Poor People's Money: The Politics of Mobile Money in Mexico and Kenya

Abstract

The diffusion of mobile money (also mobile payments) has so far been uneven by country. While in Kenya upwards of 50 percent of the population uses mobile payments platforms, in Mexico the proportion is barely above 2 percent. Drawing on interviews and secondary sources, this paper finds that the actors and the politics surrounding diffusion are key to success. Specifically, regulatory capture sheds light on the extent to which a highly regulated financial sector may seek to protect itself from competition from the telecommunication sector via mobile payments regulation they advocate for and even help formulate. In Mexico, the bank-led regulatory model of mobile payments has limited the diffusion of the service to the unbanked population because of regulatory capture by the banking industry. In Kenya, by contrast, the Mobile Network Operator (MNO)-led model has resulted in much higher rates of diffusion and reflects the extent to which telecommunications firms have played a decisive role in designing the regulatory regime and the limiting the impact of financial industry capture in that country. The implications for policymaking and regulation are discussed.

Keywords: Mobile Money, Mobile Payments, MNO-led, Bank-led, Mobile Payments, Financial Inclusion, unbanked

JEL Classification: L50, G28, G18