This blog follows yesterday’s article on the Better Than Cash Alliance and is the second in a three part series that covers the workshop we held during the Connected World Forum Mobile Money Academy in Dubai on November 22, 2012.
In this blog, we share our experiences in the field over the past 8 years working on USAID projects that have been utilizing mobile money platforms to facilitate development initiatives in the Philippines, Afghanistan, and Kenya. See yesterday’s presentation for more information about these projects and an overview of their various uses of mobile money: here
Following the presentation on the Better Than Cash Alliance, we thought it would be useful to summarize some of our experiences in the field working with mobile money platforms to support or implement USAID-funded projects. In particular, we find that collaboration with all the partners is key, ensuring that a proper road map is in place helps to keep things on track, and then we summarize our advice to mobile money providers and donor partners interested in using mobile money platforms.
Collaboration is key in the area of using mobile money for development activities. This includes the importance of working with mobile money issuers, banks, governments, third parties, utility companies and/or payment providers. Developing a good partnership model that includes working closely with key management, both on the mobile money provider end and on the development side, is essential.
For example, in the Philippines, a strong partnership commitment at the senior levels of both G-Xchange Inc. (GXI) – the mobile money issuer of GCASH – and the USAID implementing partner, the Rural Bankers Association of the Philippines (RBAP), was key to the success of this effort that led to multiple new banking applications that made use of the G-CASH mobile money platform. In addition, more than 70 rural banks and their more than 1,100 branches and other banking outlets were registered to act as agents. Over the past 7 years, this partnership resulted in facilitating banking transactions for almost 400,000 clients and resulted in more than $400 million in mobile money-enabled banking transactions.
Setting a road map that lays out all the steps and a clear action plan with milestones can keep you on track. Our action plans always lay out the essential steps, the player or players responsible for each activity, a target date for completion, and a status column that can be used for regular updates which are monitored on a monthly and, in some cases, a weekly basis.
It is important for everyone to agree on their roles, ensure that there is buy-in and commitment to the plan, and agree to use the action plan to review and track progress on a regular basis.
In tomorrow’s article, we will go into the detailed road map we have been using for the mobile money related projects.
Advice to Mobile Money Providers
Over the years, we have witnessed various strategies that can help mobile money providers better interact and support development partners.
Online Systems & Interfaces
One of the most important things is the need for better online systems that provide interfaces that make it easier to facilitate bulk mobile money payments both on the sending and receiving end. P2P transactions are useful but for those handling larger volumes of transactions, such as donors, governments, donor project implementers, and even merchants or other companies, an online system is essential.
In Kenya, the USAID KTI project found that it was much easier to utilize the M-Pesa bulk payment system for a number or reasons:
- Online access: a SIM-based system was too slow and presented too much risk of fraud.
- Easy uploads: the M-Pesa online portal allowed the project to upload hundreds of transactions in minutes.
- Online confirmation of registered names & payments: the portal allowed the project to ensure that they were we sending transfers to the right people and that the intended beneficiaries were receiving the funds.
Sufficient Agent Network
In working with development partners, make sure that areas to be covered have a sufficient agent network as well as ensuring that the mobile money ecosystem is developed at the same time. In several markets, we have witnessed where agents were brought on board too early and soon lost interest when not enough customers used their services. At the same time, we also witnessed markets where mobile money services were promoted too quickly, with an insufficient number of agents, and the clients soon lost interest in using the service. Outside of countries like Kenya, where the domestic remittances are key and there are few alternatives, other ways to promote mobile money ecosystems such as mobile money-enabled payroll, help to get over the proverbial chicken-and-egg problem more quickly.
Take Advantage of the Interest in Mobile Money
Mobile money providers can benefit from the tremendous interest of donors and governments in promoting financial inclusion via mobile money and other electronic fund transfer mechanisms. Our recommendation for mobile money providers is to take advantage of this opportunity as donor/government agencies can make for very influential allies.
In the Philippines, USAID’s MABS program, working with RBAP, was able to help mobile money-enabled banking services to be introduced much more quickly than the mobile money providers could have initiated on their own. The program also worked closely with Central Bank regulators to obtain regulatory approval for these new services.
In Afghanistan, support from USAID’s FAIDA project helped to establish the Association of Mobile Money Operators in Afghanistan (AMMOA) which helped mobile money operators to better collaborate to work on standards with regulators.
Advice to Project Implementers
For donor-funded project implementers, our advice is to ensure that you can provide a compelling value proposition for mobile money providers whether these are led by mobile network operators, banks, or third-party operators.
Using the example of the Philippines, had one or two small microfinance players with a limited number of clients approached the mobile money providers, they probably would not have been interested. The USAID/Philippines MABS program, on the other hand, was working with RBAP and their more than 500 member rural banks with over 2,700 branches and other banking offices and a combined 6 million-client base. This made it easier to work with large numbers of potential clients and made for a more compelling value proposition for the mobile money partners to work with USAID and their partner RBAP on this initiative.
Likewise, in Afghanistan, USAID’s FAIDA project targets organizations and partners that have large numbers of potential clients in order to scale up and support mobile money ecosystems that include utility companies and salary payments.
In order to handle salary payments, utility bill payments, merchant transactions, or even small funds transfers to thousands of recipients, as USAID/Kenya was able to implement on the KTI project, a good online system is essential. So our advice to project implementers, looking at handling large numbers of transactions, is to ensure that there is a good online system that allows for bulk mobile money transfers.
There are also some excellent third party providers that allow for improved interfaces with mobile money systems including companies like Kopo Kopo in Kenya. We note that Kopo Kopo has partnered recently with Safaricom to bring the M-Pesa Buy Goods service to small and medium businesses throughout Kenya and support hundreds of businesses from salons to restaurants to office supply stores to accept mobile money payments. These same tools can be useful for development partners as well. Our hope is that we see more of these systems become available in other markets soon as well.
Tomorrow, we will continue this blog with the final part of our workshop in Dubai and share these steps and practical advice in more detail.
Anthony Latta is a project management and international development specialist with Chemonics International and has administered USAID and other U.S. Government projects throughout Europe, Eurasia, Afghanistan and Kenya. He has extensive experience and is recognized as a company leader in using mobile payments (M-Pesa) for operations and grants activities.
Anthony Petalcorin is an IT and mobile money advisor with Chemonics International. He currently works with Chemonics as the mobile money advisor on the FAIDA project and previously worked for over 14 years on the USAID/MABS program were he was the Senior MIS Manager and oversaw much of the mobile money product development work with rural banks as well as coordinated work with the Bangko Sentral ng Pilipinas (Philippine Central Bank) on e-banking and e-money compliance issues for rural banks.
John Owens is a director at Chemonics International and is a senior advisor on mobile money, mobile banking, and financial inclusion. He has worked on public private partnerships to expand financial inclusion for the past 24 years and previously served as the Chief of Party for the USAID/MABS program where he worked closely with RBAP, rural banks, and the mobile money providers to operationalize the use of mobile money to facilitate greater access to banking services.
Note that the views in this article are strictly those of authors: John Owens, Anthony Petalcorin, and Anthony Latta and do not necessarily reflect the views of Chemonics International, USAID, or the Better Than Cash Alliance.