Presentation on the Transaction Cost Index Study, a multi country study exploring the costs consumers face when making mobile money transactions, with research in Tanzania, Bangladesh and Uganda. Presented at the GRA & ICTD conference "Taxing Mobile Money: Lessons and Ways Forward".

1. F e b r u a r y 2 0 2 4
Measuring the True Cost of Digital Financial Services:
Transaction Cost Index
Year 1 Results
Francis Annan, University of California Berkeley

2. Motivation
Reduced poverty,
welfare
improvements
Take-up of digital
financial services
like mobile money
• Consumption smoothing
by sharing risk over
larger social network
• Shift to higher
productivity employment
• Migration to productive
urban centers while
remitting money home
Th e Tra n sa ct ion Cost
In dex ca n h elp
u n derst a n d t h ese
drivers of DFS t a ke-u p
I N T R O D U C I N G T H E T C I
Knowledge & perceptions
(digital literacy, trust in providers)
Product features
(interoperability, linkages to other
products)
Infrastructure
(device ownership, mobile
network coverage, agent network
coverage, failure rates)
Cost
(official fees, informal fees, non-
monetary costs costs)

3. Monetary Costs
High, informal, and unexpected fees can reduce
usage of financial services
Non-Monetary Costs
Non-monetary costs, such as limited
transparency and high failure rates, also harm
consumers and reduce usage
Study objective: We aim to
develop a cost-effective method for
monitoring these costs on an
ongoing basis
Transaction Cost
Index Study
The Transaction Cost Index (TCI) is a
multi-country study exploring the costs
consumers face when making mobile
money transactions, with fieldwork in
Tanzania, Bangladesh, and Uganda.
S E C T I O N 2 : T E X T L A Y O U T S
I N T R O D U C I N G T H E T C I

4. Mystery shopping by
local consumers
Mystery shopping visits with
mobile money agents
conducted by local consumers
Agents: N = 607
Shoppers: N = 1,940
Visits: N = 3,242
Mystery shopping by
enumerators
Mystery shopping visits with
mobile money agents
conducted by IPA enumerators
Agents: N = 1,227
Shoppers: N = 66
Visits: N = 4,423
Consumer
intercept surveys
Surveys of mobile
money consumers
Agents: N = 1,227
Visits: N = 2,043
Desk review of
official fees
Review of leading
mobile money providers’
published price lists
across 16 countries
Research Activities
I N T R O D U C I N G T H E T C I
Fieldwork carried out in Tanzania, Uganda, and Bangladesh

5. Desk review process
I N T R O D U C I N G T H E T C I
https://myvodacom
.vodacom.co.tz/as
sets/myvodacom/d
ownloadFile/16913
19178035.PDF
Carried out in 16 countries: Bangladesh,
Colombia, Côte d'Ivoire, Ethiopia, Ghana, Kenya,
Mali, Myanmar, Nigeria, Pakistan, Paraguay, Peru,
Philippines, Sierra Leone, Tanzania, and Uganda
Step 1: Identify leading mobile money operators in
each market
Step 2: Find price lists on provider websites
Step 3: “Scrape” data from price lists
Step 4: Standardize pricing data across providers
and countries

6. Findings

7. Research questions
● What are the leading hidden costs consumers face, including limited
pricing transparency, overcharging and non-monetary costs?
○ How common is it for consumers to face these challenges?
● How do costs vary by data collection method, country, urbanicity, and
consumer gender?
F I N D I N G S

8. Desk review findings
• Price lists are generally available on
provider websites, with a few exceptions.
• Many price lists can be difficult to find: 30%
of providers don’t have a link to their price
list on their home page
• Regulations typically require that prices be
made available to consumers but are silent
on locations and channels
Fieldwork findings
• Display of price lists at agent locations
varies by country
• Verbal disclosure of prices is uncommon
Prices for mobile
money transactions
are not always easily
accessible to
consumers.
S E C T I O N 2 : T E X T L A Y O U T S
F I N D I N G S 1 : P R I C E T R A N S P A R E N C Y
59%
12%
99%
7%
82%
4%
Price list displayed Verbal disclosure of price
Uganda Bangladesh Tanzania

9. F I N D I N G S 2 : M O N E T A R Y C O S T S
Official Price Across Four Core Transaction Types

10. F I N D I N G S 2 : M O N E T A R Y C O S T S
Agent overcharging rates are twice as high in Uganda as
Tanzania or Bangladesh
5%
19% 7%
Note: Averages reported across consumer surveys and all mystery shopping visits.
Tanzania Bangladesh
Uganda

11. Urban consumers
In Tanzania, urban consumers are
12 percentage points more likely
to be overcharged by an agent
than rural consumers. No
significant difference in
Bangladesh or Uganda.
Gender
No signficant difference in
overcharging by customer
gender
Larger transaction values
In Tanzania, larger valued
transactions are 3 percentage points
more likely to be overcharged, while
in Uganda large transactions are 4
percentage points less likely to be
overcharged
3-4%
12% No
difference
Note: Regression results, control for data collection method, transaction type, and provider.
F I N D I N G S 2 : M O N E T A R Y C O S T S
The types of transactions most at risk of overcharging varies by
country

12. 21%
18%
61%
Note: Data from mystery shopping visits only.
Tanzania Bangladesh
Uganda
Approximately 1 in 3 attempted transactions were not
completed due to absent agents or transaction failures
24%
11%
65%
15%
13%
72%
F I N D I N G S 3 : R E L I A B I L I T Y

13. Liquidity constraints are the leading
cause of failed transactions
F I N D I N G S
Note: Average across all methods.
F I N D I N G S 3 : R E L I A B I L I T Y

14. Consumers spend more than 30 minutes on average to complete one
successful transaction, surpassing the direct monetary cost
F I N D I N G S
F I N D I N G S 3 : R E L I A B I L I T Y

15. Expert predictions are sometimes worse than what’s
observed in the field
F I N D I N G S
F I N D I N G S 4 : R E L I A B I L I T Y
Agent
absence
Success rate
(unconditional)
Overcharging
rate
Price list
posted
All countries pooled
TCI fieldwork 20% 66% 10% 80%
Expert prediction
(N = 32)
20% 72% 32% 59%
Bangladesh
TCI fieldwork 15% 72% 5% 99%
Expert prediction
(N = 22)
16% 75% 43% 48%

16. What’s next
Right now: Visit www.poverty-action.org/transaction-cost-index
to find:
● Our full Year 1 report
● Country briefs for Bangladesh, Tanzania, and Uganda
● Our underlying data, as well as an interactive dashboard
displaying listed mobile money prices across 16 countries
Soon: Second year of data collection focused on local consumer
mystery shopping. Look for results early next year
Later: Expansion of the TCI. Periodic data collection over a
longer period and larger set of countries would yield valuable
insights. Interested? Get in touch!
F I N D I N G S

17. Thank you!
Francis Annan, University of California Berkely
fannan@berkeley.edu