India is the largest recipient of remittances in the world, and despite a subdued growth rate of 0.6% in 2014, the country received over $70 billion.
The average cost of transferring funds however remains far too high, and is estimated to be 8% for a transaction of valued at $200. This is largely due to the added expense of brick and mortar agents and networking firms.
This high cost of transferring funds has created a huge potential for mobile technologies to reduce the cost of sending and receiving money, creating value for users.
Here are few pointers showing that Mobile Money is the NextBigThing:
- There are currently 261 mobile money services spread across 89 countries which have over 103 million active users as of December 2014.
- The average cost of sending $100 via mobile is $4, which is less than half the cost of sending money via traditional money transfer channels.
- While mobile money represented only a fraction of the fund flow in 2014, mobile money service are among the fastest growing in the sector.
The high costs of transferring funds have given rise to crypto currencies such as BitCoin. However by eliminating many of the often redundant services in today’s money transfer infrastructure, costs can be dropped massively.
Further, in a country like India where a large population remains unbanked, mobile banking and mobile money are ideal candidates to develop the sector. Moreover, advances in security technology and smartphone adoption will only ensure this happens faster.