Analyst company Juniper is predicting that the amount of international remittances sent via mobile devices is set to boom over the next five years.
Juniper expects the value of mobile remittances will reach $55 billion by 2016, up from less than $12 billion this year.
The company sees growth coming from migrant worker communities in the Middle East and Africa, as well as the in the US/Mexico, but expects to see the largest volume of remittances to come from Western Europe by 2016.
In its new report, Mobile Money Transfer & Remittances: Business Models & Monetisation Opportunities, Juniper says that mobile remittances can improve revenue streams for operators and increase customer retention, while bringing secure financial services to many people in emerging markets for the first time.
According to World Bank figures, recorded remittances to developing countries hit $349bn in 2011, but with unofficial or unrecorded channels, the total amount could be double that.
“In emerging economies where smartphones still comprise a small minority of handsets, mobile money deployments have also accelerated. Both established members of the mobile value chain and financial institutions have realised that mobile’s high penetration levels amongst the general population and its ability to offer simple, secure data services could represent a means of enabling critical financial products and of delivering them in a far more convenient (and potentially less expensive way) to the vast numbers of unbanked and underbanked customers,” wrote Dr Windsor Holden, author of the report.
Holden points to the success of services such as Kenyan operator Safaricom’s M-PESA mobile payment system.
The report warns of the need for better regulation of mobile remittance services, to ensure smoother roll out, and for service providers to cut rates and better train their networks of local agents to improve uptake.
Holden also said that as more features from smartphones ‘trickle down’ into cheaper handsets, they will also boost the ease of access for users.
“In markets with low literacy levels, money transfer applications on the handset based around easily recognisable icons may gain a far wider usage than services based around text-based menus,” he said.