Mobile money is increasing financial inclusion in Africa but also raing the risks that come with online transactions.
- The coronavirus pandemic helped pushed digital migration in Africa
- Mobile money transfers increase the ease of doing business
- Security issues arise with the spread of mobile money services
The simple answer is yes. While the digital migration was already underway across the continent but with forced lockdowns and social distancing requirements in play, the adoption of digital practices for governing and doing business moved from a plausible option to a compulsory solution.
This was more so true in the use of online platforms for government and business meetings. For the first time, world leaders were forced to hold their high-level meetings in front of computer screens and not in fancy hotels; the era of virtual boardrooms had taken root.
The next most affected area was financial transactions, African financial institutions quickly went cashless in an effort to slow the spread of the virus through the transfer of cash.
In this sector, Africa was well ahead of the rest of the World having undertaken major investment in mobile money technology. The move to a cashless society has increased financial inclusion for many who were previously unbanked.
Africa’s fast adoption of mobile money transactions further spread the continent’s digital migration. Mobile banking has done for the continent what traditional banks could not dream of achieving, penetrated the remotest interiors of the continent.
Today, even in the remotest corners of Africa, peasant farmers own mobile phones and in most cases are registered to one or more mobile money services. Currently, even the smallest of businesses including street vendors and vegetable sellers at an open-air market, all accept mobile money payments.
This is true despite ongoing outcries over the expensive cost of mobile money transactions but as the digital migration develops, then there will be no need to withdraw from your mobile wallet, a process that is strategically expensive.
You see by keeping the cash withdrawal fees high, then the public is deterred from withdrawing cash to save their money. So, as more and more services become payable via mobile money transfers, then there won’t be any need to withdraw money in the first place.
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An interesting aspect here is the fact that more and more mobile money service providers are integrating their services with banks and even with major government agents. What this means is that you can move money between your mobile wallet and your bank account and vice versa.
This also means that key social services can now be paid for directly via your mobile phone. This includes payment of water and electricity bills, payment of government fines like traffic fines, payment of government taxes etc
The private sector is also quickly joining the digital migration with schools allowing for payment of school fees via mobile money transfers. For employees and even wage labourers, salaries and wages are paid through direct transfer on mobile money accounts.
A question that arises is the matter of digital security. When government officials hold what would otherwise be highly confidential meetings online, how secure are the portals that they are using? Is going digital serving to reduce national security?
Going digital also means that most all companies now require online registration of an individual’s personal information. By the end of any common online registration then you have offered the most crucial of your personal information leaving you vulnerable to identity safety.
When your e-wallet is only protected by a four-digit PIN number, it begs the question of how safe your money is. That being said, are there government records of each and every individual’s e-wallet savings? I ask because what happens if a telecom company closes down? Who will handle the refund to the public? In short how safe is your digital money?
How safe is your mobile wallet? Uganda, a case study
Generally speaking, the proliferation of mobile phone technology has increased access to mobile money services (MMS) and is the backbone of mobile money deployment in both rural and urban areas of Africa.
“Despite its enormous benefits, embracing the usage and acceptance of mobile money has mostly been low due to security issues and challenges associated with the system,” warns professor Guma Ali from the Nelson Mandela African Institution of Science and Technology.
In a paper titled ‘Evaluation of Key Security Issues Associated with Mobile Money Systems in Uganda,’ the pundit suggests the need to carry out a survey to evaluate the key security issues associated with mobile money systems in Uganda (and Africa).
In the study that followed, which employed a descriptive research design, and stratified random sampling technique to group the population, some 741 registered mobile money (MM) users and 447 registered MM agents along with 52 mobile network operators (MNOs) IT officers participated.
“The findings revealed that the key security issues are identity theft, authentication attack…personal identification number (PIN) sharing, and agent-driven fraud,” the expert revealed.
Based on these findings, the author of the study suggested better access controls, customer awareness campaigns, agent training on acceptable practices, strict measures against fraudsters, high-value transaction monitoring by the service providers and develop a comprehensive legal document to run mobile money service.
Despite its enormous benefits in improving access to financial services, embracing the usage and acceptance of mobile money has mostly been low due to security issues and challenges associated with the system notes the expert.
“The increased diffusion of powerful mobile devices like smartphones has transformed how users access mobile financial services such as mobile money. This has made many developing nations embrace mobile money as a potential payment platform,” he said.
According to the Global System for Mobile Communications (GSMA), mobile money is now available in over 90 countries with three-quarters being lower and middle-income countries. It has thus emerged as the leading payment platform for the digital economy, with 866 million registered accounts worldwide and $1.3 billion processed daily.
In Tanzania, M-Pesa was launched by Vodacom Tanzania in April 2008 and Z-Pesa by Zantel. For Uganda, Mobile Telephone Networks (MTN) launched its first mobile money service in 2009, following the successful launch of M-Pesa in Kenya.
This vast penetration of mobile money services has also meant increased security risk of mobile money, identity theft, fraud and money laundering.