Exploring the relationship between mobile money regulation and usage

Working paper

During the past decade, mobile money has helped reduce the financial exclusion gap in low- and middle-income countries, with 290 live deployments in 95 countries and more than 1 billion registered accounts at the end of 2019. In light of the Covid-19 pandemic and in recognition of the potential of mobile money to enable widespread and remote financial service provision, several countries have adopted measures to support the use of these services. These policy measures include cuts in fees related to person-to-person (P2P) transactions; relaxation of balance and transaction limits; and easing of know-your-customer (KYC) requirements.

In this context, it is timely to consider what role regulation can play in terms of the adoption and usage of mobile money services. This paper provides new evidence on the relationship between mobile money regulation and usage. It combines data from the Mobile Money Regulatory Index, a comprehensive assessment of mobile money regulations, and the Global Findex Database 2017. The analysis covers almost 50,000 individuals across 46 countries and finds compelling evidence that an enabling regulatory framework is strongly associated with higher mobile money usage. The results also suggest that an enabling regulatory framework has a stronger association with mobile money usage among women compared to men, and among the poorest segments of a country’s population.