E-Money – Mobile Money – Mobile Banking – What’s the Difference?

When I speak at conferences or with people interested in the use of mobile phones for
financial service delivery, I am often asked what is the difference between e-money, mobile
money, mobile banking, and a range of other terms that are often used wily-nily in reference
to this emerging business opportunity.  It is a good question.  People are confused.  And
rightfully so.  There are no universally accepted definitions.  While this lack of uniformity may
not be important much of the time, it does become critical at the regulatory level as well as
when potential players are trying to have a meaningful conversation with each other. 

In an attempt to create some clarity around terminology, I researched documents from

thought leaders in the e-money and branchless banking space to see if I could find any
consistency among the terms used.  The definitions provided below are the result of that
effort.  Writings from CGAP, the GSM Association, and the European Union were all leveraged
heavily.   (You can find links to all terms that have been taken directly from source material.) 
Do you think having some consensus around terminology would be an important step for the
industry?  How would you change the definitions that I have complied to make them more
universally acceptable?  Your comments and thoughts are welcomed.

E-Money

Simply put, electronic money or e-money is the electronic alternative to

cash.  It is monetary value that is stored electronically on receipt of funds, and which is used
for making payment transactions.  E-Money can be held on cards, devices, or on a server. 
Examples include pre-paid cards, electronic purses, such as M-PESA in Kenya, or web-based
services, such as PayPal.  As such, e-money can serve an umbrella term for a number of more
specific electronic value products and services. 
The European Union (EU) has been involved in defining terms related to e-money since 2000,
which is much longer than many other countries or regions.  The following definitions are
included in the most recent proposed directive from the EU.
Electronic Money Institution.  A legal person that has been granted authorization to issue
electronic money.
Hybrid Issuers.  Service providers who issue e-money as an accessory activity to their core
business, ie mobile phone companies, public transport companies, etc. 
Mobile Financial Services
Mobile Financial Services or MFS is another broad term that refers to a range of financial
services that can be offered across the mobile phone.  Three of the leading forms of MFS are
mobile money transfer, mobile payments, and mobile banking.   
  
Mobile Money Transfer (MMT).  Services whereby customers use their mobile device to send
and receive monetary value - or more simply put, to transfer money electronically from one
person to another using a mobile phone.  Both domestic transfers as well as international, or
cross-border, remittances are money transfer services.  
Mobile Payments.  While MMT addresses person-to-person money transfers, mobile payments
refer to person-to-business payments that are made with a mobile phone.  Mobile proximity
payments involve a mobile phone being used to make payments at a point-of-sale (POS)
terminal.  In these cases, the mobile phone may communicate with the POS through
 contactless technologies, such as Near Field Communication (NCR).  Mobile remote
payments involve using the phone as a mechanism to purchase mobile-related services, such
as ring tones, or as an alternate payment channel for goods sold online.  Mobile bill
payments tend to require interconnection with the bank account of the receiving business,
and hence are considered part of mobile banking.  
  
Mobile Banking.  The connection between a mobile phone and a personnel or business bank
account.  Mobile banking allows customers to use their mobile phone as another channel for
their banking services, such as deposits, withdrawals, account transfer, bill payment, and
balance inquiry.  Most mobile banking applications are additive in that they provide a new
delivery channel to existing bank customers.  Transformative models integrate unbanked
populations into the formal financial sector.  
Other Terms
Other terms that are often used in association with, or interchangeably with, e-money, mobile
financial services include:
   
Electronic Wallet (eWallet).  Refers to the cash value that is stored on a card, phone, or other
electronic device.  Pre-paid cards are one form of electronic wallet.  Electronic wallets can
represent a fixed value.  In this case, once the value has been spent, the card can no longer
be used.  Or wallets can be reloaded – to be used again and again.  The term wallet is used
because the card or phone is considered a substitute for the cash normally carried in a
person’s wallet.
Electronic Vouchers.  Refer to definition for electronic wallet. 
Mobile Money.  Refer to definition for mobile financial services. 
Mobile Wallet (mWallet).  An electronic wallet that is stored on a phone.  GSMA provides the
following more specific definition: “mWallet is a data repository that houses consumer data
sufficient to facilitate a financial transaction from a mobile handset, and the applicable
intelligence to translate an instruction from a consumer through a mobile
handset/bearer/application into a message that a financial institution can use to debit or credit
bank accounts or payment instruments.”
Stored Value.  Refer to definition for electronic wallet.

What is the difference between

mobile payments, mobile money, and
mobile banking?
In the trade, there are five different services in the mobile payments space, which
are roughly bucketed as:

 m-commerce - buying stuff from websites and apps with your phone (e.g. via
PayPal)
 mobile payments - buying stuff in stores with your phone (e.g. via Apple Pay)
 mobile banking - interacting with a financial institution via your phone (e.g.
banking with Simple)
 mobile point of sale - taking in-store payments when you are the merchant
(e.g. using Square), and
 mobile money - sending and receiving payments with your phone (e.g. by M-
Pesa or Venmo)