mtn mobile money business plan pdf

In the wake of COVID-19, the challenges of reducing the Group’s risk profile and Holdco leverage have been brought into sharper focus. The pandemic has also highlighted the opportunities presented by the shift in the global operating environment. These factors inform the case for change and the need to revise our strategy. In light of the digital acceleration taking place globally, MTN recognises the opportunity to win in digital services in our markets as customers come online for the first time. In so doing, there is also an opportunity for MTN to align our priorities more closely with the development agendas of our operating markets.

Our revised strategy, Ambition 2025, is anchored in building the largest and most valuable platform business with a clear focus on Africa. This will rest on a scale connectivity and infrastructure business, making use of both mobile and fixed access networks across the consumer, enterprise and wholesale segments. The implementation of this growth strategy will be accelerated through selective partnerships and leveraging MTN’s brand as the most trusted and valued in Africa, while it will be supported and funded through enhanced cost and capex efficiencies. The execution of Ambition 2025 is embodied in four clear strategic priorities. We have identified five vital enablers to assist in operationalising our strategy.

5 growth platforms, underpinned by Africa’s largest connectivity network

FinTech solutions​

Digital ​ services

Enterprise services​

Network as a service (NaaS)​

API marketplace​

Mobile Money Transfer Agency Business Plan [Sample Template]

By: Author Tony Martins Ajaero

Home » Business Plans » Financial Services

Are you about starting a money transfer agency? If YES, here is a complete sample money transfer agency business plan template & feasibility report you can use for FREE .

Okay, so we have considered all the requirements for starting a money transfer agency . We also took it further by analyzing and drafting a sample money transfer agency marketing plan template backed up by actionable guerrilla marketing ideas for money transfer agencies. So let’s proceed to the business planning section.

Have you ever dreamt of becoming your own boss? Did you per chance study Banking and Finance, Accountancy or any related course and are finding it difficult to get your ideal job? You don’t need to worry because your dream of becoming your own boss and still work as a professional can be fulfilled.

One of the business opportunities that you can leverage on is to start a money transfer agency business. Although you would need ample experience with good track record to be able to attract well – paying clients, but that does not stop you from still making headway in this line of business.

The truth is that the business has pretty low entry capital and you can start the business from your home, shared offices space or from a kiosk with one or two staff members.

You can be sure that your services would always be in demand by people who want to send money to other parts of the world especially migrants who want to send money back home. If you are interested in starting a money transfer agency, then you should be ready to conduct thorough feasibility studies and market survey before committing your money and other resources to it.

Aside from a thorough and detailed feasibility studies and market survey, one of the important documents that will aid the success of the business is a good and workable business plan. Below is a sample money transfer business plan template that can help you to successfully write your own.

A Sample Mobile Money Transfer Agency Business Plan Template

1. industry overview.

The money transfer industry comprises of firms that act as third-party agents that facilitate money transfers and payments among parties in different locations. Please note that this industry does not include organizations that are involved in bank wire services and card-based services.

Research conducted by IBISWorld shows that the Money Transfer Agencies industry has recorded robust growth over the past five years.

This growth is largely due to the increasing globalization and rising mobility of labor. Industry revenue is closely linked to the number of overseas workers employed in the united states, with many sending money back to their respective countries to support their families.

The resilience of the US economy relative to other developed economies and its skill shortages make the US an attractive place for overseas workers to seek employment. As a result, industry revenue is expected to increase at an annualized 7.2 percent over the five years through 2017-18, to $299.9 million. Industry revenue is anticipated to grow by 3.7 percent.

The Money Transfer industry is indeed a thriving industry and pretty much active in all parts of the world and the industry is responsible for employing several people.

The Money Transfer industry is in the growth phase of its life cycle. Industry value added, which measures an industry’s contribution to the overall economy, is forecast to grow at an annualized 4.5 percent over the 10 years through 2022-23.

This represents an outperformance compared with real GDP, which is projected to grow at an annualized 2.5 percent over the same period. This outperformance is a key characteristic of an industry in the growth phase of its economic life cycle. Increasing labor mobility and globalization will underpin demand for money transfer services over the next five years.

Any aspiring entrepreneur or investor that is considering starting this type of business whether on a small scale or in a large scale should ensure that he or she conducts thorough market survey and feasibility studies so as to get it right.

The truth is that, this type of business does pretty well when it is strategically positioned. Places like campus, school board / districts, passport office, immigration centers, licensing offices and migrant communities are ideal for this type of business.

Over and above, the money transfer business is profitable and it is open for any aspiring entrepreneur to come into the industry; you can choose to start on a small scale in one or two public facilities and operate on a local and national level. If you have the capital and business exposure, then you can choose to start on a large scale with several outlets in key cities.

2. Executive Summary

Swiftness© Money Transfer Agency, Inc. is a registered and licensed international money transfer agency. We have been able to secure all the required documentation and a standard office facility that is highly suitable for the kind of business we are into.

Our head office is situated in Los Angeles – California and we hope to sometime in the nearest future have branches scattered all across major cities in the United States of America.

Swiftness© Money Transfer Agency, Inc. will be involved in all aspect of money transfer, we will act as third-party agents that facilitate money transfers and payments among parties in different locations. Our business goal is to become one of the leading money transfer agencies in Los Angeles – California and we will make sure that every service we handle compete favorably with the best in the industry in terms of time.

We are aware that there are several money transfer agencies all around Los Angeles – California which is why we spent time and resources to conduct a thorough feasibility studies and market survey so as to position our business in strategic locations in Los Angeles – California.

Much more than prompt money transfer, our customer care is going to be second to none in the whole of Los Angeles – California. We know that our customers are the reason why we are in business which is why we will go the extra mile to get them satisfied when they patronize our services.

At Swiftness© Money Transfer Agency, Inc. our client’s best interest come first, and everything we do will be guided by our values and professional ethics. We will ensure that we hold ourselves accountable to the highest standards by delivering excellent jobs and also meeting our client’s needs precisely and completely.

Swiftness© Money Transfer Agency, Inc. is a family business that is owned and managed by Jude Adamson and his immediate family members.

Jude Adamson is a graduate of Business Administration and has extensive experience working with one of the leading global money transfer agencies in the United States of America. He will bring his experience and expertise to help grow Swiftness© Money Transfer Agency, Inc.

3. Our Products and Services

Swiftness© Money Transfer Agency, Inc. is in the industry for the purpose of making profits and we will ensure we position our business to favorably compete for the available market in the industry. We are going to do all that is permitted by the laws in the United States of America to achieve our business goals.

Here are some of our service offerings;

• In-store money transfers operations
• Retail money transfer
• Online money transfer

4. Our Mission and Vision Statement

• Our vision is to build a money transfer agency that will have active presence all over the United States of America and the globe.
• Our mission is to establish a standard money transfer agency that will make available a wide range of services in the money transfer industry at affordable prices to residents of Los Angeles – California, and other locations in the United States of America where we intend operating from.

Our Business Structure

Our intention of starting a money transfer agency is to build a standard business with active presence in major cities in the United States of America and the globe. We will ensure that we put the right structures in place that will support the kind of growth that we have in mind while setting up the business.

In putting in place a good business structure, we will ensure that we hire only people that are qualified, honest, customer centric and are ready to work to help us build a prosperous business that will benefit all the stake holders.

As a matter of fact, profit-sharing arrangement will be made available to all our management staff and it will be based on their performance for a period of ten years or more. In view of that, we have decided to hire qualified and competent hands to occupy the following positions;

• Chief Executive Officer (Owner)
• Admin and Human Resources Manager

Sales and Marketing Manager

Money Transfer Agents

• Client Services Executive

5. Job Roles and Responsibilities

Chief Executive Officer – CEO:

• Intensifies management’s effectiveness by recruiting, selecting, orienting, training, coaching, counseling, and disciplining managers; communicating values, strategies, and objectives; assigning accountabilities; planning, monitoring, appraising job results and developing incentives
• Creates, communicates, and implements the organization’s vision, mission, and overall direction – i.e. leading the development and implementation of the overall organization’s strategy.
• Accountable for fixing prices and signing business deals
• Responsible for providing direction for the business
• Responsible for signing checks and documents on behalf of the company
• Evaluates the success of the organization
• Reports to the board

Admin and HR Manager

• Responsible for overseeing the smooth running of HR and administrative tasks for the organization
• Maintains office supplies by checking stocks; placing and expediting orders; evaluating new products.
• Ensures operation of equipment by completing preventive maintenance requirements; calling for repairs.
• Defines job positions for recruitment and managing interviewing process
• Carries out induction for new team members
• Responsible for training, evaluation and assessment of employees
• Responsible for arranging travel, meetings and appointments
• Oversees the smooth running of the daily office activities.
• Manages external research and coordinates all the internal sources of information to retain the organizations’ best customers and attract new ones
• Models demographic information and analyze the volumes of transactional data generated by customer purchases
• Identifies, prioritizes, and reaches out to new partners, and business opportunities et al
• Identifies development opportunities; follows up on development leads and contacts; participates in the structuring and financing of the business
• Documents all customer contact and information
• Represents the company in strategic meetings
• Helps to increase sales and growth for the company
• Handle in-store money transfer operations
• Handle retail money transfer
• Handle online money transfer
• Responsible for operating IT systems for the organization
• In charge of planning for and negotiating technical difficulties
• Responsible for monitoring exchange rates
• In charge of negotiating service charges.
• Responsible for dealing with the effects of network congestion.
• Responsible for preparing financial reports, budgets, and financial statements for the organization
• Provides managements with financial analyses, development budgets, and accounting reports
• Responsible for financial forecasting and risks analysis.
• Performs cash management, general ledger accounting, and financial reporting
• Responsible for developing and managing financial systems and policies
• Responsible for administering payrolls
• Ensures compliance with taxation legislation
• Handles all financial transactions for the organization
• Serves as internal auditor for the organization

Client Service Executive

• Ensures that all contacts with clients (e-mail, walk-In center, SMS or phone) provides the client with a personalized customer service experience of the highest level
• Assist in helping clients track their transfer and provide helpful information as required
• Through interaction with clients on the phone, uses every opportunity to build client’s interest in the company’s products and services
• Manages administrative duties assigned by the human resources and admin manager in an effective and timely manner
• Consistently stays abreast of any new information on the organizations’ products, promotional campaigns etc. to ensure accurate and helpful information are supplied to clients when they make enquiries.

6. SWOT Analysis

Our intention of starting our money transfer business in Los Angeles – California is to test run the business for a period of 3 to 6 months to know if we will invest more money, expand the business and then open transfer centers all around key cities in the United States.

We are quite aware that there are several money transfer agencies in the United States and even in the same locations where we intend locating ours, which is why we are following the due process of establishing a business.

We know that if a proper SWOT analysis is conducted for our business, we will be able to position our business to maximize our strength, leverage on the opportunities that will be available to us, mitigate our risks and be equipped to confront our threats.

Swiftness© Money Transfer Agency, Inc. employed the services of an expert HR and Business Analyst with bias in startups to help us conduct a thorough SWOT analysis and to help us create a Business model that will help us achieve our business goals and objectives. This is the summary of the SWOT analysis that was conducted for Swiftness© Money Transfer Agency, Inc.;

The strategic locations we intend positioning our business, the business model we will be operating on, ease of transfer, wide range of services and our excellent customer service culture will definitely count as a strong strength for Swiftness© Money Transfer Agency, Inc.

So also we have a team that can go all the way to give our clients value for their money; a team that are trained and equipped to pay attention to details and swiftly and safely transfer money both locally, nationally and internationally.

A major weakness that may count against us is the fact that we are a new money transfer agency and we don’t have the financial capacity to compete with multi – million dollar money transfer agencies in this industry.

• Opportunities:

Rising globalization and labor mobility continues to benefit the industry’s revenue performance and online operators have benefited from their lower cost base and the rise of online transfers. The fact that people and businesses are always sending money from one location to another provides us with unlimited opportunities.

We have been able to conduct thorough feasibility studies and market survey and we know what our potential clients will be looking for when they patronize our services; we are well positioned to take on the opportunities that will come our way.

Just like any other business, one of the major threats that we are likely going to face is economic downturn. It is a fact that economic downturn affects purchasing / spending power; in essence, if the economy is under stress, people will find it difficult to transfer money.

Another threat that may likely confront us is the arrival of a new money transfer agency in same location where ours is located. unfavorable government policies and technology can also pose a threat to businesses such as ours.

7. MARKET ANALYSIS

• Market Trends

Rising globalization and labor mobility continues to benefit industry’s revenue performance and online operators have benefited from their lower cost base and the rise of online transfers.

Although the fact that the industry is divided in the two categories makes it easier for aspiring entrepreneurs to choose to start on a small scale by servicing local communities and small to medium scale businesses or to start big by offering all the services.

A common trend in this industry is that money transfer agencies usually position their offices close to colleges and migrant communities. This is so because statistics shows that international students and of course working class migrants/expatriates are known to be top on the list when it comes to transferring monies from the United States to other countries of the world.

8. Our Target Market

The target market for those who need the services of money transfer businesses are all encompassing. In view of that, we have positioned our transfer centers in strategic locations to service residents and businesses in Los Angeles – California and other towns in key cities in the United States of America. We are in the money transfer industry to attract the following clients;

• Expatriates
• Business men and women
• Small scale businesses
• Clearing and forwarding agents
• Corporate Executives

Our competitive advantage

The competitions that exist in the industry is stiff because anyone that has the finance and business expertise can decide to start this type of business howbeit on a small scale servicing a city or more. Although, the money transfer industry requires some form of trainings and expertise, but that does not in any way stop any serious minded entrepreneur from starting the business and still make good profit out of it.

The business model we will be operating on, having a good reputation, proximity to key markets, unlimited access to the latest available and most efficient technology and techniques, ease of money transfer, wide range of services and our excellent customer service culture will definitely count as a competitive advantage for Swiftness© Money Transfer Agency, Inc.

So also, we have a team that can go give our clients value for their money; a team that is trained and equipped to pay attention to details and deliver parcels on time both locally, nationally and internationally.

Lastly, our employees will be well taken care of, and their welfare package will be among the best within our category in the industry meaning that they will be more than willing to build the business with us and help deliver our set goals and achieve all our aims and objectives.

9. SALES AND MARKETING STRATEGY

• Sources of Income

Swiftness© Money Transfer Agency, Inc. is established with the aim of maximizing profits in the money transfer industry and we are going to ensure that we do all it takes to offer our services and products to a wide range of customers. Swiftness© Money Transfer Agency, Inc. will generate income by offering the following services;

10. Sales Forecast

One thing is certain; there would always be individuals, businesses or corporate organizations in Los Angeles – California and in the United States of America who would always need the services of money transfer agencies.

We are well positioned to take on the available market in Los Angeles – California and we are quite optimistic that we will meet our set target of generating enough income from the first six months of operation and grow the business and our clientele base.

We have been able to examine the money transfer agencies industry, we have analyzed our chances in the industry and we have been able to come up with the following sales forecast. Below are the sales projections for Swiftness© Money Transfer Agency, Inc., it is based on the location of our business and the wide range of services that we will be offering;

• First Fiscal Year: $240,000
• Second Fiscal Year: $450,000
• Third Fiscal Year: $750,000

N.B : This projection was done based on what is obtainable in the industry and with the assumption that there won’t be any major economic meltdown and natural disasters within the period stated above. There won’t be any major competitor offering same services as we do within same location. Please note that the above projection might be lower and at the same time it might be higher.

• Marketing Strategy and Sales Strategy

Before choosing a location for our business, we conducted a thorough market survey and feasibility studies in order for us to penetrate the available market and become the preferred choice for businesses and residents of Los Angeles – California.

We have detailed information and data that we were able to utilize to structure our business to attract the number of customers we want to attract per time.

We hired experts who have good understanding of the money transfer agency industry to help us develop marketing strategies that will help us achieve our business goal of winning a larger percentage of the available market in Los Angeles – California.

In summary, Swiftness© Money Transfer Agency, Inc. will adopt the following sales and marketing approach to win customers over;

• Introduce our business by sending introductory letters alongside our brochure to corporate organizations, households and key stakeholders in Los Angeles and other cities in California.
• Print handbills about our business and its locations
• Advertise on the internet on blogs and forums, and also on social media like Twitter, Facebook, LinkedIn to get our message across.
• Create a basic website for our business so as to give our business an online presence (list the locations of our transfer centers)
• Directly market our business
• Join local business center associations for industry trends and tips
• Provide discount days for our customers
• Advertise our business in community based newspapers, local TV and radio stations
• List our business on yellow pages’ ads (local directories)
• Encourage the use of Word of mouth marketing (referrals)

11. Publicity and Advertising Strategy

Despite the fact that our office facility and transfer centers will be well located, we will still go ahead to intensify publicity for the business. We are going to explore all available means to promote our business.

Swiftness© Money Transfer Agency, Inc. has a long term plan of opening our transfer centers in various locations in key cities all around the United States of America which is why we will deliberately build our brand to be well accepted in Los Angeles – California before venturing out.

As a matter of fact, our publicity and advertising strategy is not solely for winning customers over but to effectively communicate our brand. Here are the platforms we intend leveraging on to promote and advertise Swiftness© Money Transfer Agency, Inc.;

• Place adverts on both print (community based newspapers and magazines) and electronic media platforms
• Sponsor relevant community programs
• Leverage on the internet and social media platforms like; Instagram, Facebook, twitter, et al to promote our brand
• Install our billboards in strategic locations all around Los Angeles – California
• Distribute our fliers and handbills in target areas
• Position our Flexi Banners at strategic positions in the location where our money transfer centers are located.
• Ensure that all our workers wear our branded shirts and all our delivery vehicles are well branded with our company’s logo.

12. Our Pricing Strategy

At Swiftness© Money Transfer Agency, Inc. we will keep the prices of our money transfer service charges below the average market rate for all of our customers by keeping our overhead low and by collecting payment in advance from corporate organizations who would hire our services. In addition, we will also offer special discounted rates to all our customers at regular intervals.

• Payment Options

The payment policy adopted by Swiftness© Money Transfer Agency, Inc. is all inclusive because we are quite aware that different customers prefer different payment options as it suits them but at the same time, we will ensure that we abide by the financial rules and regulation of the United States of America.

Here are the payment options that Swiftness© Money Transfer Agency, Inc. will make available to her clients;

• Payment via bank transfer
• Payment with cash
• Payment via online bank transfer
• Payment via check
• Payment via Point of Sale Machines (POS Machine)
• Payment via bank draft
• Payment via mobile money

In view of the above, we have chosen banking platforms that will enable our clients make payment for our services without any stress on their part.

13. Startup Expenditure (Budget)

When it comes to starting a money transfer agency, the major areas that you should look towards spending the bulk of your cash is in the renting or leasing of well – located facilities. Aside from that, you are not expected to spend much except for paying of your employees and the purchase of supplies. These are the key areas where we will spend our startup capital;

• The total fee for registering the Business in the United States – $750.
• Legal expenses for obtaining licenses and permits as well as the accounting services (software, P.O.S machines and other software) – $1,300.
• Marketing promotion expenses for the grand opening of the business in the amount of $3,500 and as well as flyer printing (2,000 flyers at $0.04 per copy) for the total amount of $3,580.
• The cost for hiring Business Consultant – $2,500.
• The amount needed for the purchase of insurance policy cover (general liability, workers’ compensation and property casualty) coverage at a total premium – $2,400.
• The cost for payment of rent for 12 months at $1.76 per square feet in the total amount of $35,600.
• The cost for the facility and remodeling – $10,000.
• Other start-up expenses including stationery ( $500 ) and phone and utility deposits ( $2,500 ).
• Operational cost for the first 3 months (salaries of employees, payments of bills et al) – $100,000
• The cost for store equipment (cash register, security, ventilation, signage) – $13,750
• The cost of purchase and installation of CCTVs and car tracker devices – $10,000
• The cost for the purchase of furniture and gadgets for the office (computers, internet device, photocopy machine, computers, fax machine, phone box, printing machines, laminating machines and scanning machine, TVs, Sound System, tables and chairs et al) – $20,000
• The cost of launching a website – $600
• Miscellaneous – $10,000

We would need an estimate of $150,000 to successfully set up our money transfer agency in Los Angeles – California.

Generating Startup Capital for Swiftness© Money Transfer Agency, Inc.

No matter how fantastic your business idea might be, if you don’t have the required money to finance the business, the business might not become a reality. Finance is a very important factor when it comes to starting a money transfer agency.

Swiftness© Money Transfer Agency, Inc. is a family business that is solely owned and financed by Jude Adamson and his immediate family members. They do not intend to welcome any external business partners which is why he has decided to restrict the sourcing of the startup capital to 3 major sources.

• Generate part of the startup capital from personal savings
• Source for soft loans from family members and friends
• Apply for loan from the bank

N.B: We have been able to generate about $50,000 ( Personal savings $30,000 and soft loan from family members $20,000 ) and we are at the final stages of obtaining a loan facility of $100,000 from our bank. All the papers and documents have been signed and submitted, the loan has been approved and any moment from now our account will be credited with the amount.

14. Sustainability and Expansion Strategy

The future of a business lies in the number of loyal customers that they have, the capacity and competence of their employees, their investment strategy and the business structure. If all of these factors are missing from a business, then it won’t be too long before the business close shop.

One of our major goals of starting Swiftness© Money Transfer Agency, Inc. is to build a business that will survive off its own cash flow without injecting finance from external sources once the business is officially running.

We know that one of the ways of gaining approval and winning customers over is to offer our money transfer services a little bit cheaper than what is obtainable in the market and also to ensure timely and safe deliveries. We are well prepared to survive on lower profit margin for a while.

Swiftness© Money Transfer Agency, Inc. will make sure that the right foundation, structures and processes are put in place to ensure that our staff welfare are well taken of. Our company’s corporate culture is designed to drive our business to greater heights and training and retraining of our workforce is at the top burner.

As a matter of fact, profit-sharing arrangement will be made available to all our management staff and it will be based on their performance for a period of three years or more. We know that if that is put in place, we will be able to successfully hire and retain the best hands we can get in the industry; they will be more committed to help us build the business of our dreams.

Check List/Milestone

• Business Name Availability Check : Completed
• Business Registration: Completed
• Opening of Corporate Bank Accounts: Completed
• Securing standard photo booths: In Progress
• Opening Mobile Money Accounts: Completed
• Opening Online Payment Platforms: Completed
• Application and Obtaining Tax Payer’s ID: In Progress
• Application for business license and permit: Completed
• Purchase of Insurance for the Business: Completed
• Leasing of facility for positioning and remodeling the facility: In Progress
• Conducting Feasibility Studies: Completed
• Generating capital from family members: Completed
• Applications for Loan from the bank: In Progress
• Writing of Business Plan: Completed
• Drafting of Employee’s Handbook: Completed
• Drafting of Contract Documents and other relevant Legal Documents: In Progress
• Design of The Company’s Logo: Completed
• Printing of Promotional Materials: In Progress
• Recruitment of employees: In Progress
• Purchase of furniture, racks, shelves, computers, electronic appliances, office appliances and CCTV: In progress
• Creating Official Website for the Company: In Progress
• Creating Awareness for the business both online and around the community: In Progress
• Health and Safety and Fire Safety Arrangement (License): Secured
• Establishing business relationship with third party services providers – banks, technology companies and other financial institutions et al: In Progress

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Mobile money in emerging markets: The business case for financial inclusion

Mobile money systems offer a dual promise, as an engine for financial inclusion and as an emerging market business opportunity for providers. Most people and small businesses in emerging economies today do not fully participate in the formal financial system. Two billion individuals and 200 million small businesses in emerging economies today lack access to formal savings and credit. They transact exclusively in cash, have no safe way to save and invest their money, and must rely on informal lenders and personal networks for credit. Even those with access can pay dearly for a limited range of products. Success in financial inclusion entails reaching these individuals and small businesses with products that go beyond payments and that can significantly improve their financial lives.

Stay current on your favorite topics

For providers of digital financial services, mobile money can be a gateway into huge and largely untouched markets . Digital finance has the potential to reach over 1.6 billion new retail customers in emerging economies and to increase the volume of loans extended to individuals and businesses by $2.1 trillion. The providers of these products stand to gain by having access to potential new revenue streams, and to increase their balance sheets by as much as $4.2 trillion, in aggregate. By building digital finance capabilities, companies will gain the opportunity to develop new business models ranging across new forms of more data-based financial services, micropayments, and entirely new digital businesses. Existing financial services providers also stand to reduce the direct costs of their current businesses by $400 billion annually. 1 1. All figures in the paragraph are from Digital finance for all: Powering inclusive growth in emerging economies , McKinsey Global Institute, September 2016.

The scale of the opportunity is clearly understood; however, firms seeking to tap the mobile money opportunity are faced with a landscape of unknowns. How will the mobile money value chain work in practice? What do we know about consumer behavior? Mobile money’s underpinning structure, with its combination of financial and telecom industry firms, and a heterogeneous regulatory landscape, is complex and unique. And there are few examples of firms that have achieved scale.

To answer some of these questions, and understand how digital payments providers can capture the opportunities while benefiting those without access to financial services, we have examined the actual financial data of a sample of mobile money providers, all on a blinded basis. This work is the first to our knowledge that attempts to look systematically at the economics of mobile money in this way. We relied on proprietary data from six institutions for detailed benchmarking analysis, and also drew on publicly available data. The benchmarking analysis focused most heavily in East Africa but also included representative companies from both West Africa and Southeast Asia. It included banks, mobile network operators (MNOs), as well as other third-party providers of mobile money services. Some of the providers we studied were subscale, capturing under 25 percent of their markets and only a small amount of transaction volume; others were operating at scale as the dominant players in their markets. The companies we examined also ranged in degree of maturity, from under five years in operation to over ten years.

Our analysis of mobile money economics, case studies, and observation of industry trends indicate that while the opportunity for providers is both significant and attainable, some providers will need to shift their mind-sets to succeed. They will need to invest for the long term and be prepared to work in new ways, including through partnerships with other types of firms. Providers will not be able to unlock the mobile money opportunity through incremental action or by doing more of what they have always done. Regulation can serve as either help or hindrance. Because success is in everyone’s best interest, providers and regulators should consider constructive collaboration.

Scale enables profitability but requires significant up-front spend

Payments systems realize significant benefits of scale when fixed costs become small on a relative basis and when network effects kick in—both for individual providers and at the market level. We estimate that above scale, mobile money can be a 35 percent-margin business; but small providers may need to spend over two times what they earn just to maintain their size. Providers will break even once they see sufficient value flowing through their systems. For the providers we observed, the break-even point occurred at $2 billion to $3 billion in annual transaction value and corresponded to total system revenue of roughly $20 million to $30 million (Exhibit 1).

Since mobile money requires fixed investment, unit costs decrease as more value flows through the system. The most significant fixed-cost component is the IT backbone required for transactions processing, which can include software licensing fees. Overall, our benchmarking indicates that IT represents roughly $1.5 million in annual cost—significant for a smaller provider but relatively minimal once a system has more than several hundred million dollars of annual flow, generating well in excess of $1 million in annual revenues. 2 2. In our benchmarking, average transaction fees were roughly [1 percent] of value, though fees charged by mobile money providers for individual transactions typically are defined by bands of transaction value rather than as a straight percentage of the amount transacted. Personnel and real-estate costs also contribute to the fixed-cost base of companies exclusively devoted to mobile money. On the other hand, providers who support many lines of business—like MNOs and banks—leverage existing staff and buildings as they grow their mobile money offering, effectively marginalizing these spend components.

As providers grow, they also can reap network effects that lower their marginal costs, particularly in sales and marketing, agent acquisition and management, and cash distribution. Once the system is established, at least some new customers will join based on word of mouth or to transact with others already on the system. Similarly, agents may sign up because they directly observe the business opportunity and how it works. Active cash distribution requirements can also become less intense as individual agents are more likely to collect and disperse cash in equal measure on any given day. For example, our analysis indicates that subscale providers spend roughly 40 percent more on above-the-line marketing compared with at-scale providers and that overall smaller providers can spend up to two times more per customer.

To gain the benefits of scale, however, providers must invest heavily and with long time horizons. This holds true across the world for Internet players in network businesses—firms such as Alibaba and Google have invested significantly in long-term growth and market capture, even when this means immediate losses. Since a rosy end-state business model means little without the ability and appetite to foot the initial bill, successful providers will draw on their own reserves, find long-term investors, or look to partner. International plays may be required. For example, MNOs may look to group-level mobile money strategies and resource sharing for their country-level businesses to succeed. Individual providers or partnerships that already have the capabilities needed to grow will have an easier time attracting investment than those that need to build competencies.

Regulation can accelerate or hinder ability to scale

Regulatory decisions can impact mobile money provider profitability and ability to scale. Regulation has potential to influence the ability to grow and maintain a customer base, build and sustain a high-quality agent network, develop critical capabilities and infrastructure, and offer products beyond basic payments (Exhibit 2). Since large-scale digital finance both promotes financial inclusion and boosts GDP, financial regulators should consider the impact of regulation on mobile money provider economics as part of the balance among multiple factors including financial system stability, customer interests, broader policy aims, and macroeconomic considerations.

A few examples demonstrate how regulation can impact the economics of mobile money providers. First, tariff caps intended to make services affordable to poorer users can hinder profitability and make growing the customer base more difficult. Caps on fees reduce how much a provider earns from an individual transaction or cash withdrawal and, in some cases, can make the difference between a profitable business and a money-losing one. For the business models we studied, for instance, capping cash-out tariffs at $0.25 each would shift overall provider margins from 35 percent to roughly –5 percent. Even when tariff caps do not make a type of transaction unprofitable, they increase the transaction value required through the system for a provider to be profitable overall. They may also make some customer segments unappealing for providers to serve, if the expense to reach them outweighs the benefit from gaining more users.

As another example, restrictions on who can serve as an agent can hinder providers from growing widespread cash-in-cash-out (CICO) networks. For instance, when providers can only sign up agents who are already registered legal entities they cannot work with airtime distributors or small informal shops. Motivating factors behind this sort of restriction can include controlling illicit financial activity and easing the burden on limited staffs of supervisors by having fewer types of agents providing financial services. However, such restrictions can block providers from signing up those agents that might make most business sense—for example, airtime distributors for MNOs—or are most likely to be located where currently underserved people live.

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Finally, required firewalling of mobile money and other business IT systems can discourage growth and add cost, thereby reducing profitability. Several countries require such a firewall to protect mobile money customers against control failures outside of the mobile money business—in the voice and data business of an MNO, for example—where financial services regulators typically do not have oversight. Controls might fail to protect against risk events including cyberbreaches, external identity theft, or illicit activity on the part of employees. However, such IT requirements can be costly to implement overall and contribute to fixed costs that are hard for small providers to shoulder.

Opportunities for providers will increase as mobile money business models evolve

The acta framework.

The four-part ACTA framework is a simple way to understand payments system activities and the underlying market dynamics and economics.

The first A stands for accounts, and the associated activities cover the primary relationship that a customer has with a provider, including opening new accounts and maintaining existing ones. Accounts provide a secure, accessible store of value. Mobile money accounts are an example, as are standard current accounts (also known as checking accounts).

The C stands for cash-in-cash-out (CICO). To use the payments system, customers must be able to deposit and withdraw cash into and from their payments accounts. For mobile money, most CICO activities occur at individual agents. This is the activity in which mobile money most differs from traditional banking, for which CICO occurs at more costly ATM and branch channels.

The T signifies transactions, or direct transfers of funds between accounts, including those initiated by mobile phone as well as over-the-counter transfers initiated at individual agents.

The final A stands for adjacencies, which are activities, both financial and nonfinancial, that generate nonpayments revenue for payments system providers. Financial adjacencies include interest earned on balances held, and the spread between the interest that the institution pays on savings accounts versus what it charges for loans. Nonfinancial adjacencies include strategies to help companies acquire new customers, reduce customer attrition, cross-sell services, improve collections, or power other businesses with consumer insights. These revenue streams are vital for overall payments systems economics.

Mobile money providers make money by charging customers for some combination of four types of activities: those associated with opening and maintaining the account, CICO services, transactions between two accounts, and adjacent activities tied to the mobile money wallet or services (see sidebar, “The ACTA framework”). A provider is profitable as long as total revenues from the underlying activities exceed total associated costs. Looking ahead, even more significant opportunities await; increases in digital transactions will boost the bottom line and new business models will give payments providers access to entirely new revenue streams.

In today’s mobile money business models, CICO drives provider economics (Exhibit 3). For at-scale providers, it represents roughly 60 percent of profits and accounts for the largest share of both revenues (70 percent) and costs (80 percent). Since margins on CICO are relatively slim, at 20 to 30 percent, even small cost reductions can impact overall economics and cost increases can make players unprofitable. While innovation on CICO cost structure could be game-changing, caution is critical; since agents play a central role in acquiring and maintaining customers, changes in CICO structure could require meaningful increases to customer acquisition costs.

Account-related activities are the second-largest contributor to mobile money system costs, at roughly 15 percent of the total outlay (or 10 percent of total revenues). These costs are associated with opening and maintaining accounts and stem primarily from marketing. They are a small contributor in models where MNOs run the agent network, totaling between $2 to $5 annually per customer. MNO marketing spend, which would occur anyway, can indirectly contribute to customer acquisition but is not counted in economic models. Regardless of model, marketing costs may need to be higher than this average for acquiring down-market customers who are more difficult to reach and who may be less prone to switching behavior quickly.

Transactions are currently the second-largest contributor to mobile money revenue but hold significantly greater promise. Today, transactions represent roughly 20 percent of total revenues. Appealingly, margins on transactions can exceed 75 percent thanks to fees that are large compared with the low costs to the provider, due to automated systems and digital user interfaces. As a result, providers stand to improve profitability meaningfully by increasing the number of digital transactions for every time cash is put into the system (Exhibit 4). That said, all evidence indicates that cash and thus CICO will not disappear anytime soon. Even in Norway, for example, the country with the largest share of digital payments globally, 17 percent of all payments are transacted in cash. 3 3. McKinsey Global Payments Map. Thus, to improve profits, providers should look to grow digital transactions even if it means also increasing the number of CICO transactions.

Finally, adjacencies remain a largely untapped opportunity, contributing no more than 10 percent to both total revenue and total profit at most providers. New economic models that leverage payments offer huge potential. Mobile money offers providers the opportunity to enhance existing business models and to develop new ones beyond standard digital payments—including new forms of more data-based financial services, micropayments, and entirely new digital business models.

As the network of mobile payments grows, new types of financial services are emerging. Companies are developing innovative products and services by using risk data sets engendered by digital payments. When people conduct financial transactions with a mobile phone, they leave a digital data trail that can transform providers’ understanding of customer needs and inform assessment of credit risk, allowing for extension of credit to individuals and businesses whose past transactions suggest they are low risk. Providers also can use mobile technologies to issue, monitor, and collect payments on the loans they extend, reducing costs and thus enabling extension of smaller loans. A common example for consumers is peer-to-peer lending, which is growing across many markets from players like WePay, Lufax, and Yirendai in China to Kubo Financiero in Mexico. Business models directed toward micro, small, and medium enterprises include supply-chain financing, cash management, and digital salary payments.

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Because digital payments allow people to transact in small amounts, they create new opportunities based on micropayments. These include consumer payments for services such as school fees and healthcare, as well as the potential for business salary payments, made as frequently as daily. Digital payments also enable pay-per-service, or pay-as-you-go, models. For example, low-cost private schools like Bridge International Academies in Kenya, Uganda, Nigeria, and India rely on receiving school fees and paying teacher salaries digitally as part of their cost-efficient business models. M-Kopa Solar in East Africa enables consumers to pay a small deposit on a solar panel and then pay per use with mobile money.

Digital payments also enable e-commerce and new sharing-economy models, including ridesharing and employment matching. Such business models are increasingly appearing and scaling quickly in the developing world. Online marketplaces like Alibaba, the world’s largest retailer by gross merchandise value, aggregate large numbers of sellers to improve customer choice and reduce prices. Ridesharing platforms like Didi Chuxing in China and Go-Jek in Indonesia match passengers with drivers of cars or motor bikes in real time. Didi Chuxing is now the world’s largest mobile transportation platform, supporting more than 20 million rides a day in over 400 cities.

To seize current and future opportunities, providers will need to partner or acquire new skills

While a range of value chain models are possible, not all are equally well suited to foster profitable growth or to take advantage of evolving mobile money business models. While models differ, there are typically five main roles across the value chain: deposit holder, e-money issuer, payments service provider, agent network manager, and telecommunications channel provider. 4 4. The deposit holder holds funds safe, and, in most markets, runs the back-end of the cash-handling network. The e-money issuer guarantees e-money value. The payments service provider provides transaction processing and, in some markets, clearing and settlement. The agent network manager oversees agents responsible for opening accounts and providing CICO services. In some markets, agents also provide over-the-counter transactions. Finally, the channel provider provides network access. Historically, this has been over telecom networks, but in the future could equally well occur over Internet networks. Which entity—bank, MNO, or other third-party provider—plays each of the five main roles varies by country, and sometimes even within a single country. In all value chains of which we are aware, a bank or other depository institution plays the role of deposit holder and an MNO plays the role of telecom provider. Banks, MNOs, or third-party providers can play each of the remaining three roles (Exhibit 5).

Growing and sustaining a profitable and dynamic mobile money system requires a set of diverse and hard-to-develop capabilities. Success requires broad marketing and distribution, management of an agent sales force, systems and analytics, rapid product development, and financial intermediation. For example, the ability to reduce costs by leveraging existing customer bases and distribution networks will help promote growth. Driving transaction volumes through existing or emerging use cases, such as e-commerce, will also help scale usage. Capabilities and experience in offering adjacent products that build on mobile wallets will generate additional long-term revenue streams. Such products could include both financial products—including savings accounts, lending products, and insurance—or nonfinancial products (for example, e-commerce).

Today, no single type of provider—banks, MNOs, or Internet providers—has all of these skills (Exhibit 6). For example, MNOs can leverage their existing agent and cash distribution networks to achieve costs for CICO that are roughly 40 percent lower than those of banks, comparing growing but still subscale mobile money services. On the other hand, MNOs have no experience or existing capacity holding deposits as part of financial intermediation. Recipes for overall success could include a bank-MNO partnership or an established Internet player acquiring an agent distribution network. Examples include Equity Bank’s partnership with Airtel and Standard Bank’s partnership with MTN .

Ultimately, providers’ eagerness to provide mobile money and adjacent products will depend on the benefits and trade-offs doing so presents to their core businesses. Companies will look to participate in mobile money only in those ways that provide higher returns than the other opportunities that they have to grow their businesses.

For people in developed markets, mobile money is a convenience, one of the many digital advances that have made our lives easier. For billions of people, and millions of small businesses, in emerging markets, mobile money is much more than a “use case.” It is—or can be—a lifeline, bringing the benefits of financial services to those who currently lack access, and thus enabling them to take initial steps toward healthier financial lives.

To understand how mobile money providers can tap into this opportunity in a sustainable way, we analyzed mobile money economics and proprietary real-world data from mobile money providers, and conducted a study of industry trends. The resulting conclusions led to several salient points for existing or aspiring mobile money providers. First, the up-front investment is significant; there is no avoiding the fact that scale is the key determinant of ultimate profitability. Second, few current providers possess the capabilities they need to fully seize current and future opportunities—they will need develop those capabilities—quickly—or partner and acquire firms that have those skills. Finally, successful providers will maintain a dual focus: a clear view on what drives mobile money economics today, and a forward-looking perspective on the potential for new, innovative financial services and products and adjacent revenue streams.

Download the full report , Mobile money in emerging markets: The business case for financial inclusion, in English (PDF–888KB) and French (PDF–1.05MB) .

Philip Osafo-Kwaako is an associate partner in McKinsey’s Lagos office ; Marc Singer is a senior partner in the San Francisco office , where Olivia White is a partner; and Yassir Zouaoui is a partner in the Dubai office.

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