Mobile money has revolutionized financial inclusion, especially in regions with limited access to traditional banking. However, the rapid growth of mobile money services has introduced significant challenges for governments worldwide. Uncontrolled mobile money transactions can undermine economic stability, facilitate illicit activities, and erode public trust in financial systems.  

In this post, we explore the most critical problems posed by unregulated mobile money transactions and how traceCORE Telecom Transaction Tracking offers a robust solution.

What Is Mobile Money? 

According to the IMF, mobile money is a digital payment and savings system that operates on a pay-as-you-go basis, using mobile accounts and supported by a network of local agents. 

Mobile money and mobile banking are not the same thing. Mobile money is a financial service provided by mobile network operators or their partners, independent of traditional banks. It requires only a basic mobile phone, not a bank account.  

In contrast, mobile banking uses apps to access traditional bank services like deposits and transfers. If a service simply offers mobile access to bank accounts, it’s classified as mobile banking, not mobile money. 

Mobile money refers to a variety of digital financial services available via mobile devices, including options for transferring funds, paying bills, topping up airtime, and accessing microloans.  

How Widespread Is Mobile Money? 

Once merely a tool for storing and accessing funds remotely, mobile money has now evolved into a vibrant market set for substantial growth in the coming years. 

As in 2023, mobile money adoption and active usage experienced double-digit growth in 2024. A 2025 GSMA report states that the mobile money industry reached over 500 million monthly active users and 2 billion registered accounts.  

The volumes and values of transactions saw double-digit growth too. Nearly $1.7 trillion moved through mobile money accounts, translating to transactions worth $3.2 million every minute. 

Source: GSMA, 2025. The State of the Industry Report on Mobile Money 2025, https://www.gsma.com/sotir/wp-content/uploads/2025/04/The-State-of-the-Industry-Report-2025_English.pdf  

Where Is Mobile Money Most Commonly Used? 

Currently, Sub-Saharan Africa is the global leader in mobile money, particularly in countries like Kenya, Ghana, and Nigeria, where it has become a vital tool for financial inclusion. According to GSMA, the region has over 1.1 billion registered accounts. This growth contributed to the increased reach of mobile money agent networks across the world. 

East Asia and the Pacific, as well as the Middle East and North Africa, are emerging as regions to watch in the future. Both areas experienced significant growth last year in the number of mobile money accounts, active users, and transaction volumes. 

Learning from Tanzania’s Unsuccessful Case of Mobile Money Levy Implementation

In July 2021, Tanzania introduced a new levy on mobile money transactions, aiming to generate revenue for infrastructure projects. However, the implementation of this "patriotic levy" has had unintended consequences, particularly for small businesses and low-income citizens who rely heavily on mobile money services. 

 
Financial Burden on Small Enterprises 

Small businesses, especially those operating online or from home, have reported significant challenges due to the increased transaction costs.  

For instance, Rahel Farahani, who runs a home-based bakery, expressed concerns that the new charges were discouraging customers from using mobile money, potentially forcing her to relocate her business. Similarly, Anastazia Goronga, an entrepreneur selling aromatherapy products, noted a decline in customer engagement as the increased costs made mobile payments less attractive. 

Decline in Mobile Money Usage 

The introduction of the levy led to a noticeable decrease in mobile money transactions. Reports indicated a 38% drop in person-to-person transactions and a 25% reduction in cash-out transactions between June and September 2021.  

This decline was attributed to the higher costs associated with mobile money services, prompting users to revert to cash transactions to avoid additional fees. 

Reversal of Financial Inclusion Gains 

Mobile money services have been instrumental in promoting financial inclusion, particularly among rural populations and women. However, the increased transaction costs have had the opposite effect.  

Many users, especially those in rural areas, have returned to cash-based transactions, losing access to essential financial services such as savings, loans, and insurance. This regression undermines the progress made in integrating underserved communities into the financial system. 

Government Response and Public Sentiment 

In response to public outcry, the Tanzanian government reduced the mobile money levy by 43% in July 2022. While this move was welcomed by many, including small business owners and citizens, some experts argue that a complete removal of the levy would be more beneficial in fostering economic growth and financial inclusion. 

The situation in Tanzania underscores the delicate balance governments must maintain when implementing taxes on digital financial services. While such levies can generate revenue, they should be carefully designed to avoid stifling the very economic activities they aim to support. 

Current Challenges 

Currently, there are several government institutions in Tanzania that are involved in mobile money transaction control and regulation: ​ 

• Ministry of Information, Communication and Information Technology​ 

• Tanzania Communications Regulatory Authority​ 

• Bank of Tanzania​ 

Because there is no central database for mobile money transactions, the regulatory authorities obtain different data on the number and the volume of mobile money transactions in Tanzania:​ 

• According to the Tanzania Communications Regulatory Authority, in 2022 there were 4.2 billion transactions worth US $54.4 billion.​ 

• According to the Bank of Tanzania, in 2022, 3.6 billion transactions were completed with a value of US $44.4 billion.​ 

The difference between the data amounts to 0.6 billion transactions worth US $10 billion. 

Similar Issues in Other African Countries 

Not only Tanzania, many African countries have increasingly moved to introduce taxes on rapidly expanding digital financial services such as mobile money.  

According to The Conversation, Cameroon implemented a 0.2% tax on mobile money transactions in January 2022. Just a few months later, in May, Ghana followed suit with a 1.5% electronic levy (e-levy) on mobile transactions — a measure that has disproportionately affected low-income individuals who rely heavily on these services for everyday financial activities. 

Zimbabwe Independent reported that Ugandans have been subjected to a 0.5% mobile money tax since 2018, while Zimbabweans have faced a much higher levy of 2% since 2019 — the steepest among African nations imposing such taxes. 

Governments are trying to increase revenue by introducing new taxes on mobile money in addition to VAT and excise taxes, putting an additional burden on small businesses and low-income people who do not have access to banking products and are forced to use mobile money. As a result, businesses suffer and the number of mobile money transfers declines, which benefits no one. 

The Solution 

The best thing for governments to do in this case is to improve the collection of already existing taxes (VAT, excise taxes) from mobile money transfers. For that, governments have to track mobile money transfers, which is impossible to do without a proper digital solution.  

Implementing traceCORE Telecom Transaction Tracking with ​a central database will make reliable real-time data available for all regulatory authorities. 

Conclusion

Uncontrolled mobile money transactions present significant challenges to governments worldwide, including tax evasion, fraud, and threats to economic stability.  

The experience of Tanzania and other African countries highlights the critical need for governments to consider the broader implications of taxing mobile money services. Ensuring that such policies do not disproportionately affect small businesses and low-income citizens is essential for sustaining economic development and promoting financial inclusion. 

Implementing solutions like traceCORE Telecom Transaction Tracking can provide governments with the tools needed to regulate and monitor mobile money services effectively. By enhancing tax compliance, consumer protection, and financial inclusion, the solution contributes to a more transparent, secure, and prosperous financial ecosystem.