While almost every second Ugandan owns a cellphone, online business faces major constraints due to a lack of credit cards and the restricted services of Paypal in many African countries. Payment processing companies are starting to crop up but they are yet to penerate the market as mobile money has done. So, it doesn’t come as a surprise that mobile money is big in Uganda and very important for African entrepreneurs.
But what is mobile money? Mobile money uses a mobile phone for the key financial transactions as receiving, storing, and spending money. All you need for it to work is a mobile and a phone signal.
In Uganda all mobile companies provide this service to their customers. On every major street you would see little shops, agents where people can store or withdraw money using their mobile account. Paying bills or sending money to someone can be done via the menu on the phone. The caveat? A tax of 0.5% is leveied on each transaction as well as a transaction fee. The cost of service can be excessive; especially for small amounts (up to 15%!) or when you are transferring money to an account outside of your mobile company. Some Ugandans own multiple phones just to cut on the mobile money tariffs!
Nevertheless, mobile money has come to stay: it is convenient, fast and safe. A workable alternative for any entrepreneur interested in setting up an online business or business-to-business.