Remittance Channels & Regulatory Chokepoints

By Ivan Small in Limn Magazine, Issue 10: Chokepoints

The bells jingled on the door as I entered a small store tucked in a New England Vietnamese shopping center. Specializing in transactions between the United States and Vietnam, the store is representative of many small operations providing travel and financial services, including plane tickets, visas, box shipping, and remittances. Discussing her business, the owner Kelly gestured to a wall covered with children’s pictures. She explained they were extra passport photos of her customers’ kids, many of whom were now grown up and customers themselves—a testament to the store’s enduring role in facilitating transnational ties for the Vietnamese American community. 

Bitcoin ATM in Ho Chi Minh City, 2017. Blockchain technologies offer
a potential remittance channel that may circumnavigate
regulatory checkpoints, for now. Photo credit: I. Small.

Yet when our discussion turned specifically to remittances, Kelly lamented that it was becoming more difficult for small businesses like hers to compete. In the past, she handled remittance transfers herself, via a bank account. Now, according to her, “banks don’t allow it.” As an informal remittance service provider operating in a gray area to facilitate small transfers, her company had become visible to the expanding reach of the formal financial world—most notably, as a potential “black market” operation. Kelly recently contracted financial-transfer services to an external provider but noted that, at $1.25 per transaction, “It’s hardly worth it anymore. Nonetheless, our customers need to send money and expect us to do it for them, so we continue as long as we can.” 

The informal money-transfer sector has been integral to the Vietnamese community in the United States, but during the past ten years its share of the U.S.-Vietnam remittance market has fallen from one-half to one-third. Kelly’s operation was one of many affected by remittance oversight regulations put in place after the 2008 financial crisis. Specifically, regulations associated with Dodd-Frank require low-value transfers of more than $15 to comply with disclosure, consumer protection, and error-resolution rules requiring more steps and paperwork for remittance providers. Such regulations were emerging as a problematic chokepoint, disrupting and diverting the long-standing channels of her financial-transfer services. Kelly experienced this regulatory chokepoint as a slow but significant shift, pressuring her to diversify from remittances to other services. Writ large, “not being allowed to do it anymore” signaled a significant shift in the financial infrastructures linking diasporas and homelands—Vietnamese and otherwise. 

Reforms of international remittance infrastructures since 2008 have impacted transnational banking, financialization, and payments. By highlighting these transitions—as well as the stories and histories of money-transfer operators like Kelly, who facilitate not only financial connections between Vietnam and the United States but also other material and bodily mobilities—we gain insight into how emerging chokepoints in the international financial system are experienced and navigated. Doing so draws attention to the practical, technical, and affective value of such services in framing and maintaining economic and social relations.

Read full original post - https://limn.it/articles/remittance-channels-regulatory-chokepoints/

“It is easy for women to ask!”: Gender and digital finance in Kenya

NEW article by Sibel Kusimba in Economic Anthropology 5(2). Special Issue Theme: Finance, 10 May 2018 for her IMTFI-funded project, Group versus Individual Strategies: Dynamic Social Networks of Mobile Money among Unbanked Women in Western Kenya.

Abstract
This article examines the role of gender in the use of digital finance in Kenya, including the well‐known case of mobile money but also the emerging use of smartphone apps, payment tills, digital credit services, and digital fund‐raising computer programs. Development professionals have explicitly feminist goals in bringing digital finance to women in the Global South. In several recent reports, they outline the belief that gender norms are a barrier to women's use of finance. They hope digital finance will bring women agency and control over money and consequently shift restrictive gender norms. This article offers a critique of these assumptions based on ethnographic conversations, a diary exercise, and network self‐portraiture conducted in Kenya in 2016 among both rural farmers and urbanites. Adopting a distributed agency perspective, the ethnographic study demonstrates that Kenyan women and men use digital finance not to seek individual control of their money but to produce themselves as connected and trustworthy members of financial groups and collectivities. Gender norms may not hinder women from finance but rather enhance and deepen women's and men's financial relationships and bring women success in amassing funds.

Fig. 1: Consolata, headmistress of a school in rural Western Kenya, draws her social/financial networks.

Article
During a March 24, 2017, webinar on women and financial inclusion, experts from Innovations for Poverty Action (IPA) expressed disillusionment with microcredit as a poverty alleviation tool. Globally, microfinance has reached more than 200 million borrowers, two‐thirds of them women (Garikipati et al. 2017), but the hosts explained that microloans were not leading to “higher incomes or more product investment” (Innovations for Poverty Action webinar, March 24, 2017; see also Banerjee et al. 2015; Roodman 2011). The webinar hosts suggested a new approach: digital finance delivered via mobile phones. They proposed that digital finance could bring women empowerment, control, and agency and lead to positive social change: “We want to create financial tools that will create agency and control for women and shift gender norms.”1

Through reports, studies, and research evidence, development professionals are articulating a new project to bring digital finance to women in the Global South—especially poor and rural unbanked women. They are using data sets of bank account ownership and studies of household economics, including women's bargaining power with husbands (Agarwal 1997), to claim that social and gender norms are barriers to women's agency with money (CGAP 2017a, 2017b). Development thinkers hope that digital finance on mobile phones will “rapidly connect women to digital financial services that enable them to more easily store, transfer, secure and build value digitally, beyond money payment transfers” and that digital finance will bring “empowerment and equitable decision‐making in households” (Gates Foundation 2015, 2; see also Innovations for Poverty Action 2017).

How fitting are development understandings around finance, technology, and gender for Kenyan women? This article defines finance as relations between people, money, and time that are “grounded in practices of everyday life” (van der Zwan 2014, 102). In Kenya, financialization—as I define it, the increasing use of everyday finance—often relies on digital channels and has emerged as a meld of formal (provider‐designed) and informal (user‐innovated) sources. Formal products designed for the low‐income and unbanked include digital credit via mobile phones. Informal user innovations with apps and services are equally if not more common, such as WhatsApp fund‐raising and money pooling and circulation through M‐Pesa, a money transfer service.

In this article, I describe the cultural practices and meanings around gender that influence people's engagement with digital finance. I question the idea that the value of digital finance for Kenyan women is resistance to social and gender norms. My critique centers on the idea of agency. For the development professionals of the IPA webinar, agency is a quality of individuals. It is a noun, “something one has” or does not have (Gero 2000, 34), and from a liberal feminist perspective, it implies autonomy, emancipation, and resistance to social norms (Mahmood 2001). Rather, I suggest that the agency of Kenyan women is profitably viewed as a way of acting and being in particular settings—as “the condition and constraints under which we pursue our goals” (Enfield 2017, 3). This broader view draws attention to agency as joint action in groups, as distributed through relationships between people and material systems (Burrell 2016; Enfield 2017; Pettit and Schweikard 2006).

To access the full article - go to original post:  https://anthrosource.onlinelibrary.wiley.com/doi/abs/10.1002/sea2.12121 or "Recent Publications" on Professor Sibel Kusimba's website: https://sibelkusimba.com/publications/

Financial Education Via Television Comedy in Applied Economics Letters

NEW article by Andrew Crawford, Paul Lajbcygier and Pushkar Maitra in Applied Economics Letters, 19 Jan 2018 for their IMTFI-funded project, Mobile Money Financial Literacy via Television Comedy.

ABSTRACT

We show that television may be able to deliver rudimentary financial literacy in a cost-effective manner. In a controlled experiment, Cambodian garment factory workers were randomly assigned to one of three treatments: no video (baseline), slideshow and comedy TV show. After the intervention, to examine whether individuals were able to internalize the information that was provided, participants were asked to answer a set of questions on financial knowledge and attitudes. Our results show that participants randomly assigned to the comedy show are significantly more likely to report that they are interested in obtaining more information on savings accounts and are also significantly more likely to open a savings account in the next 6 months. This method of delivery may prove effective particularly for the disadvantaged sections of the population in remote regions of Cambodia.

--
Introduction
In recent years, mass media has penetrated large parts of the developing world with traditionally remote communities now having access to television and internet. It is argued that this could be used to achieve development goals: entertainment can have an educational role to play, leading to the term edutainment. Evidence from different parts of the world suggests that this is indeed the case.

In this article, we examine whether mass media can be used effectively to improve financial literacy and consequently foster financial inclusion in developing countries. Television may be able to deliver rudimentary financial literacy to those most disadvantaged in a cost-effective manner. The promise of broadcast TV is that the financial education it delivers may prove effective as it will be accessible, memorable, and entertaining to a large audience of those normally excluded from financial services, particularly those belonging to disadvantaged sections of the population and those living outside the major cities.

The Cambodian Microfinance Association (CMA), in conjunction with the research team, produced a 5-min comedy skit to be ultimately shown as prerecorded segment in a popular Saturday evening television show, one which is watched by 20% of the country’s population. The episode involves a storyline mainly focussed on concepts relating to financial knowledge, loan management and savings. An advanced video of the episode was shown to randomly selected garment factory workers during their lunch break. A second randomly selected group of garment factory workers were shown a financial literacy slideshow video, which covered roughly the same material, but did not have any comedy content. After watching the respective videos, the participants were asked to participate in a survey to collect information on their financial knowledge and attitudes towards different financial products. The results were compared to that of a baseline group, which consisted of a third randomly selected group of garment factory workers who did not watch any video, but participated in the same survey as participants in the two treatment groups.

We find evidence that attitudes to savings accounts were significantly different for those who viewed the comedy show compared to those assigned to the control and the slide show, without going into explanations for these differences. Furthermore, it appears that the video was more effective than the alternative delivery approaches in piquing workers’ interests in savings accounts.

To access full article - http://www.tandfonline.com/doi/full/10.1080/13504851.2017.1422595?scroll=top&needAccess=true

Photo taken from Cambodia Microfinance Association (CMA)'s video on loan management from YouTube. View here: https://www.youtube.com/watch?v=k_SJAQw9DsA

Contact information:
Andrew Crawford, Department of Banking and Finance, Monash University, Caulfield Campus, Australia - crawfs@gmail.com
Paul Lajbcygier Department of Econometrics and Business Statistics, Monash University, Clayton Campus, Australia
Pushkar Maitra Department of Economics, Monash University, Clayton Campus, Australia - pushkar.maitra@monash.edu

“Capitalism is so much easier!”— Learning savings through playing a board game

By Farah Qureshi and IMTFI/Loy Loy Team at UC Irvine in the Geek Anthropologist

Loy Loy: The Savings Game in Washington D.C.!

Staging of Loy Loy at the AnthropologyCon Salon in Washington DC

Julia had been waiting until the last round to take her pot of money from the others. She was trying to get 50 Loys from every player to buy the coffee cart for extra income. After passing the star square it was savings group meeting day. She bid 50 and each player was obliged to give her the money, but the request was met with resistance. Earlier in the game, Chris had threatened to leave the savings group when Julia did not lend him money to buy a pig. Her high bid was a gamble completely depending on the players’ solidarity, so she held her breath while Chris’ deliberated his options. While playing, they had all learned that trust was crucial to the game, but she also knew he would not survive long alone. In the end, Chris resentfully handed over his 50 Loys to Julia, it was her first asset purchase anyway, and helping her would overall help everyone. 

Welcome to Loy Loy: The Savings Game (loyloy.org) where you play a Cambodian female worker trying to save up money with the other players to purchase a garment factory together.

In November 2017, our team from UC Irvine’s Institute for Money, Technology and Financial Inclusion (IMTFI) carried a role-playing board game to the American Anthropological Association’s (AAA) annual conference in Washington D.C.. Loy Loy (which means “Money Money” in Khmer) is a financial education tool being developed by IMTFI to teach players how one type of rotating savings and credit association (ROSCA) works. Similar to Monopoly, you receive ‘payday’ money upon each circulation of the board, which represents one month in time. However, unlike Monopoly, all players both move collectively with a single placeholder representing time and save together to win by purchasing the $5000 garment factory before the maximum number of months is up. Your progress depends on random events and expenses (such as medical expenses), with occasional opportunities to purchase income generating assets (for example, a pig) despite the pressure to maintain your personal funds. If any player reaches bankruptcy, the game is over for everyone. All players are challenged to come together and reach the goal collaboratively to win, which you can do through extending loans to one another or paying one another’s bills.

As anthropologists like Clifford Geertz and Shirley Ardener have famously written, and as generations of ROSCA members and development professionals have experienced, ROSCAs are commonly used in low-income communities across the world but can differ dramatically from country to country. In East Africa, for example, members of the ROSCA (or chama) make sure that money is separated and stored in a box. All participants pay an equal amount each month, as payouts are all equal. Mexican and Mexican-American tandas provide a unifying social space, encompassing a form of community as well as consistent sharing of funds. In Cambodia, factory workers form a kind of bidding ROSCA. In this kind of ROSCA, each individual contributes towards a collective savings pot, for which each member of the group then bids by offering to repay at a rate of interest they’re willing to offer to receive the pooled funds. In Loy Loy, ROSCA day falls once each round to award one player funds from the pot, instigating haggling and bidding wars between players. Once a player has ‘won’ the pot, they cannot enter a bid on the next ROSCA day until each player has had a chance at winning.

The idea for the board game developed during a closed-door workshop for IMTFI fellows, "Getting Beyond the Survey: Ethnography and the Art of Seeing," where participants convened to share their in-progress research and discuss methodology. A creative group exercise materialized issues found in observations of payment practices in different field sites around the world. You can see the inception video here:

Games are recognized as a valuable tool to communicate complex social dynamics. Allowing students to participate, interconnect and play creates an immediate and ongoing feedback mechanism where failure is reframed as iteration so that learning happens by doing. In this case the game teaches you about your own interactions and relations with money even as it offers a window into the everyday economic challenges and financial practices of people like the Cambodian garment workers who inspired it. As a player, you’re responsible for both negotiating and preparing for expenses that turn out to be impossible to cover using the regular wage income that you’ll receive. Most players realize this within a few turns and begin to develop their strategies while playing, either forming as many close social connections as possible or bidding large on ROSCA days to receive loans and trying to hoard.

The game is engrossing: players are absorbed into a virtual reality constructed through their characters and ROSCA community. In both groups, players passionately embodied their characters while forming new friendships. Unique and surprising banter always appears as each player justifies their reasoning for deserving the money. The game encourages very particular creative thought and debating skills! We ran two testing sessions for interested gamers while at the AAAs, one in the lobby of the hotel where the conference was being held, and the second as invited guests at the AnthropologyCon salon for gaming and games at the conference. Sharing Loy Loy at the AAAs was a fun experience. I found it immensely valuable to receive feedback from anthropologists before and after each session, and in what follows, in the full blogpost I offer just a few reflections on what we learned.

For detailed reflections from the AAAs and background of Loy Loy, read the full blogpost in The Geek Anthropologist here: https://thegeekanthropologist.com/2018/01/26/capitalism-is-so-much-easier-learning-savings-through-playing-a-board-game/.

Interested in keeping up to date, learning more or helping us distribute Loy Loy? Please join us on LoyLoy.org. To purchase Loy Loy, follow this link to the Game Crafter site.

Insights on Demonetisation from Rural Tamil Nadu: Understanding Social Networks and Social Protection

NEW paper by Isabelle Guérin, Youna Lanos, Sébastien Michiels, Christophe Jalil Nordman and Govindan Venkatasubramanian, published in Economic and Political Weekly, Vol. 52, Issue No. 52, 30 Dec, 2017.

Queue in front of ATM in Chennai, January 2017
Photo credit: Santosh Kumar.

Drawing on survey data from rural Tamil Nadu, the effects of demonetisation are documented. Serious concerns arise with regard to the achievement of its stated goals. The rural economy was adversely affected in terms of employment, daily financial practices, and social network use for over three months. People came to rely more strongly on their networks to sustain their economic and social activities. Demonetisation has not fought, but has largely  strengthened the informal economy. Demonetisation has also probably further marginalised those without support networks. In a context such as India, where state social protection is weak and governmental schemes are notoriously subject to patronage and clientelistic networks, dense networks of supportive relatives, friends and patrons remain key for safeguarding daily life. With cashless policies gaining currency in various parts of the world, we believe our findings have major implications, seriously questioning their merit, especially among the most marginalised segments of the population.

Download PDF version of the full paper.

Isabelle Guérin (isabelle.guerin@ird.fr) is at the IRD-Cessma  (French National Research Institute for Sustainable Development, Centre d’études en sciences sociales sur les mondes américains africains et asiatiques), Paris, France and is associated with the French Institute of Pondicherry (IFP), India. Youna Lanos (lanosyouna@gmail.com) is a doctoral student at University Paris Dauphine, DIAL (Développement, Institutions et Mondialisation), and is associated with IFP. Sébastien Michiels (sebastien.michiels@ifpindia.org) is at IFP. Christophe Jalil Nordman (nordman@dial.prd.fr) is at the IRD, Paris and is associated with IFP. Govindan Venkatasubramanian (venkat@ifpindia.org) is at IFP.

A group of women complaining to a clerk office that their labour welfare benefits cannot be withdrawn from the bank, January 2016. Photo credit: Santosh Kumar.

This paper follows and explores arguments made in the Special PERSPECTIVES Series on Demonetization in India last year, take a look at Part 1 and Part 2 below: 

The dangerous liaisons between demonetization and the Indian informal economy (Part 1)

The dangerous liaisons between demonetization and the Indian informal economy (Part 2)

Read more about Isabelle Guérin, Santosh Kumar and G Venkatasubramanian's IMTFI-funded research here.

Mobile Money: The First Decade - NEW white paper

By Stephen C. Rea and Taylor C. Nelms

"Mobile Money: The First Decade" White Paper - 34pp.
IMTFI Fellows Jude, Sangaré and Kusimba at Day 3 Workshop (2014) 

Over the past decade, mobile phone-enabled financial services, such as those made famous by the Kenyan mobile money platform M-Pesa, have been heralded as a means of poverty alleviation and financial inclusion. The mobile platform represents an exciting possibility as a delivery channel for digital financial services and as a technology that, like money, connects people with one another. Indeed, mobile money has thus become a central pillar of a global and internally heterogeneous—although by-now mostly “market-driven”—financial inclusion agenda, bringing together many different stakeholders in international development and philanthropy, industry (including telecommunications, banking, technology start-ups, and more), multinational aid and regulatory organizations, government, and academia.

Yet mobile money deployments around the world have not had unequivocal success. In this working paper, we survey lessons from the first decade of research into mobile money, focusing on an archive of studies produced by fellows funded by the Institute for Money, Technology & Financial Inclusion (IMTFI), based at the University of California, Irvine. We specifically target insights about mobile money users’ everyday social, cultural, political, and economic practices. We suggest that the ethnographic sensibilities of mobile money researchers have enabled attention to mobile money’s real use cases, while demonstrating how those use cases are context-specific and dependent on material, political, and sociocultural conditions that are often not replicable. At the same time, however, this literature has been characterized by a lack of systematization and comparative insight. Often explicitly aspiring to replicate and scale specific innovations, mobile money professionals (like those in across the development world) make constant use of comparisons across contexts. Many of these comparisons mobilize categories familiar to social scientists: culture, history, locality, inequality. We see the case studies produced by IMTFI researchers as contributing to an explicitly collaborative project that lays bare these assumptions of comparability, as well as their limits. It is our hope that this synthesis will be beneficial for mobile money’s various stakeholders.

Mind Your Ps and 2s

We describe mobile money’s primary use case—P2P money transfer—and argue that both the “Ps” and the “2s” of this model (mobile money’s “peers” and the technological and social infrastructures that intermediate them) must be understood in context. We find that the complexities involved in introducing and scaling mobile money, shared across contexts, resist distillation and are not going away. They include infrastructural maintenance, liquidity management, and coordinating interaction among all of the people in the system, from users to agents to service providers to regulators. From a practical perspective, we insist that such complexities are best thought of not as “pain points” to be bypassed or “frictions” to be smoothed over, but challenges to be carefully and regularly attended to in ways that put history, culture, and politics front and center: not as buzzwords, but as windows onto the variables that make a difference—differently in different times and different places—in shaping uptake and use of both money and technology.

Insights from the Research Archive

In what constitutes the bulk of this paper, we outline ten insights from the IMTFI research archive that demonstrate these contextual complexities. These insights have to do with:

• agent networks; 
• physical infrastructure; 
• location, place, and space; 
• kinship and family; 
• gender and gender inequality; 
• class, caste, and rank; 
• religion and ritual; 
• time and tempo; 
• government and regulation; and 
• the persistence of both cash and non-currency stores of value. 

If indeed the comparative categories of social science—history, culture, and politics foremost among them—are now being embedded in the strategies, operating procedures, and even self-presentation of global development, then it’s up to us to specify the contours and content of those categories. For each, we attend to the gaps between the hopes for and realities of mobile money’s impact thus far, as well as some of the fissures that have emerged among mobile money’s different stakeholder groups.

Concluding Thoughts and Provocations

We conclude by raising issues that promise to be critical provocations for the next decade of mobile money research, making an argument for methodological diversity, and interrogating the limitations of the “financial inclusion” frame within which mobile money has been situated as a development intervention. If mobile money is, at its core, a technology of communication and circulation, it is also a central means of distribution and redistribution. What would it mean, then, to shift the conversation from debates over financial inclusion to questions about financial justice?

Read the full white paper: "Mobile Money: The First Decade" - (34pp.)

IMTFI Fellows Day 3 Workshop (2016)
View Flickr stream for more photos of and by IMTFI researchers

***
Read previous installments of the PERSPECTIVES blog series on Financial Inclusion:

• Can financial inclusion be synonymous with financial justice and equity?
• Reflections on the “Financial Inclusion of the Poor,” workshop in Karachi (Part One): Decolonizing Financial Inclusion
• Reflections on the “Financial Inclusion of the Poor,” workshop in Karachi (Part Two): Decolonizing Financial Inclusion
• Drama in the payments infrastructure and saturation in financial education: Discussing new avenues of research around financial inclusion in Colombia
• Continuing the conversation about “financial inclusions” in Latin America – onto Mexico

We invite you to send comments to imtfi@uci.edu.

(Dis)Trust in Mobile Money in Ghana: Yesterday, Today, and Tomorrow

By IMTFI Fellow Vivian Dzokoto, Virginia Commonwealth University and John Kojo Aggrey, Louisiana State University

Yesterday: The Struggle to Gain a Foothold

In the early days of our IMTFI-funded fieldwork on Mobile Money (MM) in Ghana, MTN Mobile Money ads and billboards were out there. Yet, many interviewees either hadn't heard of MM at all; confused it with the e-zwich platform (a biometric smart card); or just didn't feel comfortable about the notion of converting physical cash to electronic value and keeping it on a mobile wallet on a cell phone. What was the discomfort about? For some, the apprehension concerned the non-materiality of the value. If one rolled up one’s cash and kept it in a bra, tied it in the corner of a cloth, or kept it in a repurposed plastic or tin container, one knew where it was at all times, and could access it easily. Intangible e-value was just too…. Intangible. For others, the concerns varied from utter disbelief that such technology could exist (it just seemed too good to be true), to suspicion that politicians must somehow be involved (and therefore it was something to be avoided). Additionally, interviewees from middle to upper income brackets thought that the technology would be hampered by the unreliability of the phone network (with statements like “right now, you need a backup for the backup”). Would the e-value get lost if the transaction was interrupted due to a spotty network? The variety of reasons indicated curiosity and a degree of skepticism about how the technology worked. It just didn’t seem trustworthy from the get go.  But that was in 2009. And 2010. And 2011. And 2012.

Money in the Cultural Context

It’s important to think about the context in which this technology was being launched and relentlessly promoted due to its success in Kenya. Traditional Ghanaian culture puts value on the form in which some payments are made. Apology pacifications may require a sheep, for example, and wedding bride prices come in the form of cash AND a variety of other goods. Yet nowhere has the form of money been more of an issue in contemporary Ghana than in the introduction of money technologies such as Mobile Money (MM). In a largely cash-driven society such as Ghana, getting people to switch from cash to cash-lite means of payments has been an ultra-marathon. While a host of obstacles such as poor infrastructure have been implicated in the failures of different card-based payment options in the early 2000s, trust and the lack thereof has played an important role in Ghanaian adoption rates of money technologies- in particular cell-phone based ones. At the onset, trust was hard to come by.

Today: The Wobbly Foothold

Fast forward a few years and Mobile Money has taken a foothold in the Ghanaian marketplace.  People recognized the convenience of the technology that enabled them to change local currency into electronic value, load it onto an electronic wallet, and use for spending, bill payment, savings, insurance, and remittances. Due to the doggedness of  Mobile Network Operators (MNOs), banking partners, agent networks, regulators and other stakeholders, trust in and use of Mobile Money grew, and grew, and grew some more, ….and then, sadly, ran into a brick wall. Criminals figured out how to exploit Mobile Money, and it was estimated that 50% of customers had been targeted. The criminal network included people from the inside. The modus operandi of the insiders was found to include (i) accessing the MM database of merchants without authorization and altering customer information; (ii) resetting the phone number assigned to the MM account, and then granting access to the new number to change the PIN  and (iii) acquisition of new SIM cards using a false identity, register for MM services. These provided cash outs access to customer and merchant accounts.

Additionally, some merchants were found to have overcharged for their services. Scammers have also been involved in defrauding MM subscribers using several tactics. First, the you-have-won-send-money-to-claim-your-prize scam, a financial crime also perpetrated via email. Once the subscriber sends the money, it is cashed out and the SIM card destroyed. Second, the problem-when-there-is-no-problem scam in which MM subscribers are informed that an amount of money transferred to them has been wrongfully sent as airtime or that there is a general problem with their account. Under the guise of “fixing the problem”, the “customer service” person on the phone takes the subscriber through steps which result in a money transfers to a scammer’s phone or code generation for an ATM withdrawal. Third is the related please-send-back-the-money-sent-to-you-by-mistake scam in which subscribers receive a call about an erroneous transfer meant for someone else. The subscribers motivated to do the right thing end up sending money from their account to these fraudsters. The fraudsters are getting craftier by the day, and so in a new development, subscribers simply receive a notification on their phone that an amount of money has been withdrawn from the MM account. These are withdrawals not authorized or carried out by the subscriber.


Deconstructing Mobile Money Crimes: Technology or Humans?

An MNO representative noted that problematic fraud was not due to a breach in MM platform itself, but due to nefarious human activity. The MNO staff involved were able to do so due to their access to the MM technology by virtue of the work they do with the telcos, and not because they are able to bypass the security systems in place. The fraudsters on their part, used their knowledge of the use of the MM technology to outwit people who are less versed in it and then defraud them.

This framing of the problem is consistent with perspectives about the misappropriation of tools in general and technology in particular for criminal purposes. Cars are not considered bad because some users chose to drive drunk or drag race on public streets, cryptocurrencies are not generally considered evil because bitcoin became the currency of choice in Silk Road and other dark websites, and the internet has not been dispensed with because websites are routinely (it seems) hacked. The question is, will Ghanaians (in a market where mobile money has entered but not dominated the payment space) care about the difference, or will they throw out the baby with the bathwater? Will consumers care that as one MNO representative put it, it’s about the "gullible consumer" and not a “system vulnerability issue”?

Elsewhere in the world, challenges to trust in particular systems and platforms have resulted in shock, but not necessarily in long-term decreases in their patronage. For example, people did not stop investing in the stock market because of Bernie Madoff or after the 2008 financial crisis. People across the world have not stopped using email despite threats to internet security, and it does not appear that people have stopped using Wi-Fi since the recent announcement by a Belgian researcher that Wi-Fi networks using the WPA2 protocol are vulnerable to hacking. However, each of these threats to consumer confidence have occurred in the context of products and platforms that had already successfully penetrated the market - not ones that are in a crucial growth phase as seems to be the case in Ghana. So the question remains: to what extent is trust in Mobile Money in Ghana impacted, and how will this affect subscription, active use, and growth of the user base?

Tomorrow: Finding its feet again, or will the other shoe drop?

Trust in Mobile Money in Ghana and its future patronage will be contingent upon a variety of factors including perceptions of how well the current investigations are going, perceptions of product safety, and perception of future customer vulnerability vis-à -vis the perceived benefits of having a mobile phone-based payment medium.

On the one hand, the fact that MNOs eventually went public to discuss the issue is encouraging, and a testament to their commitment to dealing with the problem. Hopefully it will warrant a few trust points. These “trust points” may further soar with MTN’s publicized sanctioning of a whopping 3,000 members of its agent network in a bid to curb their fraudulent activities, and release of information that contrasted targeted subscribers (up to 50%) with those successfully defrauded (less than 0.1%). Other concerted efforts to curtail the problem that have been discussed in recent weeks include a re-registration of SIM cards, changes in procedures related to agent activities to enhance privacy, industry-wide agent blacklisting, better and more accessible agent identification by consumers, and changes to features in the user interface to provide the consumer with additional control over cash outs, and text filtering to block out identified scam messages. In addition, MM subscribers have been reminded via text, automated messages and via the media to protect their PINs, and change them regularly. In other words, there have been movements at the levels of regulators, MNOs, and the consumer (education efforts) to minimize the likelihood of recurrence of such crimes. Will these corrections and structures boost or repair consumer confidence?

On the other hand, several challenges have been identified in the execution of investigations of crimes involving Mobile Money. In addition to the fact that some scammers have covered their tracks well enough to avoid being identified, there have been some reports of less-than-ideal cooperation from some MNOs. For example, representatives of the Ghana Police Service “expressed worry that managers of some mobile telecom operators do not give the necessary information to the police concerning suspects in mobile money fraud who work in the telcos”.  Additionally, some people who crossed paths with fraudsters are calling for a boycott of specific MNOs altogether in order to regain a sense of agency and the recognition that consumers need to protect themselves. Such calls emanate from the recognition that that there is limited recourse for a defrauded consumer since there is no guarantee of a refund from the MNOs.

So what will happen to Mobile Money in Ghana? Time - and the consumer – will tell. No matter the outcome, it will undoubtedly revolve around consumer trust.

Read their first blogpost, "Yet Another Cashlite Stumbling Block: 'Alarming' Fraud and Mobile Money Uptake in Ghana"