Publication: Insolvency of Mobile Money Firms in Developing Countries: Overview for Policy Makers
Loading...
Published
2024-02-13
ISSN
Date
2024-02-13
Editor(s)
Abstract
E-money services have become increasingly popular, particularly in developing countries. These services, offered by providers other than traditional banks, enable customers to deposit, store, transfer value, and, in some cases, convert e-money back into cash. A key e-money service is mobile money. This note provides an overview of the challenges policy makers may encounter when a mobile money firm becomes insolvent. Such firms would likely be subject to corporate insolvency laws. Existing mitigation tools meant to safeguard customers’ funds may face legal and logistical problems unless they are coordinated with the country’s standard insolvency system. Customers may lose funds and/or not have quick access to them. The note also highlights several areas requiring further research.
Link to Data Set
Citation
“Martinez, Andres F.; Paterson, Will; Greenacre, Jonathan. 2024. Insolvency of Mobile Money Firms in Developing Countries: Overview for Policy Makers. Equitable Growth, Finance and Institutions Notes - Finance. © World Bank. http://hdl.handle.net/10986/41058 License: CC BY-NC 3.0 IGO.”
Associated URLs
Associated content
Other publications in this report series
Journal
Journal Volume
Journal Issue
Related items
Showing items related by metadata.
Publication Protecting Mobile Money against Financial Crimes : Global Policy Challenges and Solutions(World Bank, 2011-02-24)There has been significant discussion on the potential power of mobile-based technologies to provide unbanked populations with access to financial instruments and channels. Through the specific use of mobile money (m-money) services, for example, customers have accessed informational services, such as balance inquiries in their bank accounts, and transactional services, such as sending remittances to other people or paying for goods and services via their mobile phones. M-money has also been used by national governments to pay employee salaries and benefits. A key objective of this report is to discourage use of informal systems through the creation of a proportionate and not overly burdensome regulatory framework. Overly restrictive identification and verification processes in know-your-customer (KYC) policies, for example, may push users back to the informal financial system. The evolution of m-money in Africa and in non-African, low-income countries means that low-income and low-capacity countries are grappling with ways to ensure compliance with international Anti-Money Laundering and Combating the Financing of Terrorism (AML/CFT) standards. Thus, this report also provides some indications of how the Financial Action Task Force (FATF) standards can be applied to low-income clients within an m-money context. It does this by presenting various country practices and experiences to enable policy makers to identify the most appropriate solutions for their countries' individual circumstances.Publication IFC Mobile Money Study 2011(Washington, DC, 2011)Mobile money (m-money) refers to the use of mobile phones to perform financial and banking functions. However, the technology is far ahead of the infrastructure of financial and technical network service providers needed for an m-money system to function. This study was undertaken to increase the understanding of m-money and to address key issues in scaling up development of m-money services globally. It examines the potential demand for m-money, national regulatory environments, major obstacles, and the requirements of potential service providers and networks to run m-money services as viable businesses. Four countries - Brazil, Nigeria, Sri Lanka, and Thailand - each of which represents a different world region, socioeconomic situation, and financial sector context, were included in the study. The countries were analyzed in terms of m-money business models, money flows and demand, potential user perceptions and behavior, regulations, and agent networks. In each country, an m-money service provider acted as a partner institution. To place these four countries in the wider context of m-money developments, three case studies - Japan, Kenya, and the United States were also examined. The size of potential opportunities for m-money were quantified through demand estimates and compared with estimates in the three reference countries. Chapter one provides an introduction to the study's objectives and context, and explains the definition and positioning of m-money used in this report. Chapter two presents case studies of the prominent m-money countries Kenya and Japan, as well as the United States. Chapter three presents an overview of the four country study findings and analysis. Chapter four describes the m-money business models adopted in each country and the challenges that each country faces. Chapter five concludes by placing each country along an m-money demand curve and explains the impact of this placement on the development of an opportunity for m-money.Publication IFC Mobile Money Study 2011(Washington, DC, 2011)Although a number of m-money businesses have emerged around the world, few have reached significant scale. Overall, m-money uptake is limited when contrasted with its apparent promises of reaching the unbanked and underserved, of servicing existing banking clients, and of being a means for a cashless society. This study examines the following in more detail: existing major money flows and the critical mass of low-value, high-volume payment transactions and whether m-money can be used for them (i.e., potential demand); regulatory environment and major obstacles for m-money uptake; business models of partnering institutions; payment behavior of users and nonusers (banked and unbanked), in particular where they receive funds and how they use money, including alternative means; and existing and potential agents networks, their requirements to run m-money as a viable business, and their training needs. This report provides detailed information regarding the five main topics as they relate to Brazil, business models, money flows and demand, potential user perceptions and behavior, regulation, and agent networks.Publication IFC Mobile Money Study 2011(Washington, DC, 2011)Although a number of m-money businesses have emerged around the world, few have reached significant scale. Overall, m-money uptake is limited when contrasted with its apparent promise of reaching the unbanked and underserved, servicing existing banking clients, and being a means for realizing a cashless society. This study examines the following in more detail: existing major money flows and the critical mass of low-value, high-volume payment transactions and whether m-money can be used for them (i.e., potential demand); regulatory environment and major obstacles for m-money uptake; business models of partnering institutions; payment behavior of users and nonusers (banked and unbanked), in particular where they receive funds and how they use money, including alternative means; and existing and potential agents networks, their requirements to run m-money as a viable business, and their training needs. This report provides detailed information on Thailand regarding five main topics, business models, money flows and demand, potential user perceptions and behavior, regulation, and agent networks.Publication Does Mobile Money Use Increase Firms' Investment?(World Bank, Washington, DC, 2016-11)Private investment can be an important engine of economic growth in East African countries, which, despite recent growth rates, are still plagued with adverse economic conditions. Against this backdrop, there has been substantial penetration of mobile money, moving beyond simple person-to-person exchanges toward adoption by private firms. This study explores whether there is a relationship between firm adoption of mobile money and firm investment. Using firm-level data that are nationally representative of the private sector in three East African countries -- Kenya, Tanzania, and Uganda -- a positive relationship is found between mobile money use and the probability of a firm’s purchase of fixed assets. This relationship is attributed to reduced transaction costs, increased liquidity, and increased credit worthiness associated with the use of mobile phone financial services.
Users also downloaded
Showing related downloaded files
Publication Europe and Central Asia Economic Update, Spring 2025: Accelerating Growth through Entrepreneurship, Technology Adoption, and Innovation(Washington, DC: World Bank, 2025-04-23)Business dynamism and economic growth in Europe and Central Asia have weakened since the late 2000s, with productivity growth driven largely by resource reallocation between firms and sectors rather than innovation. To move up the value chain, countries need to facilitate technology adoption, stronger domestic competition, and firm-level innovation to build a more dynamic private sector. Governments should move beyond broad support for small- and medium-sized enterprises and focus on enabling the most productive firms to expand and compete globally. Strengthening competition policies, reducing the presence of state-owned enterprises, and ensuring fair market access are crucial. Limited availability of long-term financing and risk capital hinders firm growth and innovation. Economic disruptions are a shock in the short term, but they provide an opportunity for implementing enterprise and structural reforms, all of which are essential for creating better-paying jobs and helping countries in the region to achieve high-income status.Publication Morocco Economic Update, Winter 2025(Washington, DC: World Bank, 2025-04-03)Despite the drought causing a modest deceleration of overall GDP growth to 3.2 percent, the Moroccan economy has exhibited some encouraging trends in 2024. Non-agricultural growth has accelerated to an estimated 3.8 percent, driven by a revitalized industrial sector and a rebound in gross capital formation. Inflation has dropped below 1 percent, allowing Bank al-Maghrib to begin easing its monetary policy. While rural labor markets remain depressed, the economy has added close to 162,000 jobs in urban areas. Morocco’s external position remains strong overall, with a moderate current account deficit largely financed by growing foreign direct investment inflows, underpinned by solid investor confidence indicators. Despite significant spending pressures, the debt-to-GDP ratio is slowly declining.Publication Digital Africa(Washington, DC: World Bank, 2023-03-13)All African countries need better and more jobs for their growing populations. "Digital Africa: Technological Transformation for Jobs" shows that broader use of productivity-enhancing, digital technologies by enterprises and households is imperative to generate such jobs, including for lower-skilled people. At the same time, it can support not only countries’ short-term objective of postpandemic economic recovery but also their vision of economic transformation with more inclusive growth. These outcomes are not automatic, however. Mobile internet availability has increased throughout the continent in recent years, but Africa’s uptake gap is the highest in the world. Areas with at least 3G mobile internet service now cover 84 percent of Africa’s population, but only 22 percent uses such services. And the average African business lags in the use of smartphones and computers as well as more sophisticated digital technologies that catalyze further productivity gains. Two issues explain the usage gap: affordability of these new technologies and willingness to use them. For the 40 percent of Africans below the extreme poverty line, mobile data plans alone would cost one-third of their incomes—in addition to the price of access devices, apps, and electricity. Data plans for small- and medium-size businesses are also more expensive than in other regions. Moreover, shortcomings in the quality of internet services—and in the supply of attractive, skills-appropriate apps that promote entrepreneurship and raise earnings—dampen people’s willingness to use them. For those countries already using these technologies, the development payoffs are significant. New empirical studies for this report add to the rapidly growing evidence that mobile internet availability directly raises enterprise productivity, increases jobs, and reduces poverty throughout Africa. To realize these and other benefits more widely, Africa’s countries must implement complementary and mutually reinforcing policies to strengthen both consumers’ ability to pay and willingness to use digital technologies. These interventions must prioritize productive use to generate large numbers of inclusive jobs in a region poised to benefit from a massive, youthful workforce—one projected to become the world’s largest by the end of this century.Publication Argentina Country Climate and Development Report(World Bank, Washington, DC, 2022-11)The Argentina Country Climate and Development Report (CCDR) explores opportunities and identifies trade-offs for aligning Argentina’s growth and poverty reduction policies with its commitments on, and its ability to withstand, climate change. It assesses how the country can: reduce its vulnerability to climate shocks through targeted public and private investments and adequation of social protection. The report also shows how Argentina can seize the benefits of a global decarbonization path to sustain a more robust economic growth through further development of Argentina’s potential for renewable energy, energy efficiency actions, the lithium value chain, as well as climate-smart agriculture (and land use) options. Given Argentina’s context, this CCDR focuses on win-win policies and investments, which have large co-benefits or can contribute to raising the country’s growth while helping to adapt the economy, also considering how human capital actions can accompany a just transition.Publication Classroom Assessment to Support Foundational Literacy(Washington, DC: World Bank, 2025-03-21)This document focuses primarily on how classroom assessment activities can measure students’ literacy skills as they progress along a learning trajectory towards reading fluently and with comprehension by the end of primary school grades. The document addresses considerations regarding the design and implementation of early grade reading classroom assessment, provides examples of assessment activities from a variety of countries and contexts, and discusses the importance of incorporating classroom assessment practices into teacher training and professional development opportunities for teachers. The structure of the document is as follows. The first section presents definitions and addresses basic questions on classroom assessment. Section 2 covers the intersection between assessment and early grade reading by discussing how learning assessment can measure early grade reading skills following the reading learning trajectory. Section 3 compares some of the most common early grade literacy assessment tools with respect to the early grade reading skills and developmental phases. Section 4 of the document addresses teacher training considerations in developing, scoring, and using early grade reading assessment. Additional issues in assessing reading skills in the classroom and using assessment results to improve teaching and learning are reviewed in section 5. Throughout the document, country cases are presented to demonstrate how assessment activities can be implemented in the classroom in different contexts.