Imagine the following scenario: It’s payday and you want to pick up your salary. But first, you have to navigate a series of deteriorating, hazardous dirt roads to get to the bank. It takes you a few days just to talk to a teller. When you finally do, the teller informs you that the bank is currently out of cash – you’ll have to wait some more. By the time you actually get paid, you’ve had to miss several days of work – and to top it all off, between bank fees (including bribes or unofficial fees to bankers and security guards), the cost of lodging, travel and food, you’ve spent 15 percent of your salary just to pick it up.
Tagged: mobile money
An Interview with
Carrie Hasselback, Project Director, Mobile Money Accelerator Program (MMAP), FHI 360
What is mobile money?
Mobile money is currency stored on your mobile phone. Typically, a customer will bring cash to a local agent who deposits the cash onto the customer’s phone in the form of mobile money. Agents are also able to withdraw money from a customer’s phone and provide cash. These agents, often local shopkeepers, are selected and trained by mobile network operators.
Why is mobile money important?
An overwhelming majority of Malawi’s population lives in rural areas, where agriculture is the source of income for more than 85 percent of the population, according to the Food and Agriculture Organization (FAO). A 2009 FinScope Demand Survey found that 55 percent of Malawians do not have access to any type of financial institution, and only 19 percent of the total population uses a formal bank. Because bank accounts are so rare, mobile money offers an accessible alternative for safely depositing, withdrawing, transferring and even saving money.
Why has mobile money been adopted so quickly in Malawi?
FHI 360’s Mobile Money Accelerator Program has been working to create an environment that is ready to receive and adopt mobile money systems. We provide financial literacy trainings that help increase understanding and acceptance of mobile money.
The Government of Malawi has shown its support by signing and participating in the Better Than Cash Alliance, which aims to transition government cash payments to electronic payments in an effort to increase transparency and expand financial inclusion across the country.
Like many countries, cash is an extremely common form of monetary transaction in Bangladesh, including among U.S. Agency for International Development (USAID) implementing partners. Paying for something as basic as participant expenses at workshops, for example, often entails a finance person from Dhaka, the capital, traveling to rural communities with a bag of cash to make disbursements directly. This method is costly (in terms of travel and per diem costs for the cash runner) and risky (in terms of potential for theft and graft) and can result in lost productivity.
The introduction of mobile money to Bangladesh in 2011 changed this equation by making it possible for implementing partners to send money directly to individual program participants and staff without leaving their desks in Dhaka. Mobile money is an emerging technology that provides convenient and affordable financial services through use of a mobile phone.
Having the option of using mobile money is great, but making the change to any new technology or process is rarely easy. And, unfortunately, there is no one-size-fits-all solution. Finding the right mobile financial service for a project’s needs is crucial but not the end-all. Staff and program participants need to understand the benefits of mobile money and feel comfortable using it.
An Interview with
John Zoltner, Technology Expert, FHI 360
What is mobile money? How does it work?
Many people in developing countries, particularly in rural areas, do not have bank accounts or live near a bank branch. It can be difficult and expensive for them to make simple financial transactions, such as cashing a government check. Mobile money allows people to use mobile phones or other mobile devices, which are increasingly more available, to transfer money and make payments or deposits.
The mobile money process is straightforward. Local stores and businesses serve as “cash-in, cash-out” agents. In general, when users get funds sent to their phones, they receive a code that they show to an agent. The agent finds the code in a system and then allows the user to withdraw the funds. When users do not withdraw all of their funds, mobile money functions like a savings account. Mobile money systems differ by country, depending on the regulations governing electronic payments. It is a fast-changing field, because a wide variety of mobile financial products, such as savings accounts, are just now becoming popular around the world.