This chapter looks at the various studies that have been conducted on mobile money service and its adoption. The chapter is categorised under theoretical review, empirical review and the conceptual framework. The chapter also explains some basic terms used in the study, the Technological Acceptance Model (TAM) is fully discussed in relation to the relevance of the study.
2.1 Basic definition of terms
2.1.1 Mobile Money Service
This is the application of mobile phone device to undertake financial transactions electronically. It is common in many countries and allow users to save, send, and receive money to and from relatives and also make payments of goods and services (World Bank, 2018). This services delivered through the mobile money application is now a viable alternative to those who do have access to formal banking service.
According to Cheney, (2008) mobile money service is the term use to explain array of financial services conducted using mobile phone gadgets. Mobile money typically offers four basic service according to Davidson & Penicaud (2011) are referred to as functional transactions. These services are sending of fund, payment of bills, receiving of funds and the buying of airtime. The rural unbanked population now uses mobile money service to engage a more general financial activities that would not have been possible without the use of the mobile phone technology. In Ghana, there are three Mobile Network Operators (MNO) providing the mobile money services and these are Airtel/tigo, MTN, and Vodafone. MTN Ghana controls the largest share in the mobile money market with MTN came on top as having the largest share of deposits, accounting for more than 90 percent of mobile money accounts held at commercial banks. MTN as at October 2017 had GH¢2.1 billion representing 93.5 percent of deposits held at commercial banks. Airtel/Tigo followed with GH¢79 million accounting for 3.56 percent share of the deposits. Vodafone had 2.52 percent of the market share with GH¢57 million deposits (BoG, 2018).
It is imperative therefore to define mobile money service as the use of mobile phone technology for the movement of funds from one mobile wallet to another. Thus, it is a platform that allows mobile phone users to transfer money electronically from one person to another using mobile phone gadgets.
2.1.2 Mobile Money and Electronic Money
Mobile money is quite different from electronic money (E-Money). Electronic money is the elaborate form of money which are stored on credit cards, debit cards, ATMs, E-Zwichs together with those funds on the mobile money wallets. Mobile money is therefore an aspect of electronic money which refers to the use of mobile phone integrated technologies to carry out financial transactions. The mobile money is not actually tangled with bank accounts of individual but through the MNO who creates an account using the Subscriber Identification Module (SIM). Mobile phones are now common and the prevalent use of it has led to increasing number of people hooking unto the mobile money platform, especially the rural low income earners who are neglected by the traditional banking services.
According to GSMA report, (2017) the percentage of adult population with mobile money accounts has moved from 13% to 39% within a period of four years. Mobile money is gradually taking overtaking the access to formal banking services since only 34% of Ghanaians have bank accounts yet 39% of the population have mobile money accounts. To close the rural- urban divide on access to financial services, mobile money is then the needed platform to reach out to the rural unbanked with financial access.
2.1.3 Mobile Money Interoperability (MMI)
Like the formal banking transfer system, the MMI enables users on the mobile money platforms from different MNO to transfer and receive funds directly from one another at ease. The MMI is a cross network transaction that lowers the cost of transaction and also drives the prospects of attaining financial inclusion (Fintech, 2018). With this service, users of mobile money can simply transfer funds from their mobile money wallet to those on mobile money platform with different Mobile Money Operators (MMOs). Mobile money users with bank accounts can also transfer funds from their mobile money wallet to their bank accounts (W2A) and can as well transfer funds from their bank accounts unto their mobile money wallet (A2W). The MMI was launched in Ghana on the 9th of May 2018 following that of Tanzania and Kenya. The novelty of this service is aimed at enhancing the payment system in Ghana thereby helping to achieving financial inclusion through the use of the mobile money service. With this, the rural unbanked population will have an alternative in mobile money service to the formal banking service which is not available to them.
2.1.4 Mobile Money and Financial Inclusion
Globally, it is believed that almost 2 billion people lack access to formal banking services. And this is not different in Ghana and the rest of the sub-Saharan Africa. The advent of mobile technology has made it possible for most countries in Africa to have access to financial services at ease and at lower cost through the mobile money services. The mobile money is now seen as a driving force to achieving financial inclusion. The GSMA report (2016) indicated that the working population in Kenya and Tanzania have mobile money accounts more than that of bank accounts. Ghana is gradually following that pace with most of the rural population registered to the mobile money platform than that of bank accounts.
According to the report by Global Financial Development (GFD, 2014) financial inclusion is the proportion of people and firms that have access to formal financial service. The ability of the individual to have suitable access to financial service is paramount, and without this the person is referred to as financially excluded. Financial exclusion in Ghana is very high especially in the rural areas where there are limited number of financial institutions and people living in these rural areas are normally low income earners who are neglected by the formal financial institutions. The access to formal financial services has a role in enhancing wealth, promoting growth and achieving sustainable development. Also, access to financial service is a vital factor in enhancing the living standard of the rural people and this translates to the growth of the economy since in most cases the development of an economy is dependent on the rural market which normally has the greater proportion of the population.
Ahiabenu (2010), put it that the use of mobile money service is taking place in isolation but in parallel with the advent and expansion of other financial electronic payments services. This expansion has positive influence on the number of people who can access the basic financial services in the country. Ahiebenu further explained that mobile money provide a safe and secure way for one to transact business in more friendly and cost effective manner. With mobile money, people no longer travel to far distance to have access to financial products.
Data from the Central Bank of Ghana indicates that there has been an exponential growth with the adoption and use of the mobile money service since its inception in 2012. This growth does not only reflect on the registered users on the mobile money platform, but on the volume and the value of transaction carried out within the period of five years. This means that the mobile money service has the potential of expanding the economy to a greater height when proper attention is given to it since the mobilised funds are kept by the commercial banks who are partners to the mobile money services.
Table 2.1 Bank of Ghana Mobile Money statistic 2018
Indicators 2012 2013 2014 2015 2016 2017 Jan-Mar
2018 2018 % Growth
Total number of mobile voice subscription (Cumulative) 25,618,427 28,026,482 30,360,771 35,008,387 38,305,078 37,445,048 37,445,048* 4.65
Registered mobile money accounts (Cumulative) 3,778,374 4,393,721 7,167,542 13,120,367 19,735,098 23,947,437 25,306,085 23.44
Active mobile money accounts 345,434 991,780 2,526,588 4,868,569 8,313,283 11,119,376 11,248,758 21.45
Registered Agents (Cumulative) 8,660 17,492 26,889 79,747 136,769 194,688 217,974 51.99
Active Agents 5,900 10,404 20,722 56,270 107,415 151,745 161,317 38.31
Total volume of transactions 18,042,241 40,853,559 113,179,738 266,246,537 550,218,427 981,564,563 312,926,881 57.86
Total value of transactions (GH¢’million) 594.12 2,652.47 12,123.89 35,444.38 78,508.90 155,844.84 52,352.80 68.68
Balance on Float (GH¢’million) 19.59 62.82 223.33 547.96 1,257.40 2,321.07 2,221.91 49.39
Even though the mobile money service has achieve its feet in Ghana, the adoption still remains slow especially in the rural areas and this may partly be as a results lack of information, poor network quality, cost of the services, technicalities is usage, accessibility, peer influence and cultural phenomenon. According to the World Bank, (2015) the rural population in Ghana as at 2014 stood at 12,484,698 and only 40% of this have access to the mobile money accounts compare to 60% adoption by those living in the cities. This requires further attention to be given to those dwelling in the rural areas to help drive to the mainstream financial services and mobile money can is the catalyst in achieving that.
2.1.5 Banking the Unbanked in Ghana
2.2 Technology Acceptance Model (TAM)
The mobile money service is a technology procedure and medium through which people make transactions. Studies show that the acceptance of the mobile money service depends on how well people can use the mobile money procedures. People adopt the mobile money service base on the benefits they assume to get for hocking up on the platform. This research is based on the factors influencing the adoption of mobile money service and uses the Technology Acceptance Model (TAM). TAM is a hypothetical model that explains how users come to accept and use a technology, Davis (1989). The model suggest that when an individual is presented with a new technology, several factors determines the decision whether to accept and use this new technology or refute it. The TAM is recognised on the grounds that the construct, perceived usefulness and perceived ease of use are central variables that defines system adoption and use (Davis, 1989). These two variables build a positive outlook or target toward using an IT system. Consequently, the TAM has been selected as the most suitable model for the study and has therefore been modified to include other variables such as payment, transaction cost, and peer influence on mobile money adoption as indicated in figure 2.2.
Figure 2.1: The Technology Acceptance Model (TAM)
Source: Davis et al (1989)
2.2.1 Perceived Ease of Use
Davis (1989) defined perceived ease of use a degree to which a person believes that using a particular system will be free of effort (Davis, 1989). It has a positive influence on the adoption of mobile money service in the sense that when people believe that the use of a new technology is stress-free, it informed their decision as to accepting it use. The perceived ease of use will lead to developing an attitude of usage and the intention of adoption which leads to the actual usage. In MMS, the perceived ease of use relates to the system registration, steps in making payments, and technicalities in usage. Perceived ease of use is influenced by the other variable in the model, the perceived usefulness.
2.2.2 Perceived Usefulness
Perceived usefulness has an effect on the demand for mobile money services. It is essential for financial service to be convenient and this influence the people perception on the benefits of the mobile money services. As explained by Davis (1989) the level at which an individual assume the usefulness of an application will help achieve certain level of patronage. This can be measured through the number of people using the service and the benefits they gain from relying on it. Convenient, secured and safe MMS is desirable for users. MMS provides users with accessible and portable financial services which makes financial transactions look simple.
2.3 Empirical studies on TAM and Mobile Money Service
This section looks at previous work done on factors influencing the adoption of MMS. Zikmund et al (2010) explained that empirical literature review is a focused exploration of available work that has been done on the subject of study. It is a broad survey of previous studies related to the research questions.
TAM is a well-tested and certified and it is generally recognised model with the ability to be modified to include other variables or constructs (Venkatesh and Davis 2000; Omwansa et al 2012; Masinge, 2010). The model is generally accepted because of its briefness and succinctness (Alroaia et al, 2011).
Mpiani (2016) and Baako (2016) used the original TAM Model to study the impact of mobile money on savings and payment in Ghana. The constructs of their studies were payment, savings, and ability to make transfers on the mobile money service. Their studies concluded that mobile money has a positive impact on the payment and savings intentions of users.
Chitungo and Munongo (2013) extended the original TAM to include other variables in studying the use of mobile money service as the alternative to the unbanked in Zimbabwe. The study established that relative advantage, innovativeness and social norms have positive influence of peoples’ decision to accept the mobile money service as means of banking. Perceived risk and the cost of using the mobile money service was seen as having a negative influence on the adoption of mobile money service. This means that users are deterred from using the mobile money service due to higher transaction cost and the fear of losing their money.
Tobbin and Kuwornu, (2011) studied the factors influence the adoption of mobile money se rvice in Ghana. The variables used in the study were relative advantage, perceived ease of use, perceived usefulness, trialability, risk of using the service and the trust users have for the service. All the factors used in the study had a significant influence on mobile money adoption except risk of usage which h was not significant.
Wessels and Drennan (2010) also discussed about cost effect as the factor that determine the
acceptance and hence adoption of mobile banking in Australia using the TAM. Their study concluded that the cost of using the mobile money service has a significant negative influence on the adoption of the service. The cost of transaction seem to be higher by users who prefer using the formal banking system than clinging on the mobile money service.
Sayid, Echchabi, and Aziz (2012) studied on mobile financial service adoption in Somalia using the TAM. The model used the original variables of perceived ease of use and perceived usefulness including security, perceived risk and social influence. The study found perceived usefulness and social influence to be the only significant factors influencing the adoption of mobile financial services. Perceived ease of use, security and perceived risk were not significant in the adoption of mobile financial services. The finding on the perceived ease of use is inconsistent with many studies conducted on the basis of TAM which have shown a significant influence on adoption (Dass ; Pal, 2011).
Dass and Pal (2011) also used TAM in exploring the factors affecting the adoption of mobile financial service in the rural under-banked in India. Their model has seven constructs which were Demand for banking and financial services, Hardships faced in existing channels of banking, Perceived usefulness of MFS, Trust, Technology readiness, Ease of Use and Perceived financial cost. The study found that lack of trust, financial cost, and technology were significant barriers to mobile financial adoption in rural unbanked population.
Omwansa, Waema, and Lules, (2012) in their study of the M-Shwari (mobile banking service) adoption in Kenya which used the extended TAM they argue that the original model with only two constructs were mainly used in the field of information system (IS). They identified that the model were used in the organization context and not for everyday use like using to study mobile financial services. Because of this limitation they argued that it is necessary to include other variables which influence the adoption of mobile financial services. They extended the model to include perceived self efficacy, perceived credibility, perceived cost and perceived normative pressure. And they found that the all variables have a significant influence in mobile M-Shwari service in Kenya.
Yu (2012) used UTAUT to study the factors which influence individual adoption of mobile banking where also included other variables in his study. He included perceived credibility and perceived financial cost as factors which influences the behavioural intention to use mobile banking and as well as the effects of facilitating condition and perceived self efficacy on individual behaviour to use mobile financial services. Yu (2012) included age and gender as moderating variables. He identified that intention to adopt mobile banking was significantly impacted by social influence, perceived financial cost, performance expectancy, and perceived credibility, while the actual behaviour was significantly influenced by individual intention and facilitating condition. Perceived self efficacy did not have impact on actual adoption behaviour which is contrary to the findings of Amin et al (2008) and social influence was the most powerful factor in affecting the people’s intention to use mobile banking.
2.3.1 Conceptual Framework
From the reviewed literatures and for the purpose of this study, the conceptual framework consist of the factors influencing the adoption of mobile money service bas on the TAM methodologies with little modification which includes payments, transaction cost and peer influence together with the traditional variable perceived ease of use as independent variables and adoption of mobile money service as dependent variable.
Figure 2.2: Conceptual framework base on TAM
Source: Davis et al., (1986) modified to suit the research objectives
The framework shows that users’ adoption of mobile money service is jointly influenced by perceived usefulness (PU) and the perceived eased of use (EU). Perceived usefulness (dependent variable) is influenced by four (4) constructs (independent variables) of the study which are the convenient savings (CS), accessibility (ACC), social influence (SI) and transaction cost (TC).
Venkatesh and Davis (2000) recommended the addition of other variables in the TAM based model to assess their impact on a principal theories being determined. The proposed model integrate the original TAM variables, which are the perceived usefulness (PU) and the perceived ease of use (EU) with external variables CS, ACC, SI and TC. The study therefore theorised that the four constructs have influence on the perceived usefulness which from the original TAM based model by Davis (1989), together with the perceived ease of use, are the factors influencing the adoption and usage of technology, hence for the purpose of this study, perceived usefulness has a direct positive influence on the adoption of mobile money service.
One of the usefulness of the mobile money service is the ability to use the mobile phone device to save money for the desire period and cashing out the saved money when needed. This reduces the fear of losing money while holding it in cast since there is no financial institution available to keep custodian of the money. This also creates a firewall against thievery at the same time earning little interest on the savings on the mobile money wallet. Having the opportunity to save easily without going through some difficulties increases the potential for people adopting the mobile money service. As stated by Mpiani (2016), most mobile money users now prefer depositing their money on the mobile money wallet than depositing it into the traditional bank accounts. The study therefore hypothesised that convenient savings has a positive influence on the adoption of mobile money service.
People adopting a particular product depends on the accessibility of the product, convenience in using it and the reliability it is to the user. Data from bank of Ghana (2018) indicates a 23.44% increase in the number of people on the mobile money platform from December 2017 to March 2018. This improvement in the adoption of the mobile money service is partly due to the improvement in service quality provided by the telecommunication companies, prevalent increase in mobile phone usage, protective regulation framework, competition and improvement in mobile money education. Ability to deposit and withdraw money at ease and the availability of mobile money agents at each corner of communities make it convenient for one to use the service without putting in much effort. The study then hypothesised that accessibility has a positive influence on the adoption of mobile money service.
the degree to which an individual perceives that it is
important others believes that he or she should use the new system” It
comprises subjective norm in TRA,
Society affect the
The transaction costs of sending money through the mobile payment technology are lower than those of banks and money transfer companies. Omwansa (2009). The cost of a payment transaction has a direct effect on consumer adoption if the cost is passed on to customers. Mallat (2007). Transaction costs should be low to make the total cost of the transaction competitive. The cost of the mobile payments should be affordable to most of the MSE operators and far below what the banks normally charge for their bank transactions. There are many different mobile handsets which are easy to operate and have the functionalities required for the mobile payment technology.
2.4 Research Gap
Evidence from the literature review shows that the Perceived usefulness and the perceived ease of use are not sufficient; they may not properly describe it influence on people adoption of the mobile money service in every context especially in rural areas. This makes it necessary to add other factors that can give further explanations to the adoption of the MMS by prospective users.
The various literature reviewed showed various gaps this research seeks to fill. This study will use descriptive and regression analysis which is quite unusual in the literatures reviewed. Most of the researches on the MMS were carried out in Kenya and Tanzania, with very few conducted in Ghana on research areas such as electronic banking, MMS on payment system and the importance of the MMS. There is no existing research on factors influencing the adoption of MMS among the rural unbanked in Ghana. To the best of the researcher’s idea, there is no previous study that has jointly included Ease of use (EU), payments (PMT), Transaction cost (TC) and Peer influence (PP) in a single TAM based model even though these variables are as well important in determining the factors influencing the adoption of MMS. The contribution of this literature is therefore to fill the identified gap in the area of MMS.