Mobile money and mobile banking are terms that get mixed up a lot. People say one when they mean the other, or think they mean the same thing!
We manage so much of our life from our mobile phones these days, including our financial life. The range of mobile financial services available to us is huge, but what is the difference between mobile money and mobile banking?
This article will cut through the confusion and jargon to help you understand the difference between these services, and which one is best suited to your financial needs.
What is mobile banking?
Mobile banking is an extension of the traditional banking service. To use a bank, you need a bank account. Having an account gives you access to all the services banks allow you to use, such as…
- Deposit cheques
- Transferring money
- Applying for credit cards
- Deposit your salary
- Applying for loans
- Pay bills
Most traditional banks now offer banking apps on all mobile app stores. These apps give you a way of viewing and managing your account from your mobile device. A quick search on your app store will bring up results from the major high street banks like HSBC, Lloyds, NatWest, Barclays and Halifax.
You can check balances, request transfers and make mobile cheque deposits, but all these apps are offering another way to manage your bank account.
There are some mobile banking apps that are not associated with one of the major traditional banks. Two of the biggest are Starling and Monzo. These banks do not have branches you can visit, they are 100% online and managed through mobile apps. However, they still offer a traditional banking service, but could be considered more flexible than traditional banks.
Banks take security very seriously and mobile banking is no exception. Two-factor authentication (where you have to have a code texted or emailed to you for authorisation) is used for logins, payments and updates. This seems to work - according to UK Finance, remote banking fraud (which includes mobile banking) is trending down year on year.
So, mobile banking is regular banking but on a mobile device (usually via a mobile banking app). What is mobile money exactly, then?
What is mobile money?
The most important thing to note about mobile money is that it doesn’t directly involve a bank. You can use mobile money without a traditional bank account. Yes, there are still fees, terms and conditions etc to deal with, but it is more accessible than mobile banking.
To understand the difference between mobile banking and mobile money, let’s take a look at one of the most enduring and popular mobile financial services tools – PayPal.
When PayPal launched in 1998 (yes, over 20 years ago!) it was revolutionary. While banks were still figuring out online banking, PayPal gave users a way to store and exchange money digitally, without the need for a bank account.
Since 1998, mobile financial services have kept evolving to the point that now you can send someone money in a Facebook message!
The impact of mobile money goes further than this though. Examples can be seen around the world of people adopting mobile money over traditional banks.
Venmo is a mobile money service that is hugely popular with millennials and allows them to store and send money but also offers a social aspect to the service.
The term ‘mobile money’ covers a lot of different things, so we can split it into two halves – mobile wallets and mobile payments.
Mobile wallets are a way of storing money digitally on a mobile device. The balance on a PayPal account is held in a mobile wallet. Cryptocurrency is another popular form of mobile wallet. Older examples exist, like prepaid cash cards.
Basically, anything that can store money securely, is not necessarily a bank account; if you can carry it around on your person, it can be considered a mobile wallet. We used to store our cash in leather wallets, now we keep it in mobile wallets.
The WorldRemit Wallet is a little different, in that you can store many different currencies. Most mobile wallets do not support this, which makes the WorldRemit Wallet a fantastic service for sending money overseas instantly.
Mobile wallets like WorldRemit Wallet are as secure as a mobile banking app, with all the same protection but the added advantages of being available to more people, easier to use and supporting instant payments!
While mobile wallets store money digitally, mobile payment systems allow you to spend money digitally. Android Pay, Samsung Pay, Google Pay and Apple Pay are all examples of mobile payments.
Buying goods via PayPal is another example of mobile payment, as is transferring money to someone via PayPal, Venmo or another mobile money service.
Looking at the statistics again from UK Finance, mobile payments are on the rise and expected to grow even more. 1.6 billion purchases happened with mobile payments and we can expect to see this number increase to 2.4 billion by 2027.
Mobile payments, like mobile wallets, are secure, easy to use, convenient and (most importantly) lightning quick. Sending money overseas can take days if you use a traditional bank, but sending a mobile payment from one mobile wallet to another happens in seconds.
Mobile money has become even more popular while countries around the world are living through the lockdown. We have learned how little we actually need to visit a bank to manage our money thanks to mobile money services.
In the future, you can expect to see mobile money overtake banks as the most widely used money management tool. Banks right now cannot compete with the flexibility, convenience and freedom that mobile money offers.
Getting started with mobile money is easy – you can set up a WorldRemit account today, create your account and send your first 3 payments completely free!