You are currently browsing the tag archive for the ‘Mobile Money’ tag.
> Posted by Mary Hansen, Organizational Development and Training Associate, Accion
842 million people struggle through the hunger games yearly. The games begin as food and money run low sometime before harvest and last until the first ripe crops. This is better known as los meses flacos, the thin months, in Latin America. Or as I knew it in East Africa, wanjala in Swahili and nyengo yonjala in Chichewa (the hunger season). These recurring hunger games are not state sponsored and the participants do not fight each other to the death, but they do fight individuals, families, or communities to survive. Every day, 25,000 people around the world die from hunger-related causes, including 16,000 children. That’s one child every five seconds.
The regions deeply affected by hunger depend heavily on smallholder farming. Around 75 percent of the world’s poor are smallholder farmers. Half of the world’s undernourished people, including three-quarters of Africa’s malnourished children and the majority of those living in absolute poverty live on small farms.
Many of these farmers face the struggle of the hungry season. To understand their situation, consider how you would budget if you were only paid a few times a year.
Personally, I struggle with budgeting when paid twice a month. When I was in the Peace Corps in Malawi and was paid monthly, I struggled even more. Yet, smallholder farmers often receive payment only during harvest, or twice a year. I still do not fully understand how families survive with this income structure, even though I lived in a rural town in Malawi for two years. Yet, this is the reality for many of the 2.5 billion people that depend on smallholder agriculture for their livelihoods.
> Posted by Jeffrey Riecke, Communications Assistant, CFI
Electronic payment systems are spreading so rapidly they’ve become a challenge to size up. Payment cards have been around in some form since the early 20th Century, but their outreach is still far from ubiquitous, even in countries like the United States. To get a sense of where we stand with the expansion of modern payment systems, I compiled some recent statistics from around the world.
In the United States, employers are increasingly using electronic payment cards to distribute compensation. As compared to checks that require processing, the cards receive funds immediately, and can be used like any other payment card to make purchases, transfers, and withdrawals. In 2012, more than $34 billion was loaded onto 4.6 million active payroll cards. By 2017, this is expected to grow to $69 billion over 10.8 million cards.
Electronic payments are experiencing rapid outreach in India in part through the government’s Aadhaar identification card initiative. Increasingly banks are accepting the biometric information-backed Aadhaar numbers as adequate Know-Your-Client information, and as part of its financial inclusion report released last week, the Reserve Bank of India (RBI) Committee on Comprehensive Financial Services for Small Businesses and Low Income Households recommends that every individual over the age of 18 receive an electronic bank account when they’re issued an Aadhaar number. As of December 2013, about half the country’s population had enrolled for the identification cards. The RBI plans to have the entire adult population enrolled in the system by January 2016. Among their utilities, the cards are being used to distribute social benefits of the government’s Direct Benefit Transfer scheme. A recent UBS Securities report estimates that the efficiencies gained from the card-based social benefit system could total up to 1.2 percent of India’s GDP.
> Posted by Dave Grace, Managing Partner, Dave Grace & Associates
Dave Grace (at far left) during a roundtable session at the Global Forum.
This week I received my self-addressed postcard from the Financial Inclusion 2020 Global Forum reminding me of my personal commitment to help ensure the safety of consumers’ savings and rights as they join the financial system. My first reaction was how slow the post is, but on deeper reflection I recognized that the postcard arrived just at a time when I needed a reminder of my commitment.
In addition to the new connections made at the Global Forum, two comments stood out for me; one was rooted in the past and the other in the future.
Remembering the Past
When Michel Khalaf from MetLife described the company’s roots as an insurer for the working class and the legions of agents who went door-to-door collecting weekly premiums of $.05 or $.10 and dispensing financial advice, I instantly understood something important about my grandfather. Until then, I had just thought of him as a MetLife agent in the steel belt towns of the northeastern U.S. in the 1920s and 1930s. He left school at age nine to help the family make ends meet when his own father prematurely passed away. He first worked shoulder-to-shoulder in the coal mines with many other immigrants. His math skills and ability to work across ethnic groups enabled him to leave the mines and become a top agent for MetLife. He knew firsthand how dangerous the mining work was and how a temporary or permanent injury could be a huge setback for these vulnerable families. Once the Great Depression hit and people could not access their deposits in banks, many of his clients turned to my grandfather for financial help. He had some liquidity and became a de facto deposit insurer, paying people what he could and in the process becoming a larger creditor of the illiquid banks.
Anticipating the Future
While Michel Khalaf’s comments helped me piece together my own family history, what stood out more was the collective prediction by attendees in London that the most important story in the next five years will be the presence of a “bank run” on mobile money.
> Posted by Alex Counts, President and CEO, Grameen Foundation
The Financial Inclusion 2020 Global Forum was a remarkable and historic convening. I was honored to have been invited to attend and co-facilitate an “ideas to action” roundtable about one of the five parts of the Roadmap to Financial Inclusion .
Immediately after the event I reached out to Elisabeth Rhyne to understand how I could help build on the groundwork laid at the conference. She suggested I write a blog post about my experience. My immediate reaction was that commenting on such a wide-ranging and successful effort was a bit daunting. But I felt it was worth a try.
Dissecting the Term “Financial Inclusion”
I will admit that I have warmed slowly to the language of financial inclusion and financial capability. Are these just new buzzwords for time-tested concepts? (And if so, why use them?) Let’s assume they are new concepts. If so, financial inclusion feels like more of a means than an end. For me, the end is the reduction of poverty and the empowerment of low-income women – so why not focus on those? If having a poor or even middle-class person simply open their first “no frills” bank account is considered a step towards financial inclusion, regardless of how useful or helpful that bank account is, is this banner a lackluster one to rally under? Further, it is not clear to me that the provision of quality financial services through informal financial institutions (however defined) is being properly valued in the financial inclusion agenda. Finally, does making “financial capability” something of a prerequisite for people accessing formal financial services effectively let financial institutions off the hook for meeting clients where they are and designing appropriate products for them?
While my apprehension about these concepts has not entirely dissipated, I emerged from the Global Forum feeling that this campaign for full financial inclusion, at least as defined by CFI, is evolving as a powerful rallying point for a diverse coalition of providers, regulators, technologists, researchers, and activists. The notion of full inclusion is essential. I now see financial capability as a concept that defines the end state when financial education (through whatever means) is done effectively. The Forum probably had a similar impact on many others – helping them travel from a place of confusion or even wariness towards strong alignment and shared purpose.
Kate McKee, Senior Advisor at CGAP, reflects on key issues raised during the FI2020 Global Forum’s panel discussion on ‘Why Financial Inclusion is More Important Than We Ever Knew,’ ending with an exciting prediction market from the panelists.
Kate McKee moderating the panel “Why Financial Inclusion is More Important Than We Ever Knew,” alongside panelist Bill Gajda
In this panel, which began with an emphasis on behavioral economics opened by Sendhil Mullainathan, co-author of the recently-published book Scarcity (reviewed on this blog by CFI’s Sonja Kelly here), who focused on how the reality of scarcity translates into a “bandwidth tax” on people who constantly live in poverty. Research by Sendhil and others has documented how the constant worry and distraction of living with too little – what Sendhil and his co-author Eldar Shafir refer to as “tunneling,” with its intense focus on making ends meet day-to-day – ultimately, affects poor people’s ability to make good decisions. Basically, this growing body of research shows that when people are in a situation of scarcity, they are not as smart, not as able to resist temptation, and are less likely to be able to make and stick to a plan, as compared to themselves in a time of less scarcity.
This scarcity framework and evidence has potentially powerful consequences for financial inclusion. The panel that followed focused on how scarcity, the bandwidth tax, and tunneling affect the relevance, uptake, and usage of financial services by lower-income people. Tine Wollebekk (Vice President of Telenor Financial Services and Board Chair of Tameer Microfinance Bank, the sponsor of Easypaisa in Pakistan) and Kamal Quadir (Managing Director of bKash in Bangladesh) reflected on the experience of these two fast-growing mobile money service deployments, including insights about customers’ underlying demands and how the mobile wallets and other services are designed to meet them, how to make the offerings intuitive and simple, and how to earn trust from customers new to formal finance. Bill Gajda (Global Head of Strategic Partnerships, Visa) rounded out the panel by bringing in findings from deep consumer research that Visa has supported in additional developing countries, as well as experience with different business models and customer interfaces including cards.
Entry products need to be ‘in the tunnel’
One of the key insights was that the entry product needs to meet a really immediate need. It needs to be ‘in the tunnel’ of what the customer is focused on to meet their day-to-day needs. Obviously mobile telephony is firmly in the tunnel virtually everywhere in the developing world. Person-to-person money transfer has also passed the “tunnel test” of rapid uptake in an increasing number of markets – Kamal noted that he felt the company had reached an important tipping point when “bKash” had become a verb commonly used across Bangladesh. Tine made the point of needing excellent execution and recruiting the right kind of agents that customers will trust, in order for customers not to have extraneous worries that would prevent them from really being able to make decisions.
Innocent Ephraim, M-PESA Product Manager, Vodacom, discusses some of the main concerns shared on the FI2020 Global Forum’s panel ‘Building Infrastructure & Spurring Innovation’, along with an overview of the challenges faced in rolling-out M-PESA’s product success in Kenya to Tanzania and South Africa.
Financial inclusion and technology innovation
The main concern of the forum panel was making sure that we bring in financial inclusion, and technology innovation is one of the key things for this. What I strongly believe in is the mobile money product itself. And mobile money products are being held up with a pillar, which is the agent distribution. Just like any other product that is mass distributed – Coca Cola and similar products – mobile money products need to be visible, available, and trusted. So once all of that is achieved, then innovation can chip in.
Listening to the customer
It’s important to listen to the customer because customers are the reason why we do this. We want to make sure that we don’t complicate their lives because the minute that we do that we already risk excluding them with our complicated innovation that we put in the mix. And we’ve got it wrong many times, we’ve learnt from our mistakes, and as a Product Manager, I know that it’s critical to listen to our customers.
Learning from mistakes
I’ll give you an example of a mistake we made with a product that we learnt from. We launched a life insurance product in Tanzania, and we expected millions to adopt it. We were actually shocked with the cultural behavior in Tanzania. Every customer that we communicated with to pick up the product kept saying: ‘You guys want me to die! Why do you want me to die?’ Here, we learnt that it’s not all about what we think is good for the customer. So we went back to the drawing board. Nevertheless, the product is used by hundreds of thousands in the country.
Now the team in Tanzania has done a study to see what type of insurance our customers need, and then reposition it. And one of the key findings from that study is that customers need a product they directly benefit from, health insurance was seen as ideal because then they feel they benefit out of it. They don’t want to buy an insurance cover that benefits somebody else – for example, the life insurance product where the customers felt it was just bad luck for them and that we just wanted them to pass away!
Kenya: the archetype of mobile payment
Kenya is a very good place to go and look at how mobile payments and technology has worked out. But you need to enter into different markets in different ways. If you look at Kenya, the population is dense and one agent would service hundreds of customers. When you go to Tanzania, where the population is much sparser, an agent would service fewer customers, and that makes it less attractive to an agent. Consequently, agents choose to invest in some other type of business instead of mobile money. (That’s only one of the differences between the two markets. A study has been done to highlight the differences of these two neighboring countries.) What we learnt in Tanzania is that we need to make sure that different products and services are integrated into the agent point-of-sale. So when you give an agent a tool to conduct mobile money services, allow them to do utility payment or airtime as well, so they actually aggregate from transactions from the same customer. That creates more incentive and profitability to the agent.
> Posted by Center Staff
This edition of Top Picks features posts highlighting findings from new research on the global mobile money industry and on remittances in Africa and Asia, as well as a post on how innovation can encourage savings at the base of the pyramid.
A new post on GSMA’s Mobile Money for the Unbanked Blog shares preliminary findings from the MMU 2013 Global Mobile Money Adoption Survey. The Adoption Survey, which offers insights on the development of mobile money services and how they’re enabling the expansion of financial inclusion, will be published at the 2014 GSMA Mobile World Congress, February 24-27 in Barcelona. These preliminary findings included a few industry milestones. A few weeks ago the global industry surpassed 200 mobile money service deployments to total 208 services spread across 83 developing countries. Mobile money services are become a mainstay among mobile network operators, rather than a differentiator. In Sub-Saharan Africa, for example, mobile money is available in 36 out of the 47 countries in the region.
In Africa and Asia, domestic remittances may far surpass international remittances in both frequency and magnitude, two recent joint-reports from the Gates Foundation and Gallup found. That’s the subject of a new post on the Financial Access Initiative Blog, which details the reports’ key results and provides a brief overview of domestic remittances, internal migration, and how they relate. The reports revealed that across the 11 surveyed countries, 14 percent of people had sent money to family or friends within the country within the previous 30 days, and that 32 percent of these respondents had been on the receiving end of such a money transfer. In contrast, one to two percent of people reported sending an international remittance, and about three percent reported receiving an international remittance, in the previous 30 days.
> Posted by Solana Cozzo, LAC Prepaid Head, Senior Business Leader, MasterCard Worldwide
The Financial Inclusion 2020 project at the Center for Financial Inclusion at Accion is building a movement toward full financial inclusion by 2020. Accordingly, this blog series will spotlight financial inclusion efforts around the globe, share insights coming out of the creation of a roadmap to full financial inclusion, and highlight findings from research on the “invisible market.”
Promoting the delivery of solutions that boost the financial inclusion agenda, especially in Latin America and the Caribbean (LAC), is a shared goal that I am truly passionate about. Thankfully, advancing financial inclusion is a key driver at MasterCard, and through my affiliation with organizations such as Accion and the FI2020 movement, I am a firsthand witness to many effective programs that are moving our region, and our world, closer to being financially inclusive.
Notable work has been done recently in the government-to-person (G2P) payments space in LAC. Through efforts in this region, as well as elsewhere, there is now little doubt that in countries where financial payments infrastructure is underdeveloped the introduction of government electronic disbursement schemes via public-private partnerships helps spark the growth of broader payments and financial services ecosystems that benefit many.
In Brazil, for example, switching to electronic benefits cards helped reduce the administrative costs of Bolsa Familia (Brazil’s social welfare program) nearly seven-fold, from 14.7 percent to 2.6 percent of grant value disbursed. Overall, CGAP estimated that switching from cash to electronic delivery via agent networks generates roughly 40 percent in savings per transaction – cost savings that can be used to serve the poor.
In Argentina, the integration of electronic disbursements not only facilitates greater scope and convenience, but also provides a sense of dignity and security. The percentage of social benefits recipients who said they paid a bribe to local officials to access their benefit dropped from about 4 percent to less than 0.5 percent after the Ministry of Social Development moved to an electronic benefits card. An estimated additional US$11 million now gets into the hands of intended recipients.
Another notable electronic social payments initiative in LAC, which demonstrates the integral role of industry players alongside government, is from Davivienda, a local bank in Colombia. Davivienda is integrating their Daviplata mobile banking service into social benefits disbursements. The use of mobile money in social benefits programs has gained significant popularity in Colombia. In fact, about a third of all disbursements of Familias en Accion, the biggest conditional cash transfer program in Colombia, are now utilizing mobile technology.
> Posted by Ignacio Mas, Independent Consultant
Remote payments usually are the beachhead for mobile money as it struggles to create a role for itself alongside cash in developing countries. It’s easier to create customer awareness, induce customer experimentation, and generate customer willingness to pay when you are addressing situations in which cash presents the biggest pain points – sending money home, paying bills at distant and busy utility offices, travelling with or delivering larger stashes of money.
But that’s a limited market. Those are not daily occurrences for most people. And in many markets, especially outside of Africa, the reality is that people already have decent domestic remittance or bill payment mechanisms – through networks of pawnshops in the Philippines, courier companies in Colombia, or Hawala in Afghanistan.
Now mobile money providers are itching to get into the merchant (i.e. in-store) payment space. That’s where you can drive daily as opposed to monthly usage, so that’s where the volume is.
Of payment volumes and value
Much of the discussion on mobile retail payments centers on pricing models (merchant fees, interchange, potential cannibalization of P2P pricing), usability issues (customer convenience, speeding up transactions at the store), and acquiring strategy (how to roll out devices at stores and at what cost). These issues arise because cash is a much stronger competitor here than in a remote setting: paying some cents and waiting some seconds for an SMS confirmation are an irrelevance when you are sending money halfway across the country, but can tax people’s sense of fairness and patience in a retail setting. The less value people and stores see in electronic payments the larger these issues will loom.
But treat these as hygiene factors. Imagine that you could buy half a kilo of rice at any corner store from your mobile wallet at no cost and as conveniently as you flash out a banknote. Still, the fundamental question remains: why would you take out of your pocket your mobile phone rather a banknote?
> Posted by Jeffrey Riecke, Communications Assistant, CFI
What personal information do you fear will become public? Your financial information? Your health records? Maybe you don’t want all your political leanings to be available for everyone’s gleaning?
Safeguards are taken in nearly all systems that handle personal information to try to keep confidential information confidential. But of course the success of these safeguards varies widely, as they’re contingent on any number of factors. Two such factors that are integral in considering the safety of information are the systems through which they travel and the places where they’re stored. Increasingly, the days of pen, paper, and filing cabinets are gone, and the days of computerized devices, satellites, and servers are here. For data enthusiasts, this creates an ocean of new opportunities. For privacy and security cautioners, this creates an equal number of new threats.
A recent report from the New America Foundation’s Open Technology Institute, Mobile Privacy and Information Security in Global Development Projects investigates concerns regarding personal information privacy and security, specifically within mobile phone-based development projects. The report asserts that by and large there are no best practices or guidelines in this development space, and that key risks here are rarely addressed.
In an effort to combat this, the report highlights pertinent privacy issues raised by such projects, investigates tangible privacy concerns in the developing world, and offers recommendations and best practices to support the integration of privacy safeguards into project planning and implementation.
As you might expect, the paper identifies some of the privacy risks of mobile financial services. Mobile money projects, like many other development initiatives, are often structured as public-private partnerships. As client data is shared between more project partners, the chances for it to be intercepted or leaked increases.
Facebook
Twitter
Recent Comments