Cash Transfers and Mobile Money: Making it Work

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:

1) Buy everyone phones – Not only is this expensive for the organization or donor, but once you start to give out free phones, there is an incentive for beneficiaries to under-report cell phone ownership because, well, who doesn’t want a free cell phone? This isn’t necessary a problem, but it must be taken into account in the planning and budget phases. Any money spent on purchasing and transporting phones is money that cannot be used for transfers themselves, which will decrease either the number of beneficiaries or the amount of funds that each beneficiary receives. Also, the same logistical challenges exist for giving out phones as for handing out cash, since now partners must find a way to acquire and transport phones in addition to organizing beneficiaries for the disbursement of phones. Therefore, this option is more attractive for programs where there will be multiple transfers to the same people over time (read: not one-time disbursements following a humanitarian crisis.)

2) Require everyone to buy phones – The problem here is that the cost of the phone will be a burden on the targeted individuals, who are both deserving of a cash transfer and who have not previously been willing or able to purchase a phone. One option is to create a payment plan where beneficiaries can buy a phone from a certain retailer and then have small payments deducted from their cash receipts until the amount of the phone has been fully paid. The benefits of having people buy their own phone are many, if they can afford it: it is cheaper for the implementing organization, beneficiaries can choose their own phone, and people are more likely to appreciate the phone and utilize it beyond simply receiving their cash if they are paying for it and therefore have a greater sense of ownership.

Even if everyone does have a phone, it is almost guaranteed that they do not all use the same company for their service provider. In this case, in order to send money to an actual mobile account, the organization can go back to options 1 and 2, to provide phones or require everyone to buy a phone (or a SIM, depending on whether the phones are locked) in order to get all beneficiaries using the same provider. However, NGOs with social missions are often hesitant to actively promote the services of one for-profit company over another. In order to avoid this, the organization will have to work with two or three mobile network operators, which will most likely have different payroll systems in place, again creating logistical and financial accounting problems for the implementer and raising the cost of the disbursement. This is currently the only option in Haiti, where both mobile money providers require recipients of funds to register for a mobile money account in order to withdraw funds.

In other countries, organizations can work with a company (such as Mobile Transactions Zambia) to send beneficiaries a mobile voucher, which contains a one-time unique transaction number that the user can redeem for cash at designated agents. In this case, a mobile phone is not necessary – only the transaction number. There are still challenges to this approach: delivering the transaction number to someone without a cell phone can still create logistical challenges, and the beneficiary must redeem the voucher for the entire sum of the transfer. This latter challenge poses problems for those programs whose objective is more than simply to deliver the cash. If there is a savings or financial inclusion objective, then it might be of interest to have all beneficiaries register for account with the ability to store value.

In conclusion, the benefits of security, convenience, and accountability are all very real; however, they cannot be considered without full recognition of the costs and the challenges involved in implementation. The good news is that most of these challenges are highly likely to diminish over time, as cell phone ownership spreads and mobile money services become interconnected. In the meantime, there are other options for reaching people. For example, in Pakistan, the government distributed cash aid to flood victims via prepaid Visa-backed ATM cards. Until cell phones are truly ubiquitous, mobile transfers need to be weighed carefully against other options that may be cheaper or more practical for distributing cash transfers.


- Chrissy Martin


27 August 2012 Submitted by Anonymous (not verified)

’ve heard that Fuzion Mobile is going to be rolling out something called Fuzion Mobile Wallet. It sounds very similar too. I purchased my phone through them and the prices were VERY reasonable for the phone and the cell plan I’m on is a third of what I used to pay when I was with Tmobile. Just a suggestion. I really like the idea of Fuzion Mobile Wallet. Already pleased with their cell service. Maybe contact that company and see if there’s a way they could get involved. They’re based in the U.S. though, so I’m not sure if they could help out there, but you never know.

27 August 2012 Submitted by Anonymous (not verified)

The Kenyan situation is very different. You can send money from one company to another. One does not need to be registered with a mobile company to receive funds via the mobile money system. The problem is in rural areas that have no electricity to charge the phones. Also there are areas without network coverage. SIM cards are cheap and can be shared by 2-3 people to receive funds. Illiteracy is another factor in rural areas.

27 August 2012 Submitted by Anonymous (not verified)

We’re please to post this comprehensive comment from Kokoévi Sossouvi, who was the Economic Recovery Program Manager for Mercy Corps for the last 18 months leading Mercy Corps’ Haiti efforts in small and medium entreprise support, microinsurance and mobile money, including mobile cash-for-work and humanitarian payments programming. Thanks Kokoévi!

I would like to point out that the obstacles to overcome lay not just as to whether humanitarian program beneficiaries ought to be provided with free phones or SIM cards nor whether NGOs should partner with one carrier to the detriment of another. On the contrary, if these were the only implementation issues or even the most pressing, one would be entitled to describe Haiti as the easiest environment to deploy such a complex leapfrog technology as mobile money.

To mitigate the concerns that Chrissy Martin’s post expressed with regards to phone access, NGOs can indeed provide their beneficiaries with SIM cards at very low costs to themselves and ensure a supply to handsets is available for use at the designated cash-out locations. With regards to interoperability, software developers should see a business case in developing applications that can allow multi-carrier payments using a single interface, by differentiating phone numbers by carriers and integrating into each carrier’s payment portal. Meanwhile, as a worst case scenario, as phone prefixes clearly discriminate carriers in Haiti, where there are only two mobile money services available, NGOs may easily manage two carrier-specific payment portals.

Instead, the reader should also be made aware of the challenges around:
 User identification
 Meeting regulatory requirements
 User training, product orientation and financial literacy
 Speed of ecosystem development

User Identification
It will come with no surprise that many Haitians lost their national identification card during the Jan 12, 2010 earthquake. Furthermore, even before the disaster, many did not possess just a critical document. The collapse of government buildings holding birth records further compounded this situation of limited national identification. However, traceability of the origins and destination of money transfers is paramount to prevent money laundering and the creation of money in the financial system. Thus, the first challenge for humanitarian and other actors willing to use mobile money to deliver payments lies in asserting the identity of their intended recipient.

Meeting Regulatory Requirements
User identification is the first regulatory requirement in mobile money to meet with Know-Your-Customer (KYC) and Anti-Financing of Terrorism and Anti-Money Laundering (ATF-AML) obligations. What is more, the size of the mobile e-wallet is currently set at 10,000 HTG maximum (250 USD). This limitation precludes large scale payment such salaries, rental subsidies or yearly school fees. Having said this, it must also be noted that the Banque de la République d’Haiti (Haiti’s Central Bank) has shown foresight in permitting what is commonly referred to as a ‘mini-wallet’ which allows for automatic registration on a mobile money system using the credentials supplied to register a SIM card at the time of purchase. T-Cash, the mobile money service of Voilà and Unibank was the first to offer this functionality to its subscribers. The mini-wallet could originally hold up to 2,500 HTG (62.5 USD) and now as much as 5,000 HTG (125USD), thus accommodation humanitarian cash transfers and small scale person-to-person payments. However, for the longer-term growth of mobile money usage, e-wallets need to be able to hold much greater amounts.

User training, product orientation and financial literacy
Humanitarian agencies interested to use mobile money to deliver cash transfers and capitalize on the benefits of security, real-time settlement and convenience are faced with, not only bringing their own staff up to speed with the technology but providing adequate end user training amongst a beneficiary population that may be illiterate, non numerical and/or using a mobile phone for the first time. International aid agency Mercy Corps implemented a number of cash transfer programs using T-Cash reaching well over 8,000 rural Haitians. Their experience in this area has shown a picture-based training methodology to be well suited to meet these learning challenges. Realizing that mobile money is a transformational financial tool with a strong potential to address some of the financial service challenges of the poorest and more vulnerable segments of the population, financial literacy training should be built into any humanitarian mobile money program to foster long term financial inclusion and deliver on the promise to “bank the unbanked”

Speed of ecosystem development
The chicken and the egg tale is particularly relevant to mobile money in Haiti where the deployment of m-financial solutions is at a very nascent stage. Faced with simultaneously building a strong pool of early adopters on the demand side and the required agent network on the supply side to guarantee adequate service provision, mobile money service providers can be challenged in growing the mobile money ecosystem at the pace and scale required to meet the demands of humanitarian agencies to provide mobile cash payment in under-served, hard to reach rural areas. Here as well collaboration is key. Through effective partnership with Voilà and Unibank, Mercy Corps’s ‘Kenbe La’ food aid program in St Marc (Artibonite region) supported ecosystem development through an m-commerce strategy where vendors are trained to accept mobile money as payment from beneficiaries (See e-Books 1 and 2).

- Kokoévi Sossouvi

15 November 2012 Submitted by Chrissy (not verified)

Hi Koko,

Apologies for the very late response but I just happened to see your comment now. I narrowed in on one issue with cash transfers for this blog post, but completely agree with all of your contributions for the many additional issues that are present in Haiti. The Kenbe La program did a great job of overcoming many of these challenges and providing a use case transfers via mobile money.

As you probably know, many organizations are now building on your work in Haiti, including Food for Peace and the Ti-Maman-Cheri program with the government. There are still many challenges, but developments such as the mini-wallet are starting to help. Hopefully, next year, when Digicel's mobile money service is re-launched with the benefits of T-Cash's agent network and experience, we will see rapid development in the mobile money market in Haiti (hopefully!)

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