Mobile payment services in developing countries: Firm capabilities and financial development

Mobile payment services (MPS) may foster financial inclusion in developing countries by providing a cheap and secure way of transferring and storing money. This is crucial in economies with a large unbanked population and environments where demand for secure and cheap money transfers is high.  While some research exists on the impact of mobile money on consumers and on the financial behaviour of the poor, little is known about the “supply side” of mobile payment provision.

The overall objective of our project is to examine how mobile payment services promote sustainable economic growth by facilitating financial exchanges and improving the allocation of funds in an economy. Our study is set at the firm level and we will analyse the impact of three different types of MPS providers – banks, telecoms and “third party providers” (non-banks/non telecom providers) – on the reduction in transaction costs, the increase in the frequency of transactions, and the facilitation of the allocation of resources. Particular attention will be paid to the organisational structure that firms put in place to support their mobile payment services, and the interaction between the headquarters and the agents’ network.

We will conduct our research in three different developing countries, each representing a different case of mobile payment diffusion: Tanzania, Myanmar and Bangladesh. To examine the different aspects of the diffusion of MPS and their impact on the local economy we are adopting multilevel survey approach for each company: (1) at the firm headquarter (HQ) level, (2) at the individual agent level.