How Mobile Money Works in Africa: Behind the Scenes and Business Model

The process starts at a Mobile Money agent. These agents, located in neighborhoods, markets, and shops, purchase electronic money (called 'float') in advance from operators like MTN, Orange, or Wave. When a customer wants to deposit money, they hand cash to the agent, who credits their mobile account with the equivalent amount. The physical funds are then secured in escrow bank accounts with partner banks like UBA Congo or Ecobank, ensuring deposit safety.

When a user wants to withdraw money, they visit an agent and initiate a withdrawal request via USSD or mobile app. A security code is generated and must be provided to the agent to validate the transaction. The agent verifies the code, hands over the cash, and their float account is debited accordingly. This system ensures traceability and security for every withdrawal.

Contrary to what one might think, Mobile Money operators don't directly hold user funds. Deposited money is placed in escrow bank accounts with licensed banks. This means the money still belongs to customers but is managed by regulated financial institutions to guarantee its safety.

Mobile Money operators generate revenue through several mechanisms. First, withdrawal fees range from 0.8% to 3.5% commission depending on the amount. Second, peer-to-peer (P2P) transfers generate fees each time money is sent between users. Third, merchant payments allow businesses to accept mobile payments for a commission. Fourth, interest on deposits: money placed in banks generates interest for the operator. Finally, micro-lending products use transaction history to offer personalized loans to active users.

Agents are the backbone of Mobile Money in Africa. They handle the conversion between cash and electronic money, manage their own liquidity, purchase float from operators, and earn commissions on each transaction. However, they face significant challenges: cash management, fraud risks, and volatile commissions depending on operator policies.

Mobile Money has enabled millions of unbanked people to access financial services. According to industry data, over 60% of adults in sub-Saharan Africa now use mobile payment services. This facilitates entrepreneurship, cross-border trade, and allows families to receive funds quickly and securely, even in rural areas far from bank branches.

One of the biggest challenges in Mobile Money is liquidity management at the agent level. In rural areas, agents may lack cash or float, limiting withdrawals or deposits. Operators invest in super-agent networks and liquidity forecasting technologies to optimize distribution and ensure continuous service.

Beyond money transfers, Mobile Money is evolving toward more sophisticated services: mobile savings, insurance, micro-credit, and even bill and utility payments. Players like Wave innovate with reduced fees, while others develop APIs allowing merchants to integrate Mobile Money directly into their point-of-sale systems.

Regulatory authorities like BCEAO (Central Bank of West African States) strictly oversee Mobile Money operators to ensure consumer protection. Security standards, anti-money laundering (AML), and know-your-customer (KYC) norms are enforced to maintain a healthy and secure ecosystem.

The future of Mobile Money looks promising with the arrival of interoperability between operators, enabling seamless transfers between MTN, Orange, Wave, and others. Integration with e-commerce platforms and API solutions like ElyonPay paves the way for a complete digital payment ecosystem, strengthening financial inclusion and driving economic growth across the continent.