In a report titled “Information and Communications for Development 2012: Maximizing Mobile”, the World Bank reports that mobile money in general — and specifically in Kenya — requires stricter regulation.
The report states that “Kenya’s initial success with mobile money was arguably based on a virtual absence of formal regulation in favor of industry-government engagement (World Bank 2010). However, since mobile money services manage the limited capital of the poor, caution is essential (USAID 2010).”
It further elaborates on the necessity for mobile money regulation by adding, “Successful regulation is usually marked by collaborative exchange between industry, government, and civil society. For example, regulation should allow agents outside of bank branches to handle financial transactions and develop tiered anti-money-laundering and know-your-customer (AML/KYC) requirements.
To facilitate more sophisticated service offerings, ongoing regulatory development will be necessary—for example, most mobile money is regulated as payments, denying e-money accounts the benefit of interest payments and deposit insurance (Ehrbeck and Tarazi 2011).”
The World Bank further explains that regulation of mobile money, which is widely used across Africa, is essential in protecting against fraud as well as failure of the mobile money system.
The report, although reporting on various matters related to mobile such as mobile health as well, will surely be met with a certain level of resistance from current mobile money companies with some (in some countries) operating outside the stringent requirements and regulations imposed on traditional banking institutions.