New Avenues for Thinking about Mobile Money Regulation

This guest post was written Bill Maurer, Professor of Anthropology and Law & Director, Institute for Money, Technology and Financial Inclusion at the University of California, Irvine. Bill presented at USAID's Mobile Financial Services Seminar, "From Cash and Coin to E-Wallets: Challenges for Mobile Money Regulation in Developing World Contexts."

The global ubiquity of mobile communications technology is an opportunity to bring a wide range of services to underserved populations instead of just talk and text alone. These new services include rudimentary financial products. Yet the collision between mobile and money – from peer-to-peer funds transfer to simple savings accounts to the full suite of banking, lending and insurance products – raises a number of issues.  Low literacy levels, lack of identity documents, and highly complex social and monetary ecologies mean that when the poor and excluded gain access to mobile technology, the outcomes are unpredictable. This poses challenges to product designers, regulators and development professionals, who often have a very limited understanding of the complex existing money worlds of the poor or excluded, to say nothing of their complex mobile worlds.  Two different sets of technologies – money, and mobiles – are enmeshed in varied and sometimes complicated social milieu. When the two come together, and start to interpenetrate and fuse, the challenges for design, regulation and development multiply fast.

To wealthier people for whom the mobile phone is a personal device, tightly woven into one’s sense of identity and assumed to be one’s “own,” the wide array of social practices around the phone in the developing world is often surprising. Yet throughout the world, people share mobile phones, and operate phones on behalf of others. “Helpers,” often children, or microentrepreneurs who sell access to their phone intermediate technology use, revealing important social relationships but confounding regulatory, design and business models that depend on a one phone/one user model. The poor and excluded are remarkably adept at disassembling and repurposing mobile technology: swapping SIM cards for access to cheaper service when calling a friend on another network; or, in the archetypal transaction that gave birth to informal mobile money services, cashing out airtime as a means of peer-to-peer funds transfer (and even engaging in airtime arbitrage, selling and re-selling airtime across carriers or across national borders).

Money, too, is often simplistically reduced to a universal means of exchange. When payments systems work well, they fade into the background. When they are lacking because of living in a cash economy, one’s sense of options is simultaneously constrained (I can’t get a credit card or a savings account) and expanded (my social relationships are a form of capital; my goats are a store of value).

Mobile money services, like Safaricom’s M-PESA in Kenya or WING in Cambodia, can leverage but also run against these “informal” cultures of mobile communications and use-cases for money. (“Informal” is in scare quotes because often these systems are quite routinized). The intersection of mobile money with these “informal” cultures of use complicates the regulatory discussion. And things get even more interesting when new players enter the mobile money universe: what started as a conflict or competition between mobile network operators and banks is rapidly turning into a great game involving the traditional payment networks as well as device manufactures, database management companies, third party applications developers and more. During the USAID Mobile Financial Services Seminar Series, I outlined the use-cases for mobiles and use-cases for money as a way to broaden the conversation about mobile money regulation and to provide new avenues for thinking about the story thus far.