Governance of Global Mobile Money Networks: The Role of Technical Standards

Abstract

Mobile money has the potential to be an effective policy instrument for financial inclusion in developing countries, but it also has the potential to fuel money laundering and terrorist financing. The 2012 revised Financial Action Task Force standards attempt to strike a workable balance between the goals of financial inclusion and financial integrity in developing countries. Mobile money schemes are mostly based in national markets, however, and are not normally designed to address the need of poor migrants for cheap, effective cross-border remittance services. Demand for such cross-border remittance services may drive the development of technical standards to build global markets from national ones. As in other global governance contexts, regulatory competition among both developed and developing countries is likely to arise, and be shaped by network externalities, the economics of platform markets, and new governance institutions as well as national government strategies. If such standard setting efforts treat compliance with AML/CTF as requirements, then the growth of global networks might promote both inclusion and the development of “integrity by design” in global mobile money technologies. Co-regulatory mechanisms already in place in the US and EU for managing the interface between technical standards and legislation might provide some helpful models for accomplishing this. Ensuring that the governance of global mobile money networks is effective, legitimate, and accountable from the perspective of stakeholders in both developed and developing economies will be difficult, however.

Keywords: mobile money systems, payment systems, technical standards, mobile phones, international standards, e-commerce