Mobile money describes the use of mobile phones to pay bills, remit funds, deposit cash, and make withdrawals using e-money issued by banks and non-bank providers such as telecommunication companies. This service currently exists in over 80 developing countries and is growing rapidly, particularly in Africa. It is enabling many people without access to financial services—known as the unbanked—to access an increasing range of financial services, from payments, to savings and loans.
Regulatory frameworks need to respond to mobile money in two particular ways. First, regulators need to take an ‘enabling approach’, which involves a variety of activities that aim to help mobile money to grow safely. Second, regulators need to adopt a ‘proportionate approach’ when designing regulation. This means the costs of regulation to the regulator, market participants, and consumers should be proportionate to the benefits and risks of mobile money.
This Article explores the challenges of translating an enabling proportionate regulatory approach into actual regulatory practices and substantive rules, using Malawi as a case study. In doing so, the Article aims to enrich our understanding of how we can design effective regulatory frameworks for mobile money.
Mobile Money, Regulations, Regulatory Framework, Banking, Developing World