What is the difference between mobile money and mobile banking?

Posted by Felix Okoli on Wednesday October 30, 2013 at 16:2:2:

There were a lot of banks in Nigeria and mobile banking was also already in existence before the advent of mobile money. Nowadays, mobile money seems to be on the lips of the media who have been paid heavily by service providers eagerly struggling to dominate the mobile money market in Nigeria, a country with the highest number of mobile phone users in Africa.

Already, GSM companies have made billions of dollars in profit from the GSM revolution in Nigeria and the question remains whether the next billion would come from mobile payment market locally known as Mobile money.

Mobile banking and Mobile money may seem a bit confusing to the average Nigerian and it would be helpful if people were more educated on the difference between the two.

Mobile banking also known as M-banking basically allows a user to operate a bank account using one's mobile phone. With a registered mobile phone linked to one's normal bank account, a bank customer would be able to perform basic operations using his mobile phone such as topping up airtime, transferring money, check his account balance, pay bills as well as make special requests to his bank.

Mobile money also allows users to do similar transactions with a mobile phone but in this case, the focus is basically on making mobile payments from an account that doesn't have to be a normal bank account. In the case of mobile money, a mobile phone is linked to a cash pool that has been pre-funded and then would be able to make payments for goods and services similar to what m-banking offered but without necessarily accessing full banking service.

While mobile banking requires one to first have a normal bank account that requires a valid utility bill and personal form of id, a mobile money account holder doesn't have to open a bank account or visit the 4 walls of a bank before he starts making payments or transactions virtually with a mobile phone.
The goal of mobile money is to reduce the use of cash in the system while at the same time allowing people to pay for goods and services without the stress of having to deal directly with the banks.

Another feature I've noticed with mobile money is that money saved there doesn't really earn any interest unlike that used for m-banking. So don't expect to earn an interest on a mobile money account, unless under special cases.

A mobile money account can be opened within a few minutes from one's mobile phone without necessarily visiting a bank or paying an initial deposit but for m-banking, one would have to open a formal account and provide other documents as well as initial funding.