Mobile Money – Page 2

Agriculture, Mobile, Mobile Money, Originally posted on the GBI Portal

Kenya’s Safaricom upgrading mobile money service

Kenya’s leading telecom provider Safaricom announced on Tuesday that it was upgrading its mobile money platform M-PESA to a newer version, hoping to make doing financial transactions wirelessly a bit easier.

Safaricom set to upgrade their M-PESA platform. (image: biztechafrica.com)

According to the company, the new system “will enable users to make instant payments for corporate services such as insurance.

“The migration, to be done in the next few years, will enable M-Pesa users to instantly pay electricity bills,” the company said.

Other mobile service providers in the country have called on Safaricom to allow them access to the platform, and have repeatedly said they would be willing to pay royalties to the company. Safaricom has thus far refused.

“It will also save customers inconveniences such as disconnections that occur as the current platform reconciles the transactions,” the company continued, adding that the new service will reduce the time it takes to make payments on bills.

“It takes 48 hours for payments made to Kenya Power, for instance, to reflect on the electricity distributor’s systems, while those to the National Hospital Insurance Fund (NHIF) take 76 hours,” the company added.

The new service will also provide users the ability to use the mobile money platform to pay for items online instantly, with a balance being reduced with every purchase, instead of having to be forced to wait until payment clears.

Safaricom also added that in order to reduce costs, part of the M-Pesa servers in Germany will be relocated to Kenya in order to improve “the reliability of the mobile money platform and cut down on overheads”.

Joseph Mayton

March 21, 2012/by actualize

Agriculture, Health, Mobile Money, Originally posted on the GBI Portal

The Intersection of mHealth and mFinance: A mHealth Alliance Report

Photo Credit: mHealth Alliance

The mHealth Alliance recently released their second white paper on the interconnection between mobile health and mobile finance services. Entitled “Advancing the Dialogue on Mobile Finance and Mobile Health: Country Case Studies” and co-authored by Menekse Gencer, Founder of mPay Connect, and Jody Ranck, the report focused on four separate countries with varying degrees of intersection between mHealth and mFinance – Ghana, Haiti, Kenya, and the Philippines.

The report was commissioned in order to further explore how business models in the mHealth sector have leveraged mobile financial services (MFS) to improve the access and reach of health care in developing countries. The objectives included identifying new use cases that have shown promise at strengthening health systems, showing the characteristics in markets that have allowed MFS to improve the health care system, and recognizing the trends and challenges in how MFS can be implemented into mHealth projects. The goal is to continue to open the eyes of health providers, NGOs, MNOs, and government health agencies in developing countries to the ways that MFS can increase the care provided to the poor.

Benefits of Using MFS in Health Care

The authors make the argument in the report that mHealth can be assisted by MFS along the entire continuum of care (pre-pregnancy, pregnancy, birth, and postnatal) at multiple levels – patient, provider and administrative. Its uses at the patient level include all aspects of formal financial services (savings, insurance, and credit) to help smooth consumption as well as mobile money transfers to pay for medical services or transportation via cash. For providers, MFS allows for quicker remote payments to occur for health services and products along the supply chain and settlement of patient vouchers. Finally, at the administrative level, mobile payments allow remote and unbanked health workers to receive their salaries and reimbursements as well as for families to receive conditional cash transfers.

Countries

The countries selected have a diverse infrastructure in the MFS market and drivers from the private or public sectors, but the authors discovered three trends in each country:

1. A significant health concern that needed to be met

2. MFS had already launched in the markets

3. Either the business model, the quality of the services, or the accessibility of critical healthcare services was suboptimal without the use of MFS.

In Ghana, insurance has been pushed by the government. In a partnership with two MNOs (MTN and Tigo), Microensure has provided customers on the networks with life insurance. The drivers for this service included the need for assistance in covering funeral costs, the lack of a public option for life insurance, and consumer demand of insurance products which was caused by the government’s push to educate its citizens on health.

In Haiti, the driver of MFS in mHealth was the effect of the earthquake in 2010. After grants were provided to MNOs to develop mobile money services after the earthquake, the MNOs saw an opportunity to expand their services into mHealth with the cholera outbreak. This includes utilizing MFS to dispense medical supplies to stop the spread of the disease across the country.

The Philippines is the first country to heavily adopt MFS, and now they are leveraging the large adoption rate to provide health services. The government is now supporting the use of mHealth to reduce maternal and neonatal mortality rates through the well-developed MFS infrastructure. This includes payment for health products and vouchers for health services.

Finally, Kenya has utilized M-Pesa to pay for medical services and transportation at the patient level, payments for remote diagnostics at the provider level, and dispensing of conditional cash transfers and salary payments at the administrative level. M-Pesa was the driver along with Universal Health Care (UHC) in Kenya.

Key Challenges and Future Trends

The authors noted that there were multiple challenges discovered in their research and included brief look into the future of MFS and mHealth. The challenges included the MNOs desire for exclusive partnerships, scaling of services that need greater customer information, risks of cross-sector initiatives in markets with low mobile money adoption rates, shared phones which make it difficult to implement ID management systems, and exorbitant setup costs because of lack of interoperability between mobile money providers. As for the future, the authors see that these challenges will decrease with increased adoption rates of MFS and the decrease of the costs of utilizing MFS in the mHealth sector. Finally, the authors see a greater need for quality data to be accessible by both healthcare and financial service providers. The idea is that more quality data about a patient’s health and finances will allow for micro-insurance to be provided. It would allow for re-insurance to be provided to private or public insurance schemes to provide greater protection to those providing the insurance. The authors see a lack of movement in this space because of this lack of data. They see technology as a tool that would provide this information and expand the reach of insurance to the poor.

March 16, 2012/by actualize

Mobile Money, Originally posted on the GBI Portal

Mobile Money Interoperability: A Solution or Just Expensive?

Photo Credit: Szymon Slupik

In a report released in February, GSMA examined the value generated to both consumers and mobile operators by developing interoperable mobile money systems. Entitled “The case for interoperability: Assessing the value that the interconnection of mobile money services would create for customers and operators” and co-authored by Neil Davidson and Paul Leishman, it was released through the Mobile Money for the Unbanked unit of GSMA.

The report focused on the idea that increasing the interoperability between mobile network operators (MNO) would be better for customers as it would allow greater ability to send money from a phone on one network to a phone on another network. With the understanding that a network’s value to a consumer depends on how many other people they can connect to, there is an obvious benefit to operators creating interoperability between each other. But the article finds that developing interoperability will not create the necessary value to customers in order for MNOs to profit off the investment. The authors came to this conclusion by examining it from both the consumer side and the producer side.

Value to Consumers

By researching the competitiveness of mobile money services, the authors found that there were only three markets in the world that could be labeled as competitive. Although 25 countries have multiple operators providing mobile money services, only three had adoption rates from multiple MNOs that would dictate a need for interoperability. They next turned their attention to discovering the specific problem that interoperability would solve. In viewing the habits of consumers in markets with mobile money, the research showed that they had figured out a workaround to transferring money between mobile networks. Since there is a low cost to purchase a SIM card from another MNO, consumers can “multi-SIM.” This means that depending on which operator the receiver is using, the sender can switch their SIM card in order to send the transfer. With the advent of dual-SIM phones (two ports for SIM cards), multi-SIMing is made easy with no need to switch out the cards manually. In Uganda, a survey from June 2010 showed that 43% of mobile money users multi-SIM. Along with the hardware workaround already available, the mobile operators have allowed unregistered accounts to send and receive money. Registered customers have the ability to send money to unregistered customers. Since all that is needed in order to collect the transfer is a secret code, an unregistered user can give the code to an agent and withdraw the cash. This is called an off-net transfer. The opposite transaction can occur as well as with an unregistered user sending a transfer to a registered customer. This is called an over-the-counter (OTC) transfer. While this does not completely kill the consumer value to interoperability, customers have already discovered and are using workarounds at no further cost to them or the mobile operators.

Value to MNOs

The author’s argument for why MNOs would invest into developing interoperable systems is a simple one – because it will create greater revenue. Mobile money is provided as a value-added service to create greater loyalty in the customer base as well as having them increase the amount of money they spend. But creating a system that works with other mobile operators is not free – nor cheap. The investments would include human resources and infrastructure. But the main question is how would this investment make more money, if at all? Value-added services are used for two reasons – keeping existing customers and enticing new customers. And one or both will have to pay for this service. But since it has already been shown that current customers are already willing to use a workaround to transfer between separate mobile providers, it is not clear that interconnecting systems will create greater loyalty or attract new customers.

Along with the unclear pain from customers about the need for interoperability, the authors made the argument that the investment in it could take away from other investments that could increase loyalty or simply pass the cost of directly onto customers. Unless a clear business reason is discovered, it seems like interoperability will not occur in the near future. But that does not mean it will never occur; just that it is too early for it now.

March 13, 2012/by actualize

Mobile Money, Originally posted on the GBI Portal

Mobile Money for Women: Greater Mobile Adoption or Development of Specific Services?

Photo Credit: The Guardian

GSMA, through its mWomen program, has invested its resources in expanding the knowledge of why there is such a large gender gap in developing countries. As stated in the report entitled “Women & Mobile: A Global Opportunity” (written by Vital Wave Consulting), there is gap between male and female mobile phone ownership in low and middle-income countries which totals 300 million. The report also includes results from surveys about why women did not own mobile phones – cost, need, fear of technology, and cultural issues. In terms of mobile money, there seems to a clear benefit to families if mothers have access to formal financial services. This includes the ability to save and make payments. Research from around the world has shown that mothers are more likely than husbands to spend more on the health and education of their children. But, as shown in the large gender gap, women do not have the same access to mobile money simply because they are lacking the hardware in order to utilize the services. As the work to close the gap continues, it is important to understand how women are using mobile money. This allows for products and services to be designed for women and their needs and desires. Today there are clear examples of mobile money being leveraged by women in developing countries.

As written about last month on this blog, women in Eastern Kenya are utilizing mobile money to make payments into informal savings groups. It also has been used to make payments into a women’s co-operative in Zimbabwe. The convenience of sending payments via mobile money has allowed women to focus on their businesses and/or their families. Traveling long distances to markets not longer limits their ability to make payments on time. These are two examples in which women have decided to fold mobile money into their informal financial services. This is a clear sign that women are seeking more formalized financial services, specifically focused around convenience of mobile payments. Since they have limited access to services that men has access to, like bank accounts, they are using mobile money in innovative ways to make up for the lack of services they have.

So there is a large gap in mobile ownership between men and women. And women do not have access to some of the financial services provided to men. But there are examples of women creating their own services via mobile money. So the question is: if we want to increase women’s access to formal financial services via mobile money, should we focus more on increasing women’s mobile phone ownership or should the focus be on developing mobile banking services specifically for women? This is a difficult question, particularly because the elephant in the room is their husbands. And this elephant is preventing both issues: low mobile ownership and access to formal financial services.

As mentioned in an interview with Mary Ellen Iskenderian, President and CEO of Women’s World Banking, women have requested greater confidentiality. The goal of their request is to keep their husbands out of their finances. Mobile money is a possible way for women to hide money from their husbands, if they control the phone or own a separate one. If it is a shared phone, the ability to hide money from their husband becomes harder. This would be a reason to push harder to increase mobile ownership. But ownership with not immediately mean that women will begin to have financial freedom. Clearly mobile ownership needs to be pushed further but understanding the cultural dynamics in each country and region will be important in the development of future mobile banking products and services for women.

March 8, 2012/by actualize

Mobile Money, Originally posted on the GBI Portal

IFC’s Report on Mobile Money: A Framework to Analyze a Country’s Readiness for Mobile Money

Photo Credit: Bancore Mobile Financial Services

On February, as a part of the ICT Learning Days at the World Bank, Sonja Oestmann, the Director of Consulting and Partner of Intelecon, presented the findings from a report commissioned by the International Finance Corporation (IFC) about mobile money. Entitled “Mobile Money Study 2011,” the reports focused on the mobile money markets in four countries – Nigeria, Thailand, Sri Lanka, and Brazil.

The IFC has committed to further expanding financial inclusion by 2013 and see the potential in mobile money to help reach this goal. But while it has been successful in some countries, it has yet to take off in others. By focusing on vastly different countries in terms of region, socio-economic conditions, and financial infrastructure, the focus of the report was to show the different ways in which mobile money can be used as well as the business models that make them sustainable. It also used Kenya and Japan as examples of countries in which mobile money has succeeded.

Framework

The report included a framework to assess the sustainable viability of mobile money in a country as well as the most appropriate business model to utilize. This includes the partnership strategy, the necessary regulation environment, and the development tracks of mobile money products and services. By creating a structure of the market research that must be conducted, the report is aimed at providing this knowledge to regulators, mobile network operators, commercial banks, microfinance institutions, telecommunications manufacturers, and all others interested in expanding mobile money opportunities.

User Demand

The report also examined where the user demand of mobile money is based on the major money flows within each country. Based on these flows, the report listed the following as potential areas of demand:

Government-to-person (G2P) payments
P2P transfers
Payroll payments from small companies in the informal sector
Public transport payments
Bill payments to major utilities (e.g., electricity and water), postpaid mobile accounts, fixed phone subscribers, pay TV (cable and/or satellite)
Retail payments
Business-to-business (B2B) payments
Credit and microfinance
International remittances
Savings

Survey Findings

Surveys were conducted in order to further understand how and why individuals were using (or not using) mobile money in the four countries. One of the more interesting findings from the survey is the ability of marketing to increase the adoption of mobile money. Individuals using the service became aware of it directly from either the bank or the MNO. But the nonusers heard about the service indirectly from mass media. The conclusion in the report is that increasing adoption could be done more effectively through direct marketing with a personal touch. Another interesting finding is the state of the formal financial services effect on the perceived value of mobile money. In countries where the financial services sector is less extensive, mobile money is seen has a cheaper and faster alternative. But in countries with a strong financial services sector, cost and speed were not as important. Its perceived value was seen as an increased convenience.

Conclusions of Studies

The main conclusion from the report was that the value proposition for mobile money depends on the existing financial service infrastructure. When financial services are unavailable to a larger population, there is a higher demand for fast and cheap money transactions. But as the services improve, partnerships between banks and MNOs increase in significance. At the same time, the demand for mobile banking decreases as other e-payment services become competitors. In countries with an established and advance financial services sector, the demand for new services is based on performing at higher speeds, with greater frequency, and increased convenience.

March 6, 2012/by actualize

Mobile Money, Originally posted on the GBI Portal

Social Investing in Mobile Money: Two Recent Investments in Expanding Mobile Financial Services to the Poor

Mobile Transactions Agent next to a store

Photo Credit: http://venture-zamtan.blogspot.com/

As the Mobile World Congress 2012 wraps up in Barcelona, there has been a flurry of news about social investments in mobile money. On Wednesday (February 29^th), Omidyar Network and ACCION International announced a $3.2 million investment in Mobile Transactions International, a Zambia-based organization with a technology platform and network of agents for mobile transactions. On Thursday (March 1), CGAP, Grameen Foundation, and MTN Uganda announced a partnership along with $1 million investment into an initiative to research and design mobile financial services for those living on under $2.50 per day.

Investment Details

As the first venture capital investment in a start-up technology company in Zambia, Omidyar and ACCION see Mobile Transactions as a leader of expanding access to financial services in the country. The money will be leveraged to build up its executive team, agent network, and further develop their platform in order companies and poor consumers both in Zambia and in new markets to make mobile transactions. The investment into Mobile Transactions includes $500,000 in convertible debt funding from Mennonite Economic Development Associates (MEDA), a nonprofit organization focused on alleviating poverty through market-based solutions and financial investments. This funding will eventually be convertible into shares of the Mobile Transactions. As typical with venture capital investments, Arjuna Costa, Director of Investments at Omidyar Network, and Monica Brand, Fund Manager for ACCION’s Frontier Investments Group, will serve on Mobile Transactions’ board.

Mobile Transactions’ business model combines their proprietary technology with an agent network with the goal of creating a “Cashless Africa.” This idea is that all businesses can transact through mobile phones with the unbanked as well as those without mobile connectivity. Their services offer customers the ability to transfer money, make and receive payments, and eVouchers. This business model was created based on the fact that in countries like Zambia over 80% of the adult population does not have access to formal financial services and roughly 50% of them do not have access to a mobile phone.

The focus of the investment by CGAP, Grameen, and MTN Uganda is to build on the success of mobile money providing access to financial services. The idea is to take it a step further by creating a suite of products and services that fit the needs of low-income consumers. The diverse partnership is aiming at combining the expertise of each organization to provide better access to mobile financial services. CGAP, as a part of the World Bank, focuses on expanding financial services to the poor through independent research, policy solutions, and advisory services to governments and financial service providers. Grameen Foundation, through its AppLab in Uganda, already has the knowledge and experience of expanding the reach of financial services to poor consumers by utilizing mobile technology. MTN Uganda also has had success with mobile money in Uganda which includes building the technical infrastructure and establishing a strong agent network.

Social Investing

Mobile money has been in the news lately as global corporations are becoming interested in its revenue possibilities. Visa and Mastercard recently partnered with mobile operators across Africa and the Middle East to start offering their own form of mobile money. Western Union continues to create partnerships in order for their international money transfer services to be used via mobile phones. While these examples are corporations looking to enter new markets and generate new revenue streams, the social investments have much different and hopefully more impactful focus.

Social investing is a necessary component for mobile technology to reach the unbanked. These social businesses have a clear idea of who their targeted consumers are. With this understanding, the products and services will be designed to meet the consumers’ needs. As mentioned, in Zambia, there is a low penetration rate of mobile phones so creating a system based solely for individuals with mobile phones would not reach all the unbanked. The beauty of Mobile Transactions’ services is that provides needed services that are accessible by all, whether they have a mobile phone or not. In Uganda, the AppLab has done extensive research on providing information services via mobile phones to rural communities. The testing and delivery of these services has allowed the AppLab understand the needs of the consumers in the country. This has helped to guide further development of current products as well as the future development of new products. Both of these social investments are exciting as they will create new products and services to expand financial services to the unbanked.

March 2, 2012/by actualize

Agriculture, Mobile, Mobile Money, Originally posted on the GBI Portal

Ericsson and MTN partnership boosts m-wallet

Ericsson, leading mobile phone company, and MTN, Africa’s largest telecom operator, announced a strategic new partnership to boost the m-wallet services in Africa and the Middle East.

Christian de Faria, MTN Group Chief Commercial Officer, delighted to partner with Ericsson on expanding m-wallet. (image: file)

Announced at the Mobile World Conference in Barcelona, Spain on Monday, MTN will become the first operator to officially deploy the Ericsson’s Converged Wallet platform. Both companies said the service is “a new complementary service to the integrated pre-paid charging system and mobile financial services solution for MTN consumers in those regions”.

The new m-wallet reportedly delivers a fast track route for MTN to introduce relevant, new and differentiated m-wallet market offerings to its Mobile Money customers.

As part of the co-operation, Ericsson said it would offer a prime integrator engagement model encompassing “software, systems integration and managed operation services”.

Christian de Faria, MTN Group Chief Commercial Officer, said, “Optimizing the Mobile Money consumer experience directly impacts consumer stickiness, and with Ericsson Converged Wallet we can now address our strategic priorities by enabling rapid response to our consumer’s preferences and expectations”.

MTN said it currently has more than 5 million mobile money subscribers in 12 African countries.

“2012 will be the year of partnerships across the emerging m-commerce eco-system. MTN has long been an early adopter in mobile money, and this new partnership builds on our ongoing relationship of collaboration,” said Hans Vestberg, Ericsson President and CEO.

“Driving accelerated time to market for operators and linking wallet accounts to purchases across multiple payment systems is a clear next step in next generation mobile financial services.”

Joseph Mayton

February 29, 2012/by actualize

Agriculture, Mobile, Mobile Money, Originally posted on the GBI Portal

FNB integrates mobile banking with Facebook

A view of the mobile account screen shot on the FNB app (image source: file photo)

FNB today announced that its customers can now buy FNB Vouchers using Cellphone Banking and send to friends on Facebook. FNB Vouchers on Facebook is another first by a bank in South Africa.

A view of the mobile account screen shot on the FNB app (image source: file photo)

FNB Vouchers are targeted at Facebook users in South Africa. This innovative product enables FNB customers registered for Cellphone Banking to send gifts to their Facebook friends — the recipient of the FNB Voucher can redeem it as Prepaid Airtime or convert it to cash by using the bank’s eWallet service.

CEO of FNB Cellphone Banking Solutions, Ravesh Ramlakan says, “Constant Innovation is what drives us at FNB. It is through innovation that we are able to design and deliver solutions that add convenience to the lives of our customers. FNB Vouchers is such a solution.”

Safety is an important element of this new feature. During the buying process, the customer creates a unique PIN for each voucher. This unique PIN is then used by the customer to post the voucher onto a friend’s Facebook wall. Only Facebook friends with a South African Cellphone number can redeem these vouchers. FNB Cellphone Banking customers can buy these vouchers from R25 – R300, with limit of R1500 per day.

“The face of banking as we know it is continuously changing and as a bank we have seen the benefits of keeping abreast with the move towards the virtual world. With increasing numbers of people joining and using social networks daily, this move was natural for us in terms of extending our reach and customer base,” concludes Ramlakan.

Staff writer

February 28, 2012/by actualize

Mobile Money, Originally posted on the GBI Portal

Mobile Money Security: What is the Answer – Regulation or Technology?

Photo Credit: Tony Karumba/AFP/Getty Images

Recently there have been more reports of digital theft within the M-Pesa mobile money transfer service. In Embu, a M-Pesa agent was tricked into sending Sh50,000 (~$600) to an unknown account. It occurred when an individual received a message that he received an incorrect transfer and then he went to the agent in order to have the mistake corrected. Other examples include thieves posing as customers or Safaricom staff and calls or SMSs from unknown numbers informing the individual that they won a prize. With the large amount of money being transferred on a daily basis, it is easy to see why M-Pesa has been the target of fraud. From July to September in 2011, $683 million was transferred over mobile phones in Kenya.

The interesting aspect to this fraud is that mobile money is shown to be a safer alternative to traditional money transfer services. But as the number of fraud cases increases, it could start to be perceived (true or not) as an unsafe way to both transfer and store money. This could diminish adoption rates, especially at the bottom of the pyramid as they tend to be more risk adverse. Since their account totals are much lower, one fraudulent transfer could wipe out their entire account. Fraud could also cause the telecom providers to be further regulated by governments. Since they are not banks, they are not regulated under the same rules as banks. This includes the Know Your Customer (KYC) laws. After 9/11, there was a great push by the United States for banks globally to gather more information about their clients and further verify their identity. But since the mobile money services provided by telecoms (when not partnering with banks) are not classified as banking services, the telecoms are not required by law to follow the KYC laws. As shown in the examples above, once the money had been transferred, there was no way to get it back. The reason for this is that many mobile accounts are unregistered. Because an individual can simply purchase a SIM card at a local store, there is no way for mobile providers to track who received a fraudulent transfer. But some governments have started to require citizens to register their SIM cards. In Ghana, the National Communication Authority (NCA) has made this requirement mandatory by March 3^rd. If a SIM card is unregistered by then, the account could be deactivated. This means that roughly 7.5 million users could have their phone cut off. This is an extreme example of how to further regulate the mobile market. But is it the right answer?

Or can technology provide the answer? Further regulation is probably needed to slow down the amount of fraud, but there is a fine line between being too invasive on the end user and providing greater protection. One of the benefits of mobile money is that the lack of registration required which allows those who do not have a bank account or proper documentation to receive financial services. This is especially true of those that live in rural regions. But along with regulation, how can technology be used to solve the problem? Extra security steps can be taken to verify the validity of the transfer. But, again, it cannot be too intrusive as it could cause a decrease in usage by customers. While regulation and technology could possibly help, one of the main problems is the social knowledge of the end-user. Especially in the “You Have Won” messages, the cons are banking on the end-user lacking knowledge about these types of frauds. As shown in the articles, individuals are starting to catch on as are the authorities. The police have been trying to inform citizens that they need to avoid these messages and take extra steps to confirm the transfer. There is no clear and easy answer to solve this problem, but it must be on the front of the minds of MNOs and government regulators. Mobile money is too strong of a tool to let security issues slow the expansion of financial services to those who never had access to them before.

February 27, 2012/by actualize

Mobile Money, Originally posted on the GBI Portal, Women in Development

Mobile Money and ROSCAs: The Intersection of Technology and Informal Financial Services

Photo Credit: Nin Andrews

As reported in the working paper “Mobile Money Services and Poverty Reduction: A Study of Women’s Groups in Rural Eastern Kenya,” women’s groups in Eastern Kenya are using M-PESA as a part of an informal savings product. Through the Vinya wa Aka Group (VwAG), along with support from the New Partnership for African Development (NEPAD), 21 women’s groups were provided with financial literacy training which included investment, savings, money services, and management. After their initial training, Dr. Ndunge Kiiti of Houghton College and Dr. Jane Mutinda of Kenyatta University stated that the goal of the research was to see how mobile money services could be used as a tool in the women’s groups to reduce poverty in Eastern Kenya.

While all the groups had formal savings accounts along with other investments, the groups still continued to use an informal savings vehicle that has traditionally been used in areas that lack access to an institutional savings product. ROSCAs, Rotating Savings and Credit Associations, are groups of people who form in order to force themselves to save on a schedule. The group members will meet weekly for a set number of weeks, and in each week, each person “deposits” their savings for the week. But, instead of letting the money accumulate each week , a specific person in the group receives the entire pot for the week. The idea is that each week each group member saves a specific amount (say $100) with the understanding that when it is their week, they will receive the pot. For example, if there 10 group members, each week for 10 weeks one individual will receive $1,000. During the weeks that a member does not receive the pot, they still must deposit $100, even if they have already received the pot. This is an example of a social contract in which the group members hold the other members accountable to pay each week. ROSCAs are especially popular when individuals are looking to make a larger purchase (i.e. stove, TV, merchandise for their business) and they do not have a formal financial product to save the money.

In these women’s groups, they saw M-PESA as a benefit in order to receive payments on time from the ROSCA group members. Instead of having to attend each weekly meeting to make the payment, women transfer the money using M-PESA. This allows for group members that are not located in the area, either permanently or because of travel, to still be a part of the group and make timely payments.

This is a great example of how end-users will always dictate how a product or service is used. In the case of the women’s groups, they saw a way to leverage M-PESA in order to make their ROSCAs more efficient. While M-PESA was not originally developed for ROSCAs, this is another way for Safaricom to market its services. These types of reports are very valuable since it shows how customers are using a product or service. By understanding how and why the service or product is being used, companies can further tweak their model or even create other innovative products to match the needs of the customer.

February 23, 2012/by actualize

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