Mobile Money Agent Competition, Inventory Management, and Pooling

Abstract

The use of electronic money transfer through cellular networks (“mobile money”) is rapidly increasing in the developing world. The resulting electronic currency ecosystem could improve the lives of the estimated two billion people who live outside the formal financial infrastructure by facilitating more efficient, accessible, and reliable ways to store and transfer money than are currently available. Sustaining this ecosystem requires a healthy network of agents to conduct cash-for-electronic value transactions and vice versa. This thesis consists of three chapters formatted as stand-alone papers that explore how these agents compete, how they should manage their inventories, and how they might benefit from inventory pooling. Chapter I, Service Quality and Competition: Empirical Analysis of Mobile Money Agents in Africa, explores how service quality, competition, and poverty are related to demand and inventory. Chapter II, Inventory Management for Mobile Money Agents in the Developing World, describes various approaches to modeling the agent’s inventory problem, including a simple analytical heuristic that performs well relative to actual agent decisions. Finally, Chapter III, Inventory Pooling for Mobile Money Agents in the Developing World, proposes an inventory pooling framework that has the potential to increase channel profitability by simultaneously reducing inventory requirements and increasing service levels system-wide.