Transforming the Mobile Money Ecosystem: Eliminating All Transaction Fees to Drive Digital Growth and Economic Inclusion

Abstract

Purpose: The purpose of this research is to examine and propose a transformative policy shift toward eliminating all consumer-facing mobile money transaction fees in Zambia. It evaluates the feasibility of replacing Mobile Money Operators’ (MMOs) traditional revenue streams from fees with interest income generated from customer trust accounts, aiming to significantly accelerate financial inclusion and digital financial service (DFS) adoption nationwide.

Methodology: This applied policy research utilized a mixed-method approach, combining quantitative financial modeling, comparative international analysis, and comprehensive stakeholder consultations. Data were sourced from the Bank of Zambia policy documents, industry reports, and global best-practice frameworks. Financial modeling simulations assessed MMO revenue sustainability under proposed fee eliminations, while stakeholder feedback identified concerns and potential mitigations.

Findings: The study found that transaction fees remain substantial barriers limiting DFS adoption among rural and low-income populations. Financial modeling demonstrates MMOs can reliably and sustainably replace fee-based revenue through mandated minimum interest earnings aligned to the one-year Bank of Zambia Treasury Bill rate. While the policy proposes the elimination of all transaction fees to stimulate adoption, it is strategically designed so that users indirectly contribute through forfeited interest-sharing benefits, making the service appear costless while maximizing financial inclusion outcomes. Furthermore, introducing a new performance-based agent commission model ensures sustainable earnings for agents, promoting their enhanced role within a fee-free mobile money ecosystem.

Unique Contribution to Theory, Practice, and Policy: This research uniquely integrates practical financial modeling with strategic policy analysis to propose an innovative, zero-fee, interest-based revenue model for MMOs. It offers a pragmatic blueprint for significantly enhancing financial inclusion, agent sustainability, and financial sector stability in Zambia. Practically, it provides actionable guidance for policymakers and industry practitioners to foster greater DFS adoption, economic empowerment, and systemic financial stability, positioning Zambia as a pioneering example for other emerging economies globally.