile money.
1. Mobile money is available 24/7. Hence using this solution, money can be transferred almost anytime and anywhere,
even when there are no banks nearby. This increases accessibility in rural areas.
2. 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.
3. Mobile money has lower transaction costs with improved security compare to credit card method.
4. Customers need not require middlemen for money transfers anymore. Hence it increases transparency.
5. It reduces the need for physical visits to banks or payment centers.
Moreover it avoids long travel to send/receive money or to pay bills by standing in long queues. This provides
great comfort to the customers.
6. Purchasing of online goods and services have become easier and provides more options based on
pricing/features selection.
7. Mobile money system provides services to the people who are geographically
inaccessible and/or having very low income.
8. Mobile money platforms are accessed through most basic mobile phones with low transaction costs.
9. 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.
10. Mobile money services can reach unbanked and underbanked populations, providing them with access to
financial services they may not have had otherwise.
11. Mobile money transactions are typically secured with PINs, passwords, and encryption,
enhancing the security of financial transactions.
12. Transactions are processed quickly, enabling rapid money transfers and bill payments.
13. Users can easily track their transactions and account balances, helping with budgeting and financial planning.
Disadvantages of Mobile Money
Apart from benefits mentioned above, there are few drawbacks to be considered for mobile money as follows.
1. The customers are required to obtain compliance from the respected banks.
This can be restrictive for businesses or large transactions.
2. Lack of interoperability between networks restricts reach and makes transactions cumbersome.
Any mobile network service interruptions can disrupt transactions.
3. 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.
4. The ignorance and illiteracy from people need to be reduced in order to have
wide acceptance of the system.
5. It requires app to be installed which is not available in all the mobile phones.
Smart phones are needed for this purpose.
6. Mobile money services can be susceptible to fraud, such as phishing attacks or unauthorized transactions.
7. Mobile money services often have transaction limits, which can be restrictive for businesses or large transactions.
8. Users may have concerns about the privacy of their financial data and transactions when using mobile money services.
9. If a user's mobile phone is lost or stolen, their mobile money account could be at risk if proper security measures are not in place.
10. Mobile money services may not be accepted everywhere, limiting their usability in certain situations.
Conclusion
Mobile money offers unparalleled access to financial services for many, bridging gaps left by traditional banking. While it presents clear advantages like convenience and accessibility, users must also consider disadvantages like security risks and dependency on technology. Understanding these pros and cons enables more informed choices, ensuring you can leverage mobile money's benefits while staying aware of potential drawbacks.
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