Mobile banking services are on average 19% cheaper than services from traditional banks, according to new research.
The research, conducted by the Consultative Group to Assist the Poor (CGAP), found that the lower the transaction value, the cheaper mobile banking is in comparison with formal banks.
“For example, at a transactional value of $23 (€19), branchless banking is on average 38% cheaper than commercial banks,” the report found.
Mobile banking is also 54% cheaper than informal options for money transfer, said the report.
But CGAP says the price gap between branchless banking providers and banks was “not as large as expected.”
On a medium deposit size of $69, mobile banking services were found to be only 19% cheaper, with formal banks proving the significantly cheaper option for “high” deposits of $207.
CGAP says one possibility for the smaller than expected price gap has to do with the fact that some mobile banking providers “are purposefully setting high prices so they can lower them as competitors enter market.”
“However, we believe many low income people are transacting at lower amounts, and at that point (about $20) branchless banking is 38% cheaper than banks.”
CGAP is a consortium of 33 public and private development agencies, including Unicef.