Thursday, February 10, 2011

Will mobile money really bank the unbanked?

Wherever mobile money touches down–whether in the Philippines, Kenya, or Haiti–it is touted as the next big thing in development. M-PESA in Kenya was lauded as a success because it provided financial services to thousands of poor, previously unbanked people. Mobile money has arrived in Haiti with the same aim: it is a commercial enterprise but it is also has development potential for the 80% of Haitians who are unbanked. Whether mobile money achieves its development goals depends upon the commercial viability of mobile banking and its adoption by the target population.

Our research to date suggests that mobile banking in Haiti is commercially secure despite the small size of the current market. Mobile money may have taken years to be developed in Haiti if it were not for the incentives offered by the Gates Foundation (Haiti Mobile Money Initiative).
A similar story operates with respect to mobile money outlets. It is in the interests of small businesses to sign up for mobile money because it requires very little initial investment, is not labor intensive, and has the potential to bring in new clientele. Outlets must be registered businesses who have passed a credit check with the mobile money service's partner bank and attend a one-day training seminar (or send an employee). The only technology they need in the site of their business is a mobile phone. Some outlets are complaining that they are not seeing any benefits in this early period, but they have no intention of pulling out and do not seem to be discouraging other businesses from signing up. This augurs well for the growth of outlets.
The willingness of businesses to become outlets is crucial to mobile money's success as a development project. Mobile money will only succeed in reaching Haiti's unbanked if outlets are more widespread than any other formal financial service. If outlets are not nearby, people will stick to their tried-and-tested informal routes of money transfer (friends, buses, boats) and continue to store money in their homes. Mobile money will be commercially competitive if outlets achieve the same saturation as transfer services like Western Union and MoneyGram, but as a development project outlets also need to be located in remote areas. In this case, outlets and their access to banking facilities and reliable mobile infrastructure will be the main technical factors limiting where outlets operate.
Accessibility is not the only obstacle to widespread registration for mobile money services. Education and literacy may prove to be serious stumbling blocks for both the commercial and development sides of mobile money. First, people need to know that mobile money exists, what it can be used for, and how to access it. T-Cash is currently advertising on Radio Caraibes and we have seen people on the street wearing bright green t-shirts that display the T-Cash logo and price list. Digicel will launch its advertising campaign in late April. So far we have encountered numerous people in Port-au-Prince who have heard about mobile money but do not know what it is for or where to find it. Indeed, they keep asking us to teach them about it, thinking that we are Digicel employees.
Once people are convinced of mobile money's value and have signed up, they also need to be shown how to use the service by an agent, an outlet, or by friends. Our major concern here is literacy. Most Haitians are numerically literate and have no problem using a mobile phone to make calls or check their balance. This is fine with T-Cash, which only requires a string of numbers to be entered. But TchoTcho Mobile customers must be able to read the French-language menus to make a transaction. It is curious that the simplest form of banking in Haiti requires the highest literacy rate, whereas formal banks do not require any literacy at all because the teller fills in the customer's form. Technological literacy and access is also an imperative, as it is not uncommon for Haitians to use their phones (or other people's) to make calls and nothing else.
Currently, mobile money is well positioned to appeal to a particular demographic: it is likely to work best with people who are already well connected, literate, urban, young, and employed. We feel that mobile money has a significant chance of bringing large numbers of Haitians into the formal banking system. However, if it is to help the poorest and most marginalized Haitians, targeted development programs that build upon the intricate relationships between the economic and social should run alongside commercial activities.
--Erin B. Taylor

--Photo #1: Voilá office in downtown Port-au-Prince. Photo credit: Erin B. Taylor, 2011
--Photo #2: Entering in a string of numbers to make a transaction using T-Cash. Photo credit Espelencia Baptiste, 2011
--Photo #3:TchoTcho Mobile's text-based menus. Photo credit: Espelencia Baptiste, 2011

Wednesday, February 2, 2011

Resisting the devil: using mobile money in Haiti

As I boarded a plane bound for Haiti in December 2010, I received a text from one of my research assistants that says that Voila had just launched its mobile money service, T-Cash. It was followed closely by Digicel’s TchoTcho mobile. The advent of mobile money in Haiti is interesting and exciting. As an anthropologist I was curious to see how this new technology was going to change internal migration and remittance patterns between Port-au-Prince and the provinces. My interest in mobile money is also personal. As a Haitian with friends and relatives living in different parts of the country, the prospect of sending money electronically is particularly welcome. With mobile money I no longer have to rely on expensive money transfer services, bus drivers who offer remittance services, or send money with friends and relatives who are travelling back to their home towns.

Once in Haiti, I set out to register for both services. Registering for Voila’s T-Cash required sending a text to their dedicated number using your Voila phone. Within a few minutes you receive the secret pin required for withdrawal and transfers. Digicel’s TchoTcho Mobile is a little more bureaucratic as it requires in-person registration with a valid state-issued ID and a photocopy of said ID.

As with any new service, there were some kinks that both companies needed to work out. Although both companies boast agents throughout the country, or Port-au-Prince in the case of Digicel, finding an agent is not always easy. On the day I registered for TchoTcho, I had to visit four agencies. At the first store we were told that the agent had been called away elsewhere; the second agency did not have an internet signal, while the third had sent their laptop out for repair. However, six weeks on, it is easy to find functioning TchoTcho agencies, even though Digicel has not officially launched their service and are not advertising. T-Cash is another story: while we have found numerous businesses with the T-Cash sign on the front of their shop, few of them are actually operational.

Digicel and Voila’s tariffs for transferring and withdrawing money are similar except that Voila offers a lower maximum that one can hold on a T-Cash account. While it may seem odd that customers have to pay to withdraw their own money, so far we have not heard any complaints about the fees. Prior to mobile money, the only safe place to hold money was the bank but banking was a time consuming undertaking. Mobile money offers a middle ground between the bank and cash. With mobile money, money is available but one is able to save. As JosuĂ©, an artist, explained to me, “If I have money in my pocket, I will use it on beer, cigarettes and women, but if it is not there I cannot spend it as fast. After all, money is the devil, it makes you do crazy things.”

Safety issues are one of the main attractions to mobile money in Haiti. Discussing the risk of being mugged, Max, a plumber and TchoTcho customer, told me that an advantage of mobile money is that you can deposit your salary at an agent near your job and withdraw it at an agent in your neighborhood. Not only do you not run the risk of your money being taken away from you as you travel from your job but you do not have the stress of travelling with money. Max went on to say that he likes the fact that TchoTcho agents are located in regular businesses. If he walks out of a restaurant or a clothing store, no one will know that he just withdrew money.
Another one of mobile money’s attractions is the ability to top up your phone account from your mobile money account. Using mobile money, you save the 10% tax that you pay when you buy a phone card. Mobile money is also economic in terms of time and convenience. Prior to mobile money I could only top up my phone using a phone card or a Pap Padap vendor. These transactions are limited because they require agent which is not always available either because of where I am or because shops are closed. While online top up is available, it is not an option for many people because it requires internet access and a credit card, two luxuries that are not readily available in Haiti. No story could illustrate the significance of mobile money for topping up your phone as this scenario presented by Samuel, a 19 year old university student. He said, “Have you ever been talking to a girl late at night and just when the conversation gets interesting you run out of money on your phone? At this hour there is not a store open or an available Pap Padap or Direk Direk vendor. Even if there were, you would be too scared to go out at that time. With Mobile money you can continue the conversation without losing momentum because once lost, you cannot recapture that moment.”

Whether to keep the conversation going with your girl, transporting your salary across town, hiding money from yourself or sending money to your ninety-year-old aunt in Carrefour George, mobile money is definitely a welcome addition to the financial landscape in Haiti.

--Espelencia Baptiste

--Photo #1: Espy topping up mobile money. Photo credit: Erin B. Taylor, 2011.
--Photo #2: I can sign up for Tcho Tcho while I get my drink on. Photo credit: Espelencia Baptiste, 2011