Women make 90% of mobile transactions through USSD, not apps – Report

A new report has found that while men are likely to conduct their digital transactions via a mobile application, 90 percent of women prefer the ease of Unstructured Supplementary System Data (USSD) or SIM toolkit for the same purpose.

These women located in countries like Nigeria, Kenya, Ivory Coast, and Bangladesh where mobile banking is thriving are 2-5 times more likely than men to rely on USSD.

The ‘Payment System Design and Financial Inclusion Gender Gap’ report released by Caribou Digital with support from Bill & Melinda Gates Foundation, attributes the women’s decision to inequality in pay gaps, poverty levels, and technology adoption.

“Across all markets, the use of financial apps (mobile banking, fintech wallets, etc.1 ) correlates positively with an increase in the number of transactions, as well as the median value of transactions, compared to those who rely on USSD/SIM menu to conduct payments. This effect is even more pronounced for women,” the report read.

The gender gap is more pronounced in Nigeria which has the largest population of mobile users – 98 million unique subscribers yet mobile money adoption is at 3 percent of the adult population. The gender gap in Nigeria means that 51 percent of men are banked compared to 27 percent of women.

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In Kenya, between 73 percent to 82 percent of adults are banked and almost 98 percent of the adults have a mobile money account with 29 percent having a full-service bank account as well. The gender disparity is also insignificant at only an 8 percent difference (86% of men and 78% of women).

While Nigeria has been the epicenter for fintech growth in Africa with firms like Paga, OPay, Carbon offering app-based wallets with a full range of financial services, the majority of the banking people still use full-service banks such as GTBank, Access Bank, UBA, Zenith, and First Bank. 40 percent of adults who are banked use traditional bank accounts.

Every bank in Nigeria offer mobile apps and support USSD for common transactions, including payments, account transfers, top-up, loans, and pre-paid utility bills.

Banks also dominate the payment system which is largely driven by card-based transactions. Person-to-Business (P2B) card transactions grew from 29.4 million transactions in 2018 to 41.8 million in 2019, making cards the preferred channel for merchant payments. Fintech firms are starting to catch up with the deployment of Point of Sale (PoS) terminals.

While fintech firms like OPay and Paga are also pulling their weight in the banking agency segment, banks still dominate the agent banking system in Nigeria. But researchers at Caribou Data believe this will change with the entrance of telecommunication operators like MTN, 9Mobile, Globacom, and Airtel.

However, so far MTN only has a Super Agency licence despite applying for a Payment Service Bank (PSB) licence with the rest of the operators. 9Mobile and Globacom have approved licences but only the former has deployed mobile money service. The delay by the Central Bank of Nigeria is mostly responsible for the lack of growth in mobile money in the country.

Whereas in Kenya, Safaricom, a telecommunication operator holds a 63 percent SIM share of the mobile market while M-Pesa is also the dominant form of mobile money. The agent network is ubiquitous, with 150,000 agents nationwide (66% of Kenyans live within 1 km of an agent), and Safaricom has continued to build out new products such as M-Shwari (savings + loans), Fuliza (overdraft protection), and M-Tiba (health savings).

South Africa shares some similarities with Nigeria in that banks and bank accounts dominate financial services. Nevertheless, it has a higher rate of financial inclusion with an estimated 69 percent of adults formally banked, and an inverse gender gap, with 2 percentage points more men than women having access to an account.

The Caribou Data study suggests that bank dominance in Nigeria would not be much of a challenge for women if issues like interoperability function seamlessly and are affordable. Men are likely to make more transactions in a situation where the inter-bank transfer cost is expensive. Also in markets where transaction fees are high, women tend to avoid paying the fees.

In Nigeria, inter-bank P2P transfers carried a flat fee of N52.50 ($0.13), leading to an average fee ratio of only 0.4 percent. On 1 January 2020, the CBN instituted a tiered fee structure that lowered the average fees paid to only 0.2 percent of the transaction value.