REVEALED: Reason behind Mobile Money Losses

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The main reason for the loss of money through mobile money is attributed to fraudulent activities and sending money to the wrong mobile phone number a survey report says.

The bulk of cash loss through mobile money is triggered through hoax SMS (40.3 percent), hoax phone call (33.6 percent) and money sent to the wrong number at 22.4 percent.

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Director of economic pillar at Kenya Vision 2030, Veronica Okoth, says more consumer protection information and advice on using the multiple financial products is now more critical.

We should advance the discussion in terms of the impact in the villages and talk about the loss of assets, more young people getting listed on credit reference bureaus, families breaking up and suicide rates increasing.

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The easy access mobile bank loans and digital app loans accounts for some of the biggest proportions of loan defaults in the country.

“Mobile phone banking and digital apps have introduced new emerging risk,” the FinAccess report said.

Reliance on self-knowledge for financial decisions is highest among residents of rural areas in Kenya (42.2 percent) compared to 35.8 percent in urban regions.

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Many Kenyans have no knowledge on the cost of the loan facilities they took up despite interest rates being an important factor in deciding the affordability of debt.

“The survey tested the ability of respondents to accurately compute 10 percent interest on a Sh10,000 loan. The survey findings indicate that 42.7 percent of the population answered the interest costs correctly, while 39 percent gave a wrong answer,” the report noted.

More men (48.8 percent) were found to be knowledgeable on cost of borrowing compared to women at 36.9 percent.

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