The mobile wallet: Financially included, but users must be security conscious

Andrea Martin-Swaby

Saturday, February 25, 2017

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Today there are in excess of four billion mobile phone users across the world. The figure continues to increase daily and it is therefore likely that by 2020 over five billion people will be connected to mobile technology.

This state of affairs has been encouraged and facilitated by the constant evolution in the capabilities of cellular phones in enhancing commercial engagement and social interaction. Simply put, the mobile phone is no longer a device that simply enables communication between individuals; it has become a computer, capable of being the host of money in electronic form, and can be used to conduct financial transactions.

African countries such as Kenya and Ghana have used mobile money for some time. The question is: Can mobile money be utilised as an effective and efficient enabler for financial inclusion in developing countries? And if so, in the age of the good and the bad cyber user, let alone the element of phishing in cyber space for its next bait, what is the responsibility of the prudent and cyber security-aware user who may chose to capitalise on the virtual mobile wallet?


It is no secret that people spend more time each day on their mobile devices, and they increasingly use them to conduct more complex and sensitive transactions. Shruti Jain, senior analyst at Cisco, is reported to have stated that there are more mobile users than there are people with running water and bank accounts in many countries around the world.

It was further noted that globally, 50 per cent of the adult population, more than 2.5 billion people, do not have a formal bank account, and of the percentage of people who remain unbanked, it is estimated that a high percentage possess mobile devices in their homes. In fact, in the
Global Financial Development Report 2014, published by the World Bank, it was noted that in developed economies, 89 per cent of adults reported that they have an account at a formal financial institution, whereas the share is only 24 per cent in low-income economies.

Therefore, approximately 70 per cent of individuals remain outside of the formal financial sector in the world at large. But what of the Jamaican context? In 2015, a study conducted by The University of the West Indies revealed that over 30 per cent of Jamaica’s adult population remain unbanked.


As a consequence of these statistics, the question has long been posed whether the device could assist in reducing financial exclusion, as many who are excluded from the formal financial sector do use mobile phones in their daily lives. Financial exclusion concerns the demography of people who do not have access to bank accounts, savings and credit. It is to be noted that account penetration varies considerably, not only among countries, but also across individuals within the same country.

This may be so where not all regions or communities are serviced by financial institutions, resulting in people being geographically out of the reach of the formal sector. Studies have shown that low levels of financial inclusion represent a barrier to socio-economic development in developing countries.


The concept of financial inclusion has occupied discussions for several years, as it has been forcefully argued that financial inclusion breaks socio-economic barriers. In a non-inclusive financial system, people with limited access must rely on their own limited cash savings to invest in education or become entrepreneurs, as well as to obtain goods and services generally. It has been asserted that inclusive financial systems are those with a high share of individuals and firms that use financial services.

Today, in the face of a well-structured anti-money laundering regime in Jamaica, where certain transactions cannot be completed without the engagement of the formal sector, financial inclusion is important. The Proceeds of Crime Act forbids a person to use cash to complete a transaction which is in excess of $1 million. Therefore, to remain law-abiding, there must be engagement with the formal sector to conduct large transactions generally.

The issue however is that financial inclusion was always dependent on physical accessibility. Today, with the emergence of mobile phone technology and the accessibility to the Internet, which is able to connect people to institutions, it has been argued that the mobile phone may assist in improving financial inclusion. The technology allows for the mobile phone device to be used as the conduit in engaging in financial transactions, in similar fashion to the use of a physical wallet.


A mobile wallet is the digital equivalent of a physical wallet. Whereas the physical wallet stores credit cards, debit cards, cash, and forms of identification such as TRN cards and driver’s licence information, the mobile wallet is capable of storing these bits of information and values electronically as numbers, pictures, and certificates. Therefore, all the information is electronically stored and can be termed as E-money (electronic money).

The Bank of Jamaica guidelines for Electronic Retail Payment Services defines E-money as being electronically stored value in any device or instrument, including a SIM card or a server and accessible via mobile, telephone, Internet, or other access devices. Therefore the mobile wallet is the electronic alternative to cash. Monetary values are stored electronically and accessible via the mobile phone, and therefore the mobile phone itself can be used to receive values of money and in turn to make payments.

The use of mobile devices to access financial services may then remove the geographical barrier to the formal financial sector. Mobile money was launched in Kenya in the year 2007. The evolution of mobile telephones and, in particular, smartphones, coupled with the penetration of mobile phone services in Africa, was deemed to create fertile ground for addressing problems of financial exclusion.


Today, in Kenya, 10 years later, it is reported that there are over 25 million subscribers. Therefore more than half of the population, which is estimated at 44 million, use the mobile platform.

Similarly in Zambia, the statistics reveal that the country’s mobile money accounts have reached 3.4 million compared to two million traditional bank accounts. By June 2014, the telecommunications giant MTN Ghana had more than five million mobile money subscribers transacting business through MTN mobile money in a month. These figures were reportedly higher than the monthly transactions of some of the commercial banks in Ghana.


The question arises whether the mobile phone is the new conduit being used in the world at large to enhance financial inclusion. This is left to be determined. However, what is of absolute importance is that its use to engage in commerce creates an added responsibility for users to ensure that these devices are handled responsibly.

So we celebrate the rise of the virtual wallet and nonetheless must remember that as physical wallets can be stolen by the sleight of hand of a pick pocket or some other criminal element in the cyber age, the efficacy and enhanced use of the virtual wallet, like all other digital services, can be undermined by cyber criminals.

Therefore, it behoves the user to remain vigilant and alert. Consequentially, while one may enjoy the use of the virtual wallet, there is an added responsibility to be aware of possible risks in a world where cyber criminality is prevalent.

– Andrea Martin-Swaby heads the Cyber Crime Unit in the Office of the Director of Public Prosecutions.

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