Better Than Cash: Tips & Strategies Using Mobile Money in the Field

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This presentation was given during the Mobile Money Academy Workshop during the Connected World Forum 2012 held in Dubai on November 22. During this workshop we shared our tips and strategies utilizing mobile money for development projects in countries such as Afghanistan, Kenya and the Philippines. It shares the various use cases and experiences utilizing mobile money for development projects in the field. It covers the collective experiences of three USAID-funded projects managed by Chemonics International in Kenya, the Philippines and Afghanistan. Note the views here are those of the authors and do not necessarily reflect the views of the Better Than Cash Alliance, USAID or Chemonics International.

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  • Please note that during this part of the workshop, we will be sharing Chemonics International experiences introducing the uses of mobile money for development in Kenya, the Philippines and Afghanistan
  • MABS Philippines
  • Preparing institutions to utilize mobile money and mobile financial services (including mobile payments) Customer Value Proposition Features: What needs do the m-money & m-commerce solutions meet? Accessibility: Distribution of transaction points Affordability: Transaction costs need to be low Ease of use: Easy to use, fast & user friendly Environment Evolution of the retail and financial sectors: Nature of financial and retail market is important for determining functionality Level of financial/electronic literacy: Influences nature of transactions Regulatory and Policy Environment Need supportive environment for mobile money & mobile financial services (including m-commerce) Bring the regulators on board – early New Philippine E-Money Circular is a good example Institutional Perspective Functionality: Narrow or widely focused functionality Fees and Charges: Appropriate revenue strategy Efficiency Gains: Can the institution substantially increase business transactions at a lower cost? Product Development & Testing The MABS Program provided bank partners with generic manuals that contains procedures in using mobile financial services and in promoting this to their clients. All new mobile banking services were submitted to the Central Bank for approval and adhere to standards e.g. generally accepted accounting principles (GAAP), General Banking Law, etc… This help to make the rural banks comfortable in using GCash as a platform to support mobile phone banking services. Launch Based on close collaboration, the USAID supported MABSprogram, RBAP, and Globe’s GXI agreed to conduct nationwide accreditation training in order to support a turn-key approach to licensing and training bank partners. For banks who signed up and qualified, MABS conducted a senior management orientation, pilot testing of mobile money services (text-a-payment, text-a-deposit, text-a-withdrawal, text-a-remittance, text-a-salary, etc.), special training on how to implement specific mobile money services based on bank ’s needs. With Globe, marketing materials, printed procedures and guides are distributed to accredited rural banks.
  • These are the steps we recommend for institutions looking to utilize and promote mobile money and mobile financial services based on our experiences in the Philippines and in Afghanistan. The importance of training and building standard operational procedures was key. Customer Perspective What is the value proposition for the customer? What needs do the m-banking & m-commerce solutions meet? Are there enough distribution of transaction points? Is it affordable? Is it easy to use and user friendly? Secure? Environment What is Nature of financial and retail market? What is the level of financial/electronic literacy? Do many know how to use a cellphone? Regulatory and Policy Environment 1. Need supportive environment for mobile phone banking & mobile commerce Bring the regulators on board – i.e. helped to fast track New Philippine E-Money Circular Rural Bank Perspective How beneficial is M-Banking to Implementing Partners What is the appropriate strategy for them to earn Can the partner substantially increase business transactions at lower cost?
  • Product Development We developed a Manual on Mobile Phone Banking Services that contains procedures that adheres to standards e.g. generally accepted accounting principles (GAAP), General Banking Law, etc… This makes us comfortable in using GCash as a platform to our mobile phone banking services. Product Testing Both MABS and Globe agreed to conduct a nationwide accreditation training and workshop to get in the rural banks ’ interest. For banks who signed up and qualified, MABS conducted a senior management orientation, pilot testing of mobile money services (text-a-payment, text-a-deposit, text-a-withdrawal, text-a-remittance, text-a-salary, etc.), special training on how to implement specific mobile money services based on bank ’s needs. Launch Services - With Globe, marketing materials, printed procedures and guides are distributed to accredited rural banks.
  • Reduce Costs and Improving Outreach: We implemented the branchless banking approach by leveraging and supporting the liquidity of mobile money agents in rural areas. With the mobile money available in the rural areas, clients are able to send and receive funds. This can help partners reduce the cost of accepting or collecting remote payments, improve outreach and potentially help implementing partners to be more efficient thereby saving on time spent with cash or check payments. In the Philippines, some rural banks agreed to reduce interest rates on micro loans for clients who signed up for Text-A-Payment to compensate 1% transaction fee charged by the agents. To quantify savings, institutions need to analyze their current manual/traditional way of collections or sending funds and compare these costs against the expenses involved with mobile money services (usually transaction fees). Some ways to compare costs is to conduct time and motion to determine how much is the time spent by staff involved with either collecting payments or sending funds. For rural banks, the 60% collection time spent by the collector was converted into more productive time by offering “text-a-payment” to clients who were outside of a 5 kilometer radius from the bank. Therefore, the bank could increase load/portfolio target of the account officer. Greater Efficiency Clients do not need to go at the institution and staff do not need to collect or distribute funds in the field. Increase Deposits The under-banked and unbanked sector have the opportunity to be provided with financial services thus this can increase the bank ’s clients base as well increase deposits. For example: A Rural Bank in Luzon was able to offer payroll services via GCash to a big client in their community. This business, with over 1,000 employees. Now maintains a balance of almost $250,000 in the rural bank.
  • For Client: It is convenient for clients to get e-money within their area (at least 1 km radius) of residence or business. The closer and easier the better it is to do banking without traveling and lining up at the lobby of the bank and without leaving the business closed. It avoids opportunity losses. For Merchants/Agent: Being a merchant who accepts mobile payments or an agent can increase customer traffic as well as increasing revenues/or reducing costs from providing mobile payment services. It allows use of e-money in exchange for goods and services which saves the merchant from cash handling issues (fraud and robbery). For the Development Partner: Leverage cash in can cash out cost to increase revenue or reduce operating costs. 2) Convenience Text-A-Withdrawal- mobile ATM Unclogging lobby and reduces transaction costs Text-A-Salary = Paying salary via mobile wallets 3) Cost Savings Text-A-Payment = saves on collection cost; more time for portfolio management Reduce over the counter processing and paper works 4) Increase Profits (from fee-based transactions) Fee-based income (GCash2Load, Cash-In/Out, Advise and Pay) Opportunity for cross-selling and from referrals Improve loan portfolio and management, cost savings on loan payment through GCash
  • Some of the use cases developed with rural banks offering mobile money-enabled services in the Philippines.
  • The above chart is borrowed from CGAP and covers the points that we also recommend when it comes to selecting mobile money agents.
  • Understand your market Effective training and education client on how to send mobile money to other individual and to the bank. Based on our experiences, most clients need to use mobile money at least three times before they feel comfortable and at ease with this technology. In that way, it is similar to other forms of internet or ATM banking, especially when clients are learning to use it for the first time. The keys really are to understand your market and how comfortable they are with new technology. Make the registration process as painless as possible. Make sure to offer training as well as to motivate or encourage early adopters as well as agents to teach others. In making use of mobile money, not only is customer adoption important but so to is the acceptance as merchants. Those who are active users, have multiple places to pay for things using mobile money not just P2P. This is especially true for things that people pay for often such as utility payments or even transportation.
  • It is key to develop sufficient cash-in and cash-out points. One of the best ways we have seen for getting people to use mobile money more often is to make it as easy as possible to get into their wallets. While there is a lot of interest in international remittances, what we are learning is that this is not sufficient enough to really promote usage. Mobile money enabled payroll services were actually the best way in the Philippines to promote uptake and usage of mobile money. However, when promoting mobile money enabled payroll, it is essential to plan for sufficient cash-out outlets as well as to encourage more merchants and business to accept mobile money. As Ignacio Mas has mentioned in the past, merchants will usually follow the money and getting people’s salaries into the mobile wallet is one of the best ways to promote this. While people generally cash-out their salaries at first, over time, as they find more uses for their mobile money they tend to cash-out less and utilize it more often.
  • Increasing of volume and usage of mobile money in the rural areas With Globe ‘s partnership, there are informational and product awareness campaign through media (TV, newspaper, etc.) MABS provided mobile phone banking website: ( www.mobilephonebanking.rbap.org ). This is to post updates, press releases and blogs of mobile money situation in the rural areas. In partnership, banks to promote mobile money in major events such as festivals and civic activities in their areas of operations. In Afganistan, the mobile money issuers have used load speakers attached to moving cars to broadcast new mobile money services such as electricity payments via mobile money.
  • Increasing of volume and usage of mobile money in the rural areas Globe’s GXI in partnership with RBAP launched a promo and incentives program for the accredited rural banks. The incentive programs pays commission to any independent marketers who can register to GCASH and perform transaction over the period of time. MABS and Globe conducted a mobile money practitioners conference. This is a conference of all accredited banks to encourage others non-performing accredited banks to hear first hand information from successful banks learn from the experiences of the other banks. In Afghanistan, an interesting crowd-sourcing event was held to award students who came up with new and innovative mobile money applications. The USAID program also helped to establish and set up the Association of Mobile Money Operators of Afghanistan. This provided a venue to share and develop standards and improve the dialogue with the regulators.
  • Getting more rural banks to sign-up to offer mobile money to their clients. There is accreditation training on a yearly basis. At least twice a year depending on the events of the rural bankers association. During the rural bankers membership meetings, Globe and MABS take part of promoting mobile money to rural banks. Sharing stories of accredited banks who are successful in implementing mobile money to other non-accredited banks to encourage these banks to join and get accredited. Globe is promoting mobile money on its own capacity on a regional basis.
  • The commitment of a rural bank management to embrace the technology and following necessary steps and requirements on mobile money implementation is one of the key elements for a successful of mobile money implementation. Another key element for a successful mobile money implementation in the rural areas is the bank ’s first step to develop the mobile money (or GCASH) ecosystem is to create a demand. The bank uses Text-A-Sweldo (or salary) service wherein bank releases the salary of the bank employees and employees of other businesses in the area through GCASH. In the case of PR Bank, a rural bank. The bank use to send employees salary through a commercial bank wherein PR is required to maintain millions of pesos average daily balance (ADB) for payroll servicing. Now, the bank is paying their employees ’ salaries through GCASH therefore saving the bank from ADB requirement from commercial bank (big banks) for payroll servicing. The bank on the other hand accepts payroll servicing from other businesses therefore increases demands in the areas the bank is operating and increases deposit levels as well. Through Text-A-Sweldo (TAS) service provided by the rural bank and after the employees are well-informed about the benefits of GCASH in their electronic wallets, the employees themselves serves and acts as effective agents of the bank on “word of mouth marketing” therefore sparks the usage and volume of transactions in the rural community. Releasing salaries of employees through GCASH creates a habit of usage among mobile money practitioners or GCASH accredited banks. Activate merchants (all types of micro businesses) in the community wherein employees can spend their salaries in GCASH after receiving it. Merchants who are also clients of the bank will accept GCASH as form of payment in exchange for goods and services. This is part of the ecosystem development wherein at the end of the day, these merchants send their GCASH collection to the bank in a form of Text-A-Deposit (TAD) therefore increases deposit level at the bank. Creating awareness on mobile money (or GCASH) in the rural community wherein the accredited rural bank is operating is another key element to a successful implementation of mobile money. The bank should ensure that the following are presence: GCASH or mobile money offerings and information must be visible from outside and inside of the bank ’s premises. The bank must have banners hanging outside the branch and flyers and other informational materials must be updated and available in lobby of the branch. Coordinates with Globe for a bigger size marketing and informational campaign through civic activities, festival and other big events in the community wherein Globe can be a sponsor of the event and at the same time the bank promotes their product and services including GCASH.
  • Develop a robust financial education initiative that can support a more rapid adoption and expansion of mobile money services. We noted from this experience that real use cases and winning value propositions were the most important ways to promote and introduce mobile money to new clients.
  • Increasing of volume and usage of mobile money in the rural areas MABS and Globe launched promo and incentives program for the accredited rural banks. The incentive programs pays commission to any independent marketers who can register to GCASH and perform transaction over the period of time. MABS and Globe conducted a mobile money practitioners conference. This is a conference of all accredited banks to encourage others non-performing accredited banks to hear first hand information from successful banks learn from the experiences of the other banks.
  • Increasing of volume and usage of mobile money in the rural areas MABS and Globe launched promo and incentives program for the accredited rural banks. The incentive programs pays commission to any independent marketers who can register to GCASH and perform transaction over the period of time. MABS and Globe conducted a mobile money practitioners conference. This is a conference of all accredited banks to encourage others non-performing accredited banks to hear first hand information from successful banks learn from the experiences of the other banks.
  • Another important trend we are now seeing is the importance of a convergence of various channels including mobile money accounts that can be linked to a bank account and accessed via an ATM, used in standard POS machines as a POS, and also transferred the regular way via phone to phone.
  • In the Philippines, the examples of the GCASH Face card which acted as an ID card and an ATM card as well as being POS enabled, was a very promising way to leverage various channels and platforms.
  • For more information, check out the blog on Mobile Money for Development or our Facebook page.
  • Better Than Cash: Tips & Strategies Using Mobile Money in the Field

    1. 1. CHEMONICS TECHNICAL PRACTICES | FINANCIAL SERVICES Mobile Money for Development Workshop: Tips & Practical Experiences from the Field Mobile Money for Development: Tips & Practical Experiences from the Field
    2. 2. CHEMONICS TECHNICAL PRACTICES | FINANCIAL SERVICES Mobile Money for Development Workshop: Tips & Practical Experiences from the Field Checklist to Assess Mobile Money System for Development Projects  Upfront diagnostic/feasibility study/Due diligence  Analyze the various mobile money providers in your country – banks, MNOs, 3rd party providers or collaborative partners  Regulatory approval  # Subscribers and active users  Existing & planned agent network  System functionalities (online tools)  Customer service
    3. 3. CHEMONICS TECHNICAL PRACTICES | FINANCIAL SERVICES Mobile Money for Development Workshop: Tips & Practical Experiences from the Field Preparing to Promote/Utilize Mobile Money and Mobile Financial Services icees–– s aunch erv LLaunchSServic ustt mer CCusoomer rr duct PPooduct Addopionn A opttio mentt Deevelopmen es D velop Issuues ustt mer CCusoomer egulatt rr s RRegulaooyy Is rr duct PPooduct e PPesspeciv e errpecttiv TTesingg esttin al Inssituuionnal Inttit ttio e entt PPesspeciv e errpecttiv nvi ir nm n EEnvroonme
    4. 4. CHEMONICS TECHNICAL PRACTICES | FINANCIAL SERVICES 1. Mobile Money for Development Workshop: Customer Perspective How could mobile money be used by the target customer? Tips & Practical Experiences from the Field Use cases? Is is accessible? Is it affordable? Is it easy to use? 2. Environment Nature of financial and retail market Level of financial/electronic literacy 3. Regulations Need supportive environment for mobile money systems Are there wallet limits? Restrictions to cash-in/cash-out? Bring the regulators on board – early Review circulars & regulations 4. Institutional Perspective What are the benefits for the development partner/gov’t/institution? What is the appropriate revenue strategy? Can the institution reduce costs, improve efficiency, security, etc? High level management commitment
    5. 5. CHEMONICS TECHNICAL PRACTICES | FINANCIAL SERVICES Mobile Money for Development Workshop: Tips & Practical Experiences from the Field 5. Product Product features depends on use case Development Online system & reporting Implementation plan Process Flow Accounting Contingency Plans Customer Service 6. Product Testing Beta & Alpha test 7. Launch Services – Marketing materials, education, printed Customer Adoption procedures and guides. Make sure customer service is working!
    6. 6. CHEMONICS TECHNICAL PRACTICES | FINANCIAL SERVICES Mobile Money for Development Workshop: Tips & Practical Experiences from the Field The Business Models for Mobile Money for Development ts Cos uce Red h Improving Outreac Greater Efficie nc y Incr e ase Dep o sits
    7. 7. CHEMONICS TECHNICAL PRACTICES | FINANCIAL SERVICES Mobile Money for Development Workshop: Tips & Practical Experiences from the Field General Benefits of Mobile Money Services (along the Value Chain) Client Merchants/Agents Development Partner Convenient & more secure Leverage system and agents to than cash Increase walk-in traffic expand client base and maximize (cross-selling opportunities) revenue or reduce operating costs Comfort of dealing with corner merchant or agent in Image building Increase efficiency and staff time their neighborhood Revenue from fees, Cross selling opportunities through commissions and incentives agents‘ referrals Reduced transaction costs for accessing financial/payment Significant image building services (no lines, no travel opportunities time/costs)
    8. 8. CHEMONICS TECHNICAL PRACTICES | FINANCIAL SERVICES Mobile Money for Development Workshop: Tips & Practical Experiences from the Field Determine MPB “Use Cases” • Kapitbahay Banking “village banking” • Make loan payments • Pay employees’ salaries • Pay utility bills via mobile phone • Pay suppliers (not checks or cash) • Send money to relatives (remittance services) • Provide info for a fee (balance inquiry)
    9. 9. CHEMONICS TECHNICAL PRACTICES | FINANCIAL SERVICES Mobile Money for Development Workshop: Tips & Practical Experiences from the Field Agent/Partner Selection Criteria
    10. 10. CHEMONICS TECHNICAL PRACTICES | FINANCIAL SERVICES Mobile Money for Development Workshop: Tips & Practical Experiences from the Field Issues and Lessons Learnt from Pilot Tests Understand your market Acceptance Acceptance and fear of and fear of Keys: the use of the use of • Registration technology technology • Training • especially especially Customer/Merchant among among Adoption elderly clients elderly clients
    11. 11. CHEMONICS TECHNICAL PRACTICES | FINANCIAL SERVICES Mobile Money for Development Workshop: Tips & Practical Experiences from the Field Issues and Lessons Learnt from Pilot Tests Release of employee’s payroll/ Lack of Lack of Allowances/transfers Mobile Mobile via mobile money is key Money Money Outlets or Outlets or Plan for sufficient cash- source source in/cash-out points especially in especially in the rural the rural areas areas
    12. 12. CHEMONICS TECHNICAL PRACTICES | FINANCIAL SERVICES Mobile Money for Development Workshop: Tips & Practical Experiences from the Field Issues and Lessons Learnt from Pilot Tests Information and product awareness via How to reach How to reach media print, radio, TV, online, clients in clients in roadshows remote remote communities communities Website http://mobilephonebanking.rbap.org --awareness awareness and and Promote mobile money services in key information information locations/events (such as local festivals), campaign campaign gatherings
    13. 13. CHEMONICS TECHNICAL PRACTICES | FINANCIAL SERVICES Mobile Money for Development Workshop: Tips & Practical Experiences from the Field Issues and Lessons Learnt from Pilot Tests Incentive programs for development Increasing Increasing partners the volume the volume and usage of and usage of Sharing results via mobile mobile conferences & money in the money in the regional workshop events rural areas rural areas
    14. 14. CHEMONICS TECHNICAL PRACTICES | FINANCIAL SERVICES Mobile Money for Development Workshop: Tips & Practical Experiences from the Field Issues and Lessons Learnt from Pilot Tests Creating a sense of ownership/commitment among institutional partners Regular training Working with Working with networks can networks can Make use of customer/network be key to be key to meetings outreach outreach Testimonials from institutional partners Targeted promotions
    15. 15. CHEMONICS TECHNICAL PRACTICES | FINANCIAL SERVICES Mobile Money for Development Workshop: Tips & Practical Experiences from the Field Developing Mobile Money Ecosystems Commitment of Top Management at Institutional Partner/Mobile Money Issuer Development of Mobile Money Ecosystem Sufficient Cash-In/Cash-Out Agents Creating Awareness of the use of Mobile Money in the Rural Community Promote the Value Proposition for Institutional Partner & Clients
    16. 16. CHEMONICS TECHNICAL PRACTICES | FINANCIAL SERVICES Mobile Money for Development Workshop: Tips & Practical Experiences from the Field Financial Education • Supported by MasterCard Foundation through Microfinance Opportunities • Develop a financial education initiative that supports a more rapid expansion of MPB in rural areas by rural bank clients • Medium: wallet guides, flipcharts, video clips, etc…
    17. 17. CHEMONICS TECHNICAL PRACTICES | FINANCIAL SERVICES Mobile Money for Development Workshop: Tips & Practical Experiences from the Field Market Research Findings: What clients like Speed of transactions “Money can be sent and received fast.” Security or safety “Account is protected by PIN.” “No need to carry cash which might be lost or stolen.” “You are assured because there is confirmation.” Convenience “Can send money any time.” “Can do transaction without leaving one’s home.” “I do not need to fall in to get my salary.” “I can easily get the money at cash-in/cash-out outlets.” “I can transact even at midnight.” Cost “Low charges.” “Can save on transportation cost.” “Can save on time.”
    18. 18. CHEMONICS TECHNICAL PRACTICES | FINANCIAL SERVICES Mobile Money for Development Workshop: Tips & Practical Experiences from the Field Market Research Findings: Clients Concerns Risk “If you lose your cell phone or if your SIM is blocked, you will lose access to your e-money as well.” Reliability “Technical glitches” “Technical support for problems” “Sending the e-money to the wrong recipient” Misconceptions Misconceptions on time limits of e- money vs. airtime load
    19. 19. CHEMONICS TECHNICAL PRACTICES | FINANCIAL SERVICES Mobile Money for Development Workshop: Tips & Practical Experiences from the Field An Effective Financial Education Program can: • PROMOTE the benefits of shifting from traditional banking to mobile phone banking • ADDRESS the misconceptions that hinder uptake and usage • BE ANCHORED on merchants and re-sellers to teach clients and recruit potential clients
    20. 20. CHEMONICS TECHNICAL PRACTICES | FINANCIAL SERVICES Mobile Money for Development Workshop: Tips & Practical Experiences from the Field Mobile Money Now Accessible Via Multiple Platforms – Use Them ATM Debit Card Bank Account Mobile Phone
    21. 21. CHEMONICS TECHNICAL PRACTICES | FINANCIAL SERVICES Mobile Money for Development Workshop: Tips & Practical Experiences from the Field
    22. 22. CHEMONICS TECHNICAL PRACTICES | FINANCIAL SERVICES Mobile Money for Development Workshop: Tips & Practical Experiences from the Field Thank You http://www.mobilemoneyfordevelopment.wordpress.com/https://www.facebook.com/MobileMoneyForDevelopment/

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