Advances in mobile technology have opened up new opportunities, not only for communication but also for using the mobile handset as a platform for a range of applications. The introduction of data transfer facilities and the rise of mobile financial services around the world have allowed mobile money services to evolve and grow rapidly.
Mobile money is a form of electronic money that allows you to conduct financial transactions using your mobile phone. It allows financial services to be extended to unbanked people at a significantly lower cost because physical infrastructure isn’t needed.
Zimbabwe has an underdeveloped banking infrastructure, high poverty, and large migrant population. The value proposition of EcoCash was tailor-made for Zimbabwe and hence is extremely successful.
There is a little known fact that mobile money services, such as EcoCash were partly conceived as a service to support the Micro Finance Institutions (MFIs). The idea was to develop a platform that would allow a customer to receive and repay small loans using his or her handset.
The use of mobile technology in MFIs lowers the cost of business leading to lower interest rates. However, in the case of EcoCash, the money transfer service turned out to be the bigger draw and together with MFI support, it brought huge benefits.
The growth in mobile phone ownership raises the potential for mobile money to reach unbanked people, providing them with a more affordable payments system.
Today 96% of households have at least one EcoCash account. The services has allowed individuals to send payments to family, friends and business associates for more than seven years. Mobile operators have linked their financial payment services to each other, making it easier to send money between different services.
EcoCash has helped with poverty reduction as a result of improved financial behaviour by facilitating highly convenient and safer savings, and creating several the occupational and business choices for users.
Before EcoCash in Zimbabwe, the transaction costs of sending money over large distances were quite high. This was true both in terms of time as well as the financial resources needed to effect transactions.
There is a trend that begins when someone starts to access mobile payment services via their mobile phone. They begin to access all several other services, with the potential to empower and transform their lives and the lives of their families.
Everything from micro loans (Kashagi) to start small businesses, to insurance (EcoSure) to safeguard valuable incomes, to the ability to save money (EcoSave) for the future.
So while EcoCash may have started as a simple solution to making money more easily accessible, its convenience is now a key part of impacting the economy and empowering and improving the lives of millions of people.