Why mobile money is popular in Africa, but not in the US

Simeon Oriko, mobile technologist at m:lab East Africa, a mobile development lab in Kenya, described  the popularity of mobile cash in Africa as a family affair.

“Mobile money for me is a cultural issue,” he said. “It has very little to do with the technology itself. Mobile money channels in Kenya generally flow within family units. Secondly, mobile money offered a way for the unbanked to bank their money in a way that's personal and that fits right within their lifestyle.”

Ben Lyon is the co-founder of Kopo Kopo, a Nairobi-based company that helps businesses accept mobile-based payments from its users. He explained why mobile money has been so popular and successful in Africa, especially in East Africa where the industry dominates.

“It has been so successful in these markets because it leapfrogged the payment card industry,” he said, “which requires expensive ATM and Point of Sale (POS) networks to function. ATMs and POS Terminals require regular maintenance and, with ATMs, regular liquidity balancing.  By leveraging third party retail outlets and making the phone the primary means of exchange, mobile money bypassed the need to distribute ATMs and POS Terminals. The reverse is true in the US: mobile money isn't leapfrogging the payment card industry, it's augmenting it.”

One of the reasons that mobile cash has yet to catch on in the US, aside from the (sometimes too-open) access to credit and to banking services, is the complexity. M-Pesa and its competitors have to make their services as responsive and simple as possible to accommodate a wide spectrum of user needs, education levels and technology types. But here in the US, mobile cash comes in a bewildering variety of types, none of which have much common ground.

Google Wallet is a near-field communication tool, which allows a mobile phone owner to make a payment by tapping or waving it “near” the pay-point or cash register of a store. That’s great, if your retailer of choice has an NFC reader. Such readers are becoming more common, but by no means ubiquitous. It also requires a credit card. Mastercard’s PayPass requires, well, a Mastercard. Zong charges purchases to your mobile carrier. Square uses a dongle to swipe credit card numbers, but does not pay out.

There is, in essence, too much complexity and too little utility for mobile money here in the US. There is no shared platform for payments and most of the current offerings are merely wrappers for credit cards. And, most importantly of all, in the Western world, mobile cash is, depending on whether you’re an entrepreneur, a financial institution or a user, an opportunity, a potential for growth or a convenience. It is not the solution to a problem.

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