Better Than Cash: How Governments, Donors, and the Private Sector can support Mobile Money & Mobile Banking

During the 2nd Indian Ocean / South Asia Mobile Payments & Banking Summit 2013, I had the honor of sharing some experiences and updates on the Better Than Cash Alliance and how this can better support the expansion and take up of mobile banking, mobile money, and mobile payments. Following the conference in Bangladesh, I was scheduled to share this presentation during the MobileMoneyExpo in Lagos, Nigeria.  Unfortunately, I was a bit late due to a delay in the processing of my visa and instead, my colleague, Anthony Petalcorin was able to present on my behalf.  This presentation was an update on the Better Than Cash Alliance and experiences in the field shifting to mobile money and electronic payments.  Anthony and I were also able to share some of more details about experiences in countries such as the Philippines, Afghanistan, and Kenya where we are seeing an increase in mobile money and mobile banking services being supported by collaboration between banks, mobile money issuers, the private sector, and donors.

As we shared in the presentation in Dubai, the purpose of the Alliance is to create a global movement to shift from cash to electronic payments.  Billions of dollars in cash payments are made every day in emerging and developing economies for salaries, supplies, pensions, social welfare, relief and development efforts.  By shifting to electronic payments via mobile money or mobile banking services, both the payee and the payer can benefit.

The main benefits include:

Cost Savings: decreasing the cost of cash or check payments.

Transparency: increasing accountability and tracking as well as reducing corruption and theft.

Security: typically safer and faster, especially in high crime areas.

Financial Inclusion: accelerating greater access to financial services.

New Market Access: opening doors for accepting electronic/digital payments for businesses that were previously excluded from these opportunities in the past.

Some of the examples of cost savings include USAID/Kenya’s Transition Initiative (KTI) which saved almost 60% of operating costs by shifting from cash payment to using MPesa mobile money and the use of GCASH mobile money services in the Philippines which helped the government to quickly and efficiently disburse over one hundred million dollars in conditional cash transfers.

There are also several good examples of how mobile money and electronic payments can improve transparency including the example of the National Police in Afghanistan who received their salaries via mobile money and realized that their take-home pay was now 30% greater than before due to elimination of the corruption in the previous cash disbursement system.

Faster and more secure payments are also being seen in places like Haiti where electronic vouchers and mobile money transfers cut down the time of payments. In places like the Philippines, clients of rural banks in remote areas that used GCASH mobile money for remote withdrawals not only saved time but also found mobile money more secure than traveling over land with cash.

We are also seeing the potential to utilize electronic payments to increase financial inclusion. In countries such as Peru, recipients of electronic social welfare payments now have the opportunity to save and build their assets.

Mobile money and digital payments also open up new market access for services. In Ghana, over 300,000 people were able to get access to insurance to help them cover funeral expenses and in the Philippines, BPI Globe BanKO has opened up more agent locations in one year than any other bank in the country. In addition, the bank has opened more than 200,000 mobile money-enabled bank accounts in its first 8 months of operations and projects to reach 1 million clients in 2013.

While electronic payments, including mobile money, are not silver bullets to ending poverty they can provide a range of benefits that cash transactions cannot.  As banks offering mobile banking and mobile money services look for ways to better promote uptake, the new Alliance offers one way to do this that can benefit all parties.  Currently, the Alliance is helping to advocate a shift in government benefits, humanitarian and development assistance, payroll and supplier payments from cash to electronic payments including mobile money.

As we heard during the Summit in Dhaka, USAID and the United Nations Development Program have been supporting the Government of Bangladesh under the Access to Information (A2I) Programme which is promoting the increased use of ICT for Development including mobile banking.  By collaborating with programs and initiatives like this, especially with institutions such as USAID and the UNDP which are founding members of the Better Than Cash Alliance, mobile money providers can leverage this concerted support to better promote a shift to mobile banking.  This is especially important if more government payments can be transferred to recipients via mobile money and mobile banking.

Also, in countries such as Nigeria where USAID and other donors have a large presence, a more concerted collaboration to support the transfer of government and donor funded programs via mobile money and mobile banking services can support faster uptake and better promote mobile payment ecosystems in areas that would have been difficult for banks and mobile money providers to reach without this collaboration.

For interested governments, development organizations or private sector institutions interested in joining the effort to promote electronic payments, including mobile money payments, you can easily apply to join the Better Than Cash Alliance by applying on their website here.  I also encourage mobile money providers to improve their systems to make them easier to support bulk payments and share this information and your interest in working with the Alliance and any of their collaborating partners.

In upcoming blogs, Anthony Petalcorin and I will be exploring some of these opportunities in several countries, especially Bangladesh and Nigeria, so please subscribe to receive regular updates or like our Facebook page.

Related:

Better Than Cash Alliance: Updates during the Connected World Forum 2012

Mobile Money for Development: Experiences from Kenya, the Philippines & Afghanistan

How Mobile Money Saved This Project 60% in Grant Operating Costs

The Better Than Cash Initiative: Experiences Using Mobile Money in the Field