A new report from London-based analyst firm Ovum has revealed that mobile money services are accelerating in many emerging markets but it won’t attain popular use until 2014.

The study titled, “Mobile money in emerging markets,” found the market is still in its infancy, although
it has the potential to become a mass-market service, penetrating one-third of all mobile users in emerging markets in five years’ time.

However, Ovum noted that its mass-market acceptance will hinge much on how well the industry
addresses various market barriers, and its ability to nurture user demand with clear, simple, and attractive propositions.

Despite more than 100 launches of mobile money services by both service providers and banks globally, the market remains in a fragile state with few well-established services, said Ovum.

While there is a range of alternative scenarios, the research firm said it expects service penetration to reach between 30 percent and 40 percent in emerging markets in 2014.

“Where the industry resolves the market barriers more quickly than jessenvisaged, an optimistic scenario is possible where strong user demand propels mobile money services to penetrate between 60 percent and 70 percent of the mobile users in the emerging market by 2014,” it said.

One of the key factors influencing market uptake of mobile money services is the relatively low penetration of access to financial services compared to higher (and fast-growing) penetration of mobile services, Ovum observed.

Service providers along with banks will need to target unbanked and connected customers as they are the key demand driver for the market today, the report said.

“Without access to an extensive distribution network for the users to deposit and withdraw cash as they make use of the service, users will be prevented from making the most of the service,” said Angel Dobardziev, emerging markets practice leader and co-author of the report.

In order to ensure early-user disappointments do not extinguish the market, services providers must get the basics of the service right, Ovum said.