Helping Smallholders Buy Inputs, One Scratch Card at a Time

To a farmer, there is very little that is appealing about hiding cash at home. The farmers that we work with at myAgro are well aware of the risks of saving large sums of cash at home, including flood, theft, fire, social pressure and temptation. Still, despite these extraordinary risks and pressures, why do many farmers choose to keep money at home rather than in a mobile wallet or mobile money account?

The problem lies with current digital financial services (DFS) offerings, which farmers often do not perceive as useful, convenient, transparent or trustworthy. Many DFS options do not provide a compelling reason for smallholders to use them.

What if there was a way to construct a digital finance product that was based on habits and behaviors that are already part of smallholders’ lives? In fact, myAgro has such a product, and it relies on scratch cards - a tool that facilitates incremental payments towards the future receipt of agricultural inputs like seed and fertilizer.

An elderly Senegalese farmer proudly displays the saving 'voucher' cards he has brought from myAgro over many months, and about to finish his savings milestone (displayed on thermometer!)
An elderly Senegalese farmer proudly displays the saving 'voucher' cards he has brought from myAgro over many months, and about to finish his savings milestone (displayed on thermometer!). Photo by Ashish Kumar, 2015 CGAP Photo Contest.

The myAgro scratch card model works like this:

  • myAgro delivers physical paper cards to its network of third-party vendors.
  • Farmers enroll with myAgro and chose a layaway package of seeds, fertilizer, and training.
  • Customers visit a vendor and purchase a scratch card – which puts money toward their layaway package.
  • The customer scratches the card to reveal a secret code and uses his or her phone to send that code via SMS to myAgro.
  • myAgro verifies the transaction and credits the value to the customer’s layaway balance.Once customers reach their layaway goals, myAgro delivers the package of inputs to a nearby distribution center.

This process is very familiar to smallholders in Mali and Senegal, for example, because it is extremely similar to how they already purchase prepaid minutes for their phones. Moreover, because farmers receive a physical card, it offers tangible proof of their layaway balance. Both of these factors minimize the perceived risk of trying a financial service with a digital element for the first time.

The myAgro team has also identified several additional benefits to using scratch cards, including:

Convenience.  Smallholders who live on less than $2 typically buy their household goods at the local village store, and they purchase nearly everything in small, incremental amounts: 50 cents of sugar, $1 of oil or 25 cents of tea. For farmers, there’s more convenience in managing their spending this way even if it means a daily trip to the store. myAgro’s scratch card system is similar – instead of having to purchase $100 of fertilizer and seed in a lump sum, farmers can purchase a myAgro card just as they do their daily shopping - in increments that are small and convenient. Mariam, a customer in Dialakoroba, Mali, explained that “The payments are so small, I don’t even feel it.” During the weekly market, Mariam would come to the village store 3 times a day to make a scratch card purchase after every other sale she made from selling shoes.

The proximity of vendors, many of whom are local shop owners, also reduces the time and energy that it takes to buy cards. Women like Mariam are 5 times more likely to work with myAgro when there is a vendor in her village, and there are currently 30 – 40 myAgro vendors for every one mobile money agent in the areas that we serve.

Trust. When new technology becomes available to customers, there is often a steep adoption curve. Early adopters need to test, validate and share their assessments before the masses decide to follow. In a rural setting, where tech literacy is already low, scaling a new digital product offering can take a long time. But farmers already trust the process of buying airtime for their cell phones, and myAgro has been able to scale more quickly by imitating this behavior. Buying scratch cards uses a process famers already know and redirects it toward a new purpose (purchasing seed and fertilizer on layaway).

Transparency. Unlike mobile money platforms, which often feature complicated fee structures, scratch cards make it clear to the farmer that the value of the card she purchased is the amount she needs to pay and. It is also the exact amount exact amount that will be deposited in her layaway account. Farmers can also use the cards as tangible proof of their layaway balance: Even though the myAgro cards are not reusable after purchasing, farmers keep their cards in a myAgro wallet and carry them as a source of pride.

Delight. Using a financial service is, for the most part, not inherently fun. Saving is particularly difficult, as it requires delaying gratification now in exchange for a benefit in the future. That’s hard for anyone, and especially for smallholders with volatile incomes and urgent expenses like food, healthcare, and education. But scratch cards have the potential to turn layaway, which is similar to saving, into something fun – shopping. The cycle of purchasing cards, accumulating cards, and watching layaway balances grow leads to very sticky behaviors: 1) farmers see they have a little extra cash; 2) they purchase a myAgro scratch card; 3) they feel the instant gratification of pocketing the card. This stickiness is why there is such high engagement across myAgro’s users. On average, farmers purchase 8 cards total, more than 70% complete paying for a fertilizer and seed package within 1 year, and 90% of customers re-enroll year to year.

Of course, the scratch card model has its critics. They contend that relying on physical cards will make reaching scale more difficult than a model in which payments start and end on the mobile phone. This criticism is valid, and myAgro has focused on lowering the costs associated with maintaining its vendor network, distributing cards, and collecting payments. But when it comes to attracting customers and driving ongoing engagement, perhaps the scratch card model will be more appealing to those we are struggling to reach with mobile money, such as rural communities with lower literacy levels.

As we look to the future, our team is considering complementing the scratch card model with a fully digital platform so that customers can choose what they prefer. But at the end of the day, when we talk about reaching scale, we’re really talking about offering a service that our target customers - smallholder farmers - will adopt and continue to use.


28 April 2016 Submitted by Thomas Herlehy, PhD (not verified)

This sounds great. the underlying premise should also be articulated - that somehow, someway, smallholder farmers have seen the power of adopting improved, certified or hybrid seeds and fertilizers and WANT to purchase them to use in the future and these are or will be available in certified bags. My experience is that certified, improved or hybrid seeds are not always available on time - planting season - or in the right quantities, the right size bags, that the farmer trusts are not tampered or conterfeit.

17 August 2017 Submitted by Ikechukwu Immanuel (not verified)

Nice approach and great idea I must say. One question though, since the value of the card the farmer purchases is the exact amount he or she needs to pay, how then does the agent make profit? I'm just curious and confused on this business mode.

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