A new study by Juniper Research said international transfers made via mobile phone will exceed $10 billion this year.
But unwieldy regulation has made airtime top-ups a more popular mechanism among service providers to deliver funds across borders than cash transfers between mobile devices.
Obtaining regulatory clearance for cash transfer is costly and complex, said Juniper. For example, service providers have to obtain a licence for each “remittance corridor”, or payment route between two countries, they wish to use.
Then they face due diligence and risk assessment checks. Depending on the result of such checks, service providers may be obliged to introduce further measures. “All these processes are time consuming and expensive,” said author Windsor Holden.
By contrast, using airtime top-ups as a means for sending remittances does not require a specific licence. Sending top-ups internationally has surged among consumers.
Only a small number of players are seeing “significant traction” on cash transfer via mobile devices across international borders. They include eServGlobal, Western Union and Moneygram.
In many cases, early service providers failed to establish a critical mass of mobile wallets in recipients markets, making inbound remittance harder.
Separately, the report forecast nearly 400 million mobile phone users around the world will use their handsets for money transfer by 2018.
It also said that taxes on mobile money tranfers in sub-Saharan Africa are threatening the growth of services in the region.