Archive for: Mobile Phones

Joep Roest is a Financial Inclusion Specialist with the Pacific Financial Inclusion Programme (PFIP). PFIP is a Pacific-wide programme helping to provide sustainable financial services to low income households. It is a joint project of the UN Capital Development Fund (UNCDF) and the United Nations Development Programme (UNDP) and has received additional funding support from the Australian Agency for International Development (AusAID) and the European Union. The programme is based at the UNDP Pacific Centre in Suva Fiji.

Papua New Guinea (PNG) is a country so complex it defies easy description. A place of such diversity it hosts 850 distinct languages for a population of about 7 million. The population figure, mind you, is only a guess as nobody really knows. The landscape is so rugged that the capital, Port Moresby has no road link to any other city. To get anywhere in PNG, you walk, fly or take a boat. As such, it was only in the 1930’s that the first Western gold miners started to penetrate the interior and “discovered” the densely populated highlands where the bulk of the population lives. The miners were a sign of things to come as PNG rides the crest of a gargantuan resource boom. Over the last few years, PNG has become notorious for its high levels of crime which is a major preoccupation of all who live and work there.

State of play in PNG

Against the backdrop of PNG’s security issues and difficult geography, a means to save, store and send money is desperately needed. Mobile money looks to be the answer and typically for PNG, things have developed in their own unique way. In the last half year three providers have launched very distinct offerings, all on the same Telepin platform. Interestingly, it is not a line-up of the usual suspects as both the postal service and an MFI have entered the fray. PNG now plays host to Post’s Mobile SMK, Nationwide Microbank’s MiCash and Digicel’s (of Haiti fame) Cellmoni, with more rumoured to be waiting in the wings.

Both Post and Digicel have opted for a virtual wallet product while Nationwide has developed a real-time linkage into their core banking system. To make matters even more interesting, both Post PNG and Nationwide Microbank have partnered with Oceanic Communications Limited (OCL) to manage their agent network. Confused yet? It gets better; OCL does most of Digicel’s airtime distribution yet does not provide agency services for Cellmoni. That is, at least, where it all stands now.

Airtime distributor

As we all know, mobile money is hard, especially in places like PNG. A successful mobile money operation has to be excellent at everything, all the time. Building and maintaining an excellent agent network may be hardest part of all. It takes tremendous investment in time, resources and energy for it to work. Unfortunately there is no quick fix or technological silver bullet that ensures success. It is a long, inglorious slog. Who wouldn’t want to farm it out?

That is where OCL comes in. As an airtime distributor they seem ideally placed to play a role. They make money by getting airtime (electronic and scratch) out to the furthest reaches of this challenging country and take cash in return. Airtime distributors are operationally minded businesses where solid processes are the cornerstone of profitability. In OCL’s case, they have established relationships with 12,000 resellers. From their interactions with these resellers, they have years of data that can help predict liquidity needs and identify resellers who are prime candidates for becoming successful agents. Admittedly, airtime distribution is a far cry from mobile money agent management, yet many of the same capabilities come into play.

The opportunity

OCL is now doing much of the hard stuff on behalf of its two partners. They manage agent recruitment and training, agent monitoring and liquidity management. This frees up the mobile money operators to concentrate on their offerings. There is also the compelling possibility that OCL could drive agent interoperability and standardization of the agent experience across partners. It would make their management of the network simpler, drive down their costs and make it easier to recruit agents. This seems especially likely, as all the current products are on the same platform. Both agents and customers stand to benefit. Agents won’t have to maintain separate balances. Customers will benefit from a broader agent network, unified customer experience and an even playing field for all competitors, ensuring competitive offerings.

Will we see OCL shape mobile money in PNG due to their central role? More generally, will third-party providers become a force for standardization and interoperability in other markets?

So far…

It seems to be working. OCL’s two partners have been able to quickly expand far beyond their brick & mortar footprint. Nine months in, customer growth is strong and accelerating. If developments so far are anything to go by, there will be a lot more to write about over the coming months.

- Joep Roest -

This is a guest blog by Ignacio Mas, an independent consultant who has written extensively on mobile money.  He is former Senior Advisor with the Financial Services for the Poor team at the Bill & Melinda Gates Foundation and at the Technology and Business Model Innovation Program at CGAP. 

Mobile money feels right for mobile network operators (MNOs): it is an extension of the basic prepaid platform and distribution networks they already operate. Mobile money does require greater surveillance against fraud and money laundering measures, but it’s all fundamentally about secure messaging.

From a telecoms regulation point of view, mobile money is another instance of a value added service and those tend to receive a light regulatory treatment. All the specific regulations that pertain to the safety and soundness of mobile money –who can issue accounts, conditions of service, data security and privacy standards, supervisory treatment, consumer protections, etc.— should be the domain of the banking regulator.

But MNO participation in retail payments presents competitive challenges which banking and telecoms operators will need to monitor closely and perhaps address jointly. The problem is that MNOs are both component suppliers and direct competitors to banks wanting to offer mobile financial services. There is a risk that MNOs transfer market power from their core market to the emerging retail mobile payments market, in such a way as to effectively shut banks out of mobile payments. In the future, most financial services can be expected to have a mobile component, so such a situation would have severe implications for competition in the financial inclusion space more broadly.

This is quite understandably spooking many banking regulators into preventing MNOs from playing directly in the payments/banking space. That’s unfortunate, the fact is that we need to enlist MNOs to push the frontiers of financial access, while guarding against any potential abuses of market power on their side. We need to allow MNOs to contest the market without dominating it.

Authorities need to identify specifically those components of mobile communication services over which MNOs have bottleneck control and which are essential for the provision of mobile financial services. One asset MNOs control is the SIM card – a smartcard which identifies every mobile user. Access to the SIM card provides benefits in terms of security, since SIM cards may contain pre-loaded security keys which can implement end-to-end data encryption from the mobile handset all the way to the transaction authorization server. Access to the SIM card might also enhance the usability of services, since the SIM card controls the on-the-phone menu onto which mobile money can be incorporated directly.

However, there is no precedent worldwide for establishing equal access rules to SIM cards, as unbundling the SIM card might have severe implications for the security of mobile networks. In any case, the problem of proprietary control over the SIM card is mitigated if banks can build an equivalent service through other means.

MNOs also control the phone’s communications (or bearer) channel. The more common channels, such as voice, SMS (the protocol underlying text messaging) and packet-data (under various flavors such as GPRS, EDGDE, 3G or HSDPA), are broadly made available by MNOs under standard commercial offers. In this case, it should be fairly easy to establish and monitor a requirement of non-discriminatory access by banks and third-party providers of mobile money services to these channels. Since the market for these bearer services is sufficiently large and lucrative for the MNOs, we can expect MNOs not to over-price their voice and SMS services or to degrade the quality of their service specifically to lock out banks from using them to construct competing mobile money services.

The challenge is with a less common bearer service called USSD (Unstructured Supplementary Service Data), which is not widely commercialized by most operators. (You may recognize it as the service you use when you are asked to dial a sequence of numbers starting with star and ending with hash after you buy a scratch card.)  The session-based nature of USSD presents two strong advantages over SMS as a channel for mobile financial services: it lends itself to implementing network-based menus which makes it easier to use, and it entails no storage of messages anywhere which makes it more secure. It may also be more feasible than using voice in countries where voice tariffs are still expensive, or packet-data in countries where most people still use simple phones. For banks without access to the SIM card, USSD may be the only realistic option.

In this case, simply stating non-discriminatory access to the USSD service may not suffice as long as USSD is used primarily for banking services, since MNOs may price it specifically to preclude competition from emerging in mobile financial services. Therefore, the telecoms regulator ought to monitor USSD pricing to see if it bears a reasonable relationship with the price of alternative access channels such as voice and SMS. Moreover, an operator might be forced to offer USSD to other mobile financial service providers provided that: (i) the operator has an installed USSD capability (even if it is only used for the MNO’s own purposes, such as airtime top-ups), and (ii) the operator is offering its own mobile financial service through a proprietary channel (e.g. SIM-based) not available to others.

These actions –monitoring MNOs for potential discriminatory pricing and service quality on voice and SMS, and monitoring USSD offers to prevent undue denial of service or pricing that does not bear sufficient relationship with the pricing of other channels— fall in the first instance in the domain of the telecoms regulator, since these are purely about the channel and not higher-level financial services. Of course, the banking regulator could play a vigorous role in helping banks present their case to the telecoms regulator if they feel discriminated against, or to competition authorities if the situation warrants escalation or the telecoms regulator lacks the necessary powers to intervene.

Authorities ought to pass a clear and strong message that MNOs can play at the financial services layer if they play fairly at the communications layer. This might be expressed around a protocol or memorandum of understanding signed jointly by the banking and telecoms authorities, stating how the various authorities will work together and laying out the competition standards to which they will hold MNOs.

This regulatory vigilance will be essential until such time when everyone has a smartphone and the phone (rather than the SIM card) can perform locally all security and menu presentation services. At that point, banks will have credible options to build their own mobile financial services with minimal control by the MNOs. Banking will just be an app on your phone, which anyone can download. That competitive nirvana is now more imaginable than ever, but it is still a ways off in developing countries.

- Ignacio Mas

Pablo García Arabéhéty is an independent consultant who focuses on business model innovation in the mobile and environmental industries.  He has previously worked at the Organization of American States and the Innovation Lab at the Inter-American Development Bank.

Last December, Starbucks announced that during 2011 it processed 26 million transactions in the US through its mobile payment application. While this news was anecdotal for traditional financial service providers such as banks and credit card companies, it showed mobile network operators (MNOs) the speed with which they can be left out of the business. Their only income in this case was the data traffic generated to complete the transactions.  It is not news that the Average Revenue per User (ARPU) continues to decrease and mobile financial services are a great opportunity to reverse this trend. In mature markets such as Western Europe, the decline in ARPU has already led to a reduction of revenue. In Latin America the continued expansion of the subscriber base still enables revenue growth, but this trend will not last forever.

Source: Strategy Analytics 2012

I recently met with Tom Elliot from Strategy Analytics, a Boston-based consulting firm to discuss these issues.  Tom stressed that nowadays it is hard to find an MNO that is not developing some kind of financial service, but that nonetheless the business model is still uncertain, and what works in certain contexts is hard to replicate successfully in other markets.  Strategy Analytics’ forecasts for 2016 (see charts) do not show many signs of innovation in the industry. Their outlook is rather an inertial one where the aggregate income of the industry will flatten or decrease according to the region. These figures are more or less within the consensus of the mobile industry consulting world.  However, the promise of financial service provision is enticing for MNOs when properly implemented. M-Pesa, Safaricom’s mobile money service in Kenya, contributes 17% of total ARPU, which represents 53% of non-voice ARPU. While Kenya has its own particular market characteristics, we can use this as a best case indicator of the potential of mobile financial services. A 17% increase in ARPU in 2016 in the case of Western Europe, for example, would push income levels above those of 2007.[1]

The threat to this promise is the model à la Starbucks, where MNOs become dumb pipes. The model for obtaining significant revenues must be one in which the carriers are efficient players of the ecosystem, beyond the mere provision of connectivity to mobile phones.  Consequently, the construction of a model that avoids treating carriers as dumb pipes in the developing world requires important definitions of the core variables of the ecosystem. Depending on the definitions of these variables, very different business models can be shaped: from a scheduled savings product for house improvement targeting the unbanked, to the Starbucks model mentioned above. In each of these models, the players of the ecosystem have different roles: banks, MNOs, retailers, credit cards, etc.   In Latin America, at the time of shaping this ecosystem of mobile financial services, carriers have decided to split the risk and the investments by partnering with banks, credit card companies or both. The two most significant initiatives in the region are Wanda, a joint venture between Telefónica and Mastercard and Transfer, another JV between America Móvil and Citibank, which officially launched in Mexico this past month.

Source: Strategy Analytics 2012

The uncertain viability of the different business models explains much of the reasoning behind this decision. However, these partnerships have direct implications when defining the basic variables mentioned above, which need to be negotiated and agreed with the partners.  Banks for example, can be very good partners for cash management and identification of customers, but not so effective for other tasks. A report published this year by the World Bank, puts Latin American banks among the most expensive in the world. Expensive partners might be reluctant to embark in low margin/high volume business models. Experience shows that banks have yet to reach out with a value proposition to the 50% or 60% of unbanked households in Latin America.  On the other hand, credit card companies can be great allies for mobile payments and short-term loans, but their record in offering other financial products such as savings products is lean.

There is still little evidence in LAC to establish the conditions under which these associations can be functional to the carriers’ need to supplement their declining ARPU.  But already some points are clear. Carriers are those with the most to gain (and to lose) in this bet on mobile financial services. Their partners do not have as much at stake. Some results that would be catastrophic for MNOs, such as the Starbucks model, would leave their partners relatively well positioned.  In an industry with the current volumes exhibited in Latin America, there is ample space for a wide array of players to explore the business opportunity to provide mobile financial services for the base of the pyramid, which will hopefully result in a more tailored provision of services to those who most need it.

 

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[1] Strategy Analytics 2012

Nick Hughes and Gautam Ivatury are two of the founding members of Signal Point Partners, a company created in 2009 to build innovative mobile services in emerging markets. Nick was previously at Vodafone, where he started M-PESA, taking it from a concept to a multi-million-dollar business in five years. Gautam’s previous role was leading the technology program at CGAP, where he focused on branchless and mobile banking.

When we launched Jipange KuSave – a mobile-only savings product – in Kenya in early 2010, our goal was to out-compete the mattress. Back then, Safaricom’s M-PESA service was in hyper-growth phase and ramping up to become the de facto national retail payment system. But even more exciting was M-PESA’s potential as a pervasive and low-cost delivery channel for a wider set of financial services.

With this in mind, we decided to attempt for savings what M-PESA had done for money transfers – get millions of Kenyans to abandon informal mechanisms and instead become our paying customers. But if Kenyans were going to save with us instead of the mattress, we’d need to solve two challenges.

First, a ‘traditional’ bank-type savings proposition would never work. Poor people have never abandoned the convenience and enforced discipline of informal savings services for a couple of percent interest.  In Jipange, the combination of micro-loans and savings in a structured program met several customer needs, notably the need for cash when cash flow is low (liquidity) and steady progress towards a lump sum (a savings goal).

Second, our costs would need to be radically low. As ING Direct had shown, “pure” mass-market savings plays can make money, but only at high volumes and low margins. And that was in developed markets with larger account balances. For us to succeed, we would need to “throw out the rulebook” and design from scratch the most efficient and lowest-cost processes to manage relationships and transactions.

With our two “first principles” in mind, we gathered the essential ammunition for an attack on the mattress:  a radical product design, drawing heavily from Stuart Rutherford’s work; a set of web-based processes to run the product solely via M-PESA (limited physical contact with customers); a stellar project lead to manage implementation; and passionate, risk-seeking funders in CGAP and FSD Trust Kenya.

Interested readers may find it useful to read more about our product development and trials here in MIT Innovations. Also, this evaluation produced by FSD Kenya. In short, the Jipange KuSave product gave customers small amounts of credit at zero interest, while placing a portion of the credit into a “forced” savings account. As customers repaid the credit at whatever speed and in whatever amounts they wished, they became eligible for a bigger zero-interest loan. By borrowing multiple times and being forced to save a portion of each loan, they gradually accumulated savings.

The short version of our battle report is this:

1. Customers are hungry for better ways to save. They deal with cash flow complexity everyday and use a range of high cost / high risk methods to achieve liquidity. Some product designers would consider blending credit and savings as too complex – that was not our experience.  Clear, structured program, yes – but too difficult for customers to grasp, no.

2. Silicon Valley-style discipline and lean startup principles are keys to success. This starts and ends with customers. We quickly acquired a first trial cohort and modified and iterated the ‘offer’ on the back of real evidence from users.

3. A brand-new, mobile-oriented deposit-taking institution has the best chance of beating the mattress. This is perhaps the most difficult stumbling block on the way to scale. Only a regulated institution can take deposits — but hungry, highly innovative regulated institutions are rare beasts.

In this fourth post in our series on interoperability, we describe interoperability at the customer-level. Read the first three posts here.

One agent. Five mobile money services (Photo taken by Ben Lyon of Kopo Kopo near Geomaps Centre in Nairobi)

In our work on interoperability, we find that there are some questions that we are unable to adequately address at the platform and agent levels alone. For instance, the opening of USSD gateways by mobile operators may allow customers of one operator to access services of another operator without either platform interconnection or agent sharing.

We identify two interoperability scenarios related to the mobile handset:

1. Customers can access their account through any SIM on the same network. For instance, one service in East Africa allows its customers to access their service from any handset as long as it is on their network.

2. Customers can access multiple accounts on one SIM. For instance, SMART in the Philippines allows customers to access SMART Money on their SMART SIM, as well as access accounts with various banks through different enabled interfaces.

Allowing customers to access their account via other SIMs or other accounts via one SIM increases the potential size of the market and increases customer convenience. In the latter case, providers may fear that customers will readily switch to another provider. MNOs run the risk that another service accessible to their subscribers will cannibalize their own service. Providers with large market share, in particular, may be less inclined to allow customers of other services to access their accounts. In addition, number portability has made it easier for customers to switch telecom providers.

Mobile money and the link between the mobile phone number and mobile financial services are supposed to help retain customers. Even if providers permit access to other services, they may use pricing, marketing and other features to try to keep customers from churning (e.g., make it hard to find the other service on the menu).

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This is a guest post by Peter Goldstein and Caldwell Bishop of InterMedia. Peter is Director of Communications for InterMedia and Project Director of AudienceScapes, an African research program and online knowledge center for the global development field funded by the Bill & Melinda Gates Foundation. Caldwell is a communications intern at InterMedia and is currently pursuing a Masters in International Development at George Washington University. 

We all remember the devastating 7.0 earthquake that struck Haiti in January 2010 reportedly destroying about one-third of the country’s bricks-and-mortar bank branches, limiting Haitians’ ability to send and receive money transfers, cash checks, or simply access much-needed cash resources.

In June 2010, the Financial Services for the Poor initiative at the Bill & Melinda Gates Foundation partnered with USAID on the Haiti Mobile Money Initiative (HMMI), featuring a $10 million fund to provide incentives to mobile service providers to quickly launch and expand m-money services. Notably, Digicel, Haiti’s leading mobile provider, won the first-to-market prize of $2.5 million in January 2011 after launching its Tcho Tcho Mobile service. Soon thereafter, Voila, Haiti’s second largest mobile provider, released its T-Cash m-money service and received a $1.5 million USD second-to-market award. The CGAP Technology Blog has had several posts on this initiative (here, here, here, here, and here).

To help monitor the impact of the HMMI as well as m-money service use and financial access in general, the Gates Foundation commissioned InterMedia to design and conduct a series of household surveys of Haitian adults (aged 18+).  The first  Haiti Mobile Money Tracker (HMMT) survey was conducted in March 2011, in the early days of m-money usage, and sampled all ten Haitian administrative departments based on figures from the latest census in 2003. Follow-up surveys will be conducted to establish usage trends – hopefully based on a more up-to-date 2011 census.

InterMedia’s HMMT Online Data Analysis Tool allows financial access practitioners and stakeholders to dive into the survey data themselves in a user-friendly way. The combinations of financial, mobile and demographic data are easily cross-referenced to support project planning and analysis.

Meanwhile, the first survey yielded some helpful insights and provided rare baseline data for a mobile money deployment. Here are some of the highlights:

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Everyone is always talking about trying to move the branchless banking industry beyond just payments. Those of us concerned with accelerating “real financial inclusion” long to see credit, savings and insurance products pushed over new delivery channels. But is it possible that there’s still work to be done within the payments space itself, just diversifying a bit beyond simple P2P transfers?

For example, I’ve been hearing a lot of talk recently about really trying to crack the nut on merchant payments. Branchless banking providers see this as a huge opportunity not only for increased transactions (and therefore revenue), but also as a way to solve some of the tricky problems around liquidity management at agent locations when more people use electronic value for direct purchases instead of just cashing in and out. But how do small merchants respond to the possibility of being brought into the formal economy through using a traceable payments service? Will merchants and customers be willing to pay a fee to transact electronically instead of in cash? These are just a couple of the open questions that still need to be answered.

I ran across the organization Venture Capital for Africa (VC4A) at a recent conference in Ethiopia. One of their recently profiled ventures is addressing some of these questions around moving past person-to-person transfers to merchant payments and other business transactions. The start-up Yo! Payments in Uganda is trying to connect the ecosystem and facilitate mobile money as a real “medium of exchange.” Read about some other pretty cool startups in the African mobile market here.

What about even fancier transactions than just merchant payments, like investments? At a recent African bonds market workshop in Nairobi, discussions involved the possibility of allowing mobile phone users to buy Treasury bonds through mobile money transfers. I wouldn’t bank your investments on this yet though, as the article was clear that “details are yet to be worked out” and this seems to be the sort of transaction where the devil is indeed in the details.

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Chrissy Martin is currently a Senior Consultant at MEDA. Previously, she worked for 12 months as the Product Manager for Digicel in Haiti, which has rolled out a mobile money service called TchoTcho Mobile. Through both Digicel and MEDA, Chrissy has worked with several NGOs that are interested in mobile money services to make payments to beneficiaries of cash-for-work programs. She outlines some of practical challenges that have to be overcome to make this a reality.

Mobile Money in Haiti

There are many reasons to be excited about mobile phones as a way to distribute cash transfers, such as government payments or NGO cash-for-work programs. First, cash transfers are often sent to groups of people in multiple locations, and it can be easier to reach them via mobile than to bring them together in one place. It is also easier to track payments if they are sent electronically, which can reduce corruption and increase confidence that the right amount of money ends up with the right individuals. A third possible benefit is that relying on a network of mobile money agents who already handle cash will increase security over creating new systems for transporting cash. This was the situation in Haiti, where cash-for-work payments were made on-site at camps, which created a security risk for the bank employees who had to stand with and distribute large amounts of cash in crowded, outdoor locations. For these reasons – the potential to have a more convenient, secure, and traceable method to distribute payments – mobile cash transfers have been attempted in multiple countries from Pakistan to Niger.

Unfortunately, implementation on the ground often proves to be far more difficult than it seems at first glance. The first and most obvious challenge: not everyone has a mobile phone, let alone an account linked to their phone which can accept fund transfers. Despite all of the justified excitement over the rapid growth of mobile phones worldwide, in any given developing country a large minority of people may still not own a phone, and these people are likely the marginalized populations that are often targeted by social cash transfers. In this case, an organization (NGO or government entity) planning to implement such a program has a few choices:

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On a recent visit to Bangladesh Sarah Rotman and I met with Post Office Director General, Mobasherur Rahman, at his office in the middle of busy downtown Dhaka to hear about his foray into the world of branchless banking.

Rahman escorts us through winding corridors, deep into the heart of the Bangladesh Post Office headquarters, to a room unlike any other in the enormous building. Outside an innocuous looking door are about twenty pairs of shoes watched over by a small security camera. We were politely asked to remove our shoes and were shown into the room.

The Post Office now offers two branchless banking services. The longest established service, which was launched in March 2010, is the Electronic Money Transfer Service (EMTS) which allows customers to instantly send money from one branch to a friend or relative who can pick up the funds at 2,000 of the 10,000 post office branches. EMTS, it is envisaged, will soon replace the traditional money order. Post office staff use either a web interface, for those with internet connectivity, or a menu on a specially equipped mobile phone to key in information about the sender and receiver. There is also an option for a free text to be sent to the recipient notifying them of the transfer.

As we enter we are greeted by a blast of icy air from a room where the environment is carefully controlled – other post office staff have to brave the Dhaka heat and humidity with only the aid of a fan. In front of us is a small call center where half a dozen people are answering questions from post office staff and customers about the service. The other half of the room is taken up with huge server racks and we watch as transactions are processed, flashing up on the screen for a few seconds before the next transaction takes its place. Over two million transfers have now been carried out and the system now processes 14,000 transactions per day. As if to answer our questions about what happens in the event of a power cut, the lights momentarily dim and we hear a generator automatically start up in the background. The servers keep humming throughout and there is no let-up in the transactions popping up on the screen.

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Fiji G2P payments (courtesy of UNCDF's Pacific Financial Inclusion Programme)

Over the last couple months, we’ve run a series profiling different government payments programs that have innovated on their payment mechanisms and in some cases linked payments to financial services. We looked at the case of UBL in Pakistan making payments to flood victims. We profiled GCASH using GCASH REMIT to make payments on behalf of LandBank to rural beneficiaries of the 4Ps program in the Philippines. We featured Colombia’s Familias en Accion program that has contributed to the build out of banking correspondents in the country and is testing interesting ways to incentivize savings. We discussed the HSN Programme in Kenya and how Equity Bank is making payments to a very rural area in northern Kenya via smart cards and agents. Finally, we looked at the new G2P program in Fiji offering payments to beneficiaries through accounts offered by Westpac. Of course, we could have profiled many more schemes in countries like India, Mexico, South Africa, Dominican Republic, and others.

These examples are diverse as much as they are similar. Some of them are still in a pilot phase (such as GCCASH), while others are at a national scale (such as Familias en Accion). Some of them are using card-based solutions (such as the HSN Programme and Familias en Accion), while others are experimenting with mobile phones (such as GCASH). Some of them are distributing a payment based on certain conditionalities (such as the 4Ps program in the Philippines and Familias en Accion), while others are distributing unconditional cash transfers (such as in Fiji and the HSN Programme). What are some observations and lessons we can gather from these examples and from others around the world?

1. The link to financial inclusion is one that can often get forgotten in the quest for payment efficiency. Social protection programs rightly have the objective of making payments in a timely, efficient and cost-effective manner. While they often appreciate the link that financial services can offer to the beneficiaries, when push comes to shove, this will get sidelined if it becomes too complicated or costly to implement. Therefore we see that while the schemes in Pakistan and the Philippines have done an excellent job getting payments (and in Pakistan emergency payments no less) to poor beneficiaries, there is not yet a link to financial services. While this may be an added feature in the future, these examples should encourage all of us with a specific interest in financial inclusion to be deliberate and clear in our interaction with G2P partners about our real goals. Read the rest of this page »