Barriers to mobile money adoption among rickshaw pullers in Delhi: Part two

This is the second of a two part post (see here for part one). IMTFI sponsored researcher Mani Nandhi highlights barriers to mobile money adoption among rickshaw pullers in Delhi by sharing her notes from the field.

How do rickshaw pullers like Vinod 
Kumar cope with everyday debt relations?

Vinod Kumar is about 27 years old from Bilheri Village, Chattarpur district in Madhya Pradesh. After finishing middle school he was not allowed to study, so he ran away to Delhi at the age of 16. He became a puller because of his tekedar (rickshaw contractor), who is also from his village. He had tried to open a bank account in his village by providing the necessary documentation (e.g. voter’s ID, ration card) about 3 years ago, but his application was rejected because the fellow villager who signed his application form was not deemed eligible. Vinod could not find another person who could sign for him. When he learned about mobile banking, he was happy that he could open an account because he owned a mobile phone. On 26th October, 2012 he opened his ICICI –EKO mobile banking account with Rs.600 (about US $10).

But when I contacted Vinod in December to check his progress, he had lost his phone. Despite knowing that he had to get a duplicate SIM card to access his account using his voter’s ID card, he said that he had left the card in his village and would have to ask the next fellow villager coming to Delhi to get it from his house. As he ran out of excuses, I sensed that there was more to the story than met the eye. Over the course of a number of small personal meetings (in the rickshaw or on the pavement away from his slum where the tekedar kept a watch), I pieced together the story.

High stakes card games drag borrowers like
Vinod into cyclical debt relations with
tekedar-cum-lenders 

Gambling with cards was the main issue. He had accumulated a huge debt to his tekedar as well as a few fellow villagers. He plays cards to relax after the working day. He played much more during Dipawali (a major Indian festival of lights) because if you win a card game during the festival the Goddess Lakshmi is said to bestow good luck and prosperity on you.

Vinod explained to me that whilst small amounts are taken on a reciprocal basis, bigger amounts of money lent by the tekedar (the rickshaw contractor) or malik (the rickshaw owner) are repayable with interest. For instance, a loan of Rs.1000 (US $17) would have to be repaid in a week's time with an interest amount of Rs.250 (US $4) per every Rs.1000. Vinod's debts totalled Rs.115,000 (almost US $2,000). He said he normally earns about Rs.500 per day, which is his net earnings (after basic expenses and rent for rickshaw) from pulling a rickshaw. So that would mean repaying the debt in 7 to 8 months!

When I asked Vinod if he was frightened about such a huge debt, he shot back “Why would I be scared? I know I will have to earn and repay if I lose, but if I win I will be able to clear off some debts.” When I asked what he would do if he needed to send money home, his answer was “tekedar will lend for that purpose, if the need arises.” On seeing me shaking my head, he said calmly: “Madam, I have a small diary maintained about my loans,” and he was ready to show it to me.

There are eight tekedars in this kandhar (the Hindi term for "wasteland"), and three are frequent lenders. Vinod explained that the tekedars and maliks are happy to lend when the juwa (card games) are on, but rarely lend for other purposes. Many pullers like Vinod deposit their daily earnings from the rickshaw with the tekedar. However, the deposited earnings and the loans are treated separately. The earnings deposited are also treated as collateral when a puller borrows from the tekedar. He said that in one of the games he won Rs.40,000 (US $670). The stake was doubled in the next game by his tekedar, who encouraged him to gamble, and he was unable to resist the temptation. He fell for it and lost Rs.80,000 (US $1,340). He was forced to borrow big sums of Rs.10,000 (US $168) from three tekedars and small amounts from others. Vinod stole Rs.55,000 (US $922) in cash from his brothers at home during his visit for Dipawali, hoping that he would win big in the next game. Now he owes this huge amount to his brothers, too.

"Lena-dena hota hai and isab kitab ban jati hain" -
 "Normally there is give and take when we play;
we square up debt obligations
depending on who wins or loses."  

Vinod explained that many people in the kandhar are tempted into playing cards and thus fall into a debt trap. Normally debts are squared between winners and losers. If a friend wins big one week, he will lend to his friends who have lost and borrow from them the next, “like a moving wheel.”

But the relations with the tekedar seem different. I witnessed an ugly spat between Vinod and his tekedar. The tekedar would not let him take out the rickshaw that day because his rent for it was overdue by five days. His tekedar issued Vinod an ultimatum to clear off all dues (Rs.4300, about US $72) in ten days time. But from Vinod’s explanation this was just one of a number of debts that would need to be settled at the same time: “I will repay each lender alternately because if I repay one and not bother about repaying another, I will face the wrath of the lender who is not getting back the loan from me.”

Vinod has aspirations, but when gently reminded about saving in his newly opened mobile banking account, Vinod simply said: “How can I think of saving or bother about Rs.600 savings in my mobile banking account when my mind is concerned only with now and only about returning the huge amount I owe people? Such things are far away in my mind now.” His answer echoed his life situation that dangles between desires and actual choices made under harsh circumstances.

1. Link to their full report: Evolving Participatory Relationships for Uplifting the Urban Poor Rickshaw pullers: Next Step Forward.

Understanding diverse uses of mobile phones and definitions of welfare: Revisiting the fishers of Kerala

By Janaki Srinivasan and Jenna Burrell based upon their IMTFI-funded research project with Richa Kumar

Discussions of money, technology and financial inclusion focus largely on practices around using and saving money. In our work we take a step back and analyze how money is earned in the first place, and how technology is woven into people’s livelihood strategies. With this objective in mind, we studied the use of mobile phones among fishing communities in Kerala, India.

Fish Auctioning in Vizhinjam, a landing center in south Kerala, 9/25/2012

Field site and findings
We first encountered our field site through a study that has become canonical in ICTD: economist Robert Jensen’s study of mobile phone use in fishing markets in north Kerala. Very simply put, Jensen found that the use of mobile phones to share market price information made fish markets more efficient while also improving producer and consumer welfare. Our goal with this project was to understand the geographic and political economic conditions in which Jensen’s findings hold and to examine questions of generalizability. In addition, we wanted to expand definitions of welfare to encompass more than an increase in income or savings.

We used a different methodological approach to frame and tackle these questions, constructing an ethnographic case study comparing two sites, one in north Kerala where Jensen’s study was conducted and the other in south Kerala. We conducted three-and-a-half months of participant observation and interviews in 2012 at fish landing centers in Kozhikode district in north Kerala and Thiruvananthapuram district in south Kerala. We spoke with fishers (owners of small and large boats, workers), fish purchasers (wholesale traders, small-scale vendors, including male and female), auctioneers who conducted the ‘auctions’ by which most fish was transacted between fishers and buyers, activists and others involved the fish supply chain. Based on our research, we found that

1. Fish trade in north Kerala is a special case. The region’s geography as well as prevalent investment and credit relationships allowed fishers the flexibility to sell at different markets. In south Kerala, we found that all-season landing centers were farther apart than in the north. Further, boats were bound by a credit relationship to a single investor rather than to several investors as in the north. For these reasons, fishers in the south had less flexibility to sell in different markets.
2. Moreover, in both regions, only specific categories of actors within a landing center found price information critical in making trading decisions and regularly used phones to ascertain it. 
3. A majority of those at the fish market were using mobile phones in a much wider range of activities related to their livelihoods. 
4. While a majority of these individuals perceived mobile phones as having enhanced their livelihoods and well-being, their implicit definitions of ‘welfare’ were rarely focused on improved incomes alone, emphasizing instead how they used their phones to maintain relations within and outside the market, and protected themselves during times of risk, vulnerability, or emergency.

Describing our first and second conclusions, and the list of differences between fishing in north and south Kerala, is beyond the scope of a short blog post such as this one. Therefore, we focus here on our third and fourth conclusions. We discuss the varied uses of phones and the many definitions of welfare that were emphasized by different actors in the fishing industry. Based on our observations, we argue that the seeking of market price information via mobile phones should not be given an over-privileged role.

Mobile phone use and definitions of welfare in fish landing centers of Kerala

At the time Jensen conducted his research (1997-2002), phones cost Rs. 5000 (around $106) on average, and there was a clear division between those who possessed phones and those who did not. By the time we conducted our study (2012), phones could be purchased for as little as Rs. 700 (around $15) and many owned multiple phones. No boat went out to sea without a phone and most typically had multiple handsets onboard. Nor was this restricted to fishers: an auctioneer told us “There’s no business here without mobiles” and we heard this from almost all categories of actors operating in both north and south Kerala sites. Jensen’s focus on who possessed phones and who did not is therefore less significant today than it was during his study. The more interesting question today is how phones are being used by different categories of users. In addition, we saw that other technologies such as GPS and echo sounders have become popular since Jensen’s study, making it worth asking how phones are being used in conjunction with these technologies.

Among the broader uses of the mobile phone, co-ordination work between the different actors in the fish economy constituted an important category of uses. This was important in fish marketing activities, as well as in fish preservation. Boat owners and fishing crew described, and we saw, how they would call their auctioneers a few minutes before they arrived at the shore to ensure someone was on hand to perform the auctions. Fishers in the south also mentioned discussing the timing (rather than site) of landing to optimize pricing. The ice-seller on the shore called the ice company to order ice based on how much fish was being transacted on a given day. Wholesale merchants and export agents also mentioned using the phone to communicate details of the trucks on which they were sending fish to agents at the destination. The perishability of fish, of course, was part of what made this coordination work critical.

Phones were also mentioned in the context of coordinating or balancing work and home concerns, most often by women vendors who operated in south Kerala. With the growth of fish exports, the presence of export company agents on the beach and the entry of cheaper fish from neighboring Tamilnadu, small-scale vendors are increasingly being marginalized in this region. Many small-scale vendors in this region have started traveling to markets in Tamilnadu to buy cheaper fish. Women comprise a part of this population that travels long distances everyday to purchase fish. A woman vendor’s work day, which includes traveling by public or hired transport because she doesn't own a vehicle, attending an auction, purchasing fish and selling it at a market or at individual houses, can last longer than 12 hours. Since women are also seen as the caretakers of this family in the prevalently patriarchal structure of the region, they worry about their families and their children throughout the day that they spend away from home. Many of them mentioned that having a phone helped them inform their family of their schedules and delays, know what was going on at home, and relieved them of constant worry.

Just as frequently as coordination work, people on the ground mentioned fish-finding as a prime reason for using mobile phones. Fishers used phones at sea and on shore to gauge fishing grounds on a given day. We found, in addition, that phones were often used in conjunction with the Garmin GPS units that all fishing units carried. The GPS was used to mark and specify the exact location where fish had been found. Fishers both used these markers themselves at a later date to look for fish, and also shared them with friends and relatives, a practice also noted by Abraham and Sreekumar. The widespread use of GPS and echo sounder technologies to pinpoint the location of fish and the use of GPS coordinates to share such prime fishing locations with other fishers post-dates Jensen’s study and is another element of the changing industry. While the sharing of fish locations is limited to fishers’ close social networks, it is worth noting that Jensen dismisses the likelihood of such a practice existing at all and as being against fishers’ self interest.

Finally, mobile phones (along with other communication devices) were perceived to be important in times of emergency as others have also noted. Fishers used both phones and wireless sets (the latter were typically installed only on large, mechanized boats) to contact the shore or other fishers in case of emergencies (such as running out of fuel, a damaged engine). Fishers frequently mentioned the dangers of fishing. A fisherman in north Kerala relayed a story of being out at sea when the fuel finished and his eventual rescue following a phone call placed on a satellite phone to a coastguard office, adding “I have great respect for this device because it saved our life.”

Using examples from north and south Kerala, we outlined six primary uses of the mobile phone – (1) price information gathering in combination with (2) arbitrage work (as considered by Jensen), as well as (3) coordination work, (4) balancing work and family (5) fish-finding, and (6) emergency response. We did this to question the often singular attention placed on the first two, and the pithy statement that commonly circulates in the aid sector and the mass media that ‘farmers/fishermen use mobile phones to get a better prices for their goods.’ What we heard from fishing industry actors in the field in both north and south Kerala is that there is no single practice that prevails as the most significant or universally valued use of the phone. It is important here, we argue, not to mistake the focus and priorities of disciplines (such as the concern in economics for how information asymmetries affect market functioning) for the interests and priorities of target populations. There are opportunities in the ICTD space (perhaps underexplored) to support the underlying needs that these alternate practices reflect.

The varied uses of the phone among these actors are matched by almost as many understandings of ‘welfare’ in their lives. People did not define their well-being or welfare primarily in terms of their income, or in terms of optimizing it. Many of them, especially the owners and crew of vallam and gillnet boats, and small-scale vendors, spoke instead in terms of managing or coping. They spoke of their physical and mental well-being, sometimes prioritizing that over an increased income (such as fishers who spoke of wanting to sell quickly and move on to rest, rather than wait to get the best price). The survival of a fishing unit lost at sea or caught in a storm is, of course, critical to fishers’ own long-term welfare and that of their families. Fishers and others in the fishing supply chain spoke also in terms of maintaining relationships, with fellow fishers, their auctioneers, or regular buyers, rather than solely in terms of optimizing their incomes (as reflected in practices of sharing fish-finding locations). These practices may very well eventually lead to improved incomes, but in a longer term and less easily measurable way. They also lead us to ask if Jensen’s definition of the fisherman’s problem as "maximizing profits by choosing where to sell their fish" or concluding with income increases as "welfare benefits" doesn’t narrow our understanding of the reality of the fish market.

The broader implication of our work, which we are only able to flag in this post (but is available in more detail here), concerns the importance of situating analyses of technology use in the history and political economy of a region and a sector. Through our conversations and examination of archival material, we found that fish markets in Kerala have been shaped by the regulatory influences of both fishers’ collectives and the government, in particular the creation of fishers’ co-operative societies, the systematization of an auctioning system and the loosening of traditionally coercive credit relations between fishers and those who provided them capital to purchase and operate their fishing craft and gear. We suggest that when studies (such as Jensen’s) omit these features in order to create parsimonious models and explanations, we end up representing particular markets as more “free” than is warranted. In turn, this potentially blinds us to the power dynamics that shape the daily working of such a market, including who uses technology and towards what end.

"My credit history": new monetary practices among Altaians in the post-Soviet era.

IMTFI researcher Svetlana Tyukhteneva gives us an update on her work on loans in the Altai Republic. More on the project.

Bank credit for private individuals among the Altaian community (Altai Republic, Russia) has only become publicly available in the post-Soviet period. Cash loans have now become an integral part of the lives of modern Altaians and people get them a number of different ways. The main objective of this project is to investigate the practices of new money among Altaians, particularly bank loans and bank credit cards. 15 interviews were carried out from July to September 2012 in the Ongudaisky district of the Altai Republic. The population of the area is 14,513 people and 76% are Altai. Respondents were chosen from among those who used the services of banks that were lending cash. The research confirmed my hypothesis, that monetary behavior among Altaians is culturally conditioned. Living in the same environmental conditions, yielding approximately the same salary, buying food and clothing in the same stores, Russian and Altaians handle money differently.

INSTANT MONEY. Cash loans: here and now!

Results of the project after six months:
1. Bank loans became available for the bulk of working citizens of the Altai Republic in 2002. Access to credit depends on the policy of each individual bank but generally as more people take loans, they are being made more and more available. Paying them is more difficult. To take a loan you must give the bank a wage slip from an official source. Since 2012, representatives of lending institutions have begun to go into people’s work places to offer loans and potential borrowers can complete an application for a loan whilst at work.

2. After working with borrowers I have found that they can be divided fairly evenly between two groups: those people who have had a positive experience and those who have had problems. I use this division as a methodological framework. Those that have had a positive experience can be further divided into those that will borrow more cash in the future and those that won't.

3. Looking more closely at the vocabulary employed by Altaians with regard to transactions, I was immediately drawn to how expressive they were about loans. One respondent said that he "loves loans" while another person compared loans with hard-labor. Based on this, we can assume that the credit history of each of these individuals is emotionally charged and is on a par with other important aspects of people's lives.

4. The stories I gathered from respondents confirmed my idea that bank loans and credit cards are the Altaians' first "school of capitalism," the first step on the road to capitalism. Quite a lot of the people who had taken a loan with cash at least once noted that due to the loan they had begun to learn to count money and plan expenses.

5. It is worth looking at some of the purposes for which the borrowers use credit money. Among other things they are used to purchase and repair houses, buy a car, host a wedding, purchase furniture and appliances, purchase livestock and livestock feed, pay for funeral expenses and purchase expensive clothing (coats of fur). These observations and conclusions are important for my further studies. My idea is as follows: cash loans have taught borrowers to be better at financial planning, more rational and pragmatic and with more financial discipline. I would like to look more closely at Altaians representations of wealth and poverty through the anthropology of money.

6. Many respondents stated that they took loans for the purchase of furniture, home appliances, mobile phones and expensive clothes like coats of mink because they have a desire to "have it all." People still refer to the trademark "hunger" of Soviet times. According to many social scientists and economists the Soviet ideal of wealth in the form of the triad "apartment, car, house" exists in the Russian mass consciousness to this day. Consequently, most of the borrowers take loans in cash or as a mortgage to improve the quality of their lives, rationally investing in their own future and the future of their children. However, there are also those borrowers who take a loan but use it inefficiently, spending in order to satisfy transient needs.

ALTAIENERGOBANK: "Fast, cheap, available!"

Conclusion
Most of the population of the Altai Republic can be classified as low-income families. Respondents explained that low-wages, unemployment and the absence of additional sources of income leads people to borrow money. The emergence of new players in the Russian banking market and the tightening of state control over the activities of banks has meant that the credit policy of banks has become more flexible. But the ease of getting credit in cash, the rather aggressive advertising of consumer credit organizations, and the economic illiteracy of the population, are all factors which can mislead people. People who do not carefully read the loan agreement, especially paragraphs typed in small print, only learn about hidden interest payments when they discover that their principal amount has remained high despite them having met the mortgage payments as required. As a result there are some people who find that they cannot repay the loan. Despite their best efforts to improve their lives, the loan ends up reducing their quality of life. On the flip side, there are a number of positive examples: loans for farm equipment have helped bring many people in villages in the Ongudai region out of poverty.

IMTFI Researchers Report on Findings from Workshop on "Landscaping Mobile Social Media and Mobile Payments in Indonesia"

Tom Boellstorff and his team offer here a series of reflections on the research resulting from their project on mobile technology, social media, and payments in Indonesia." This report, which precedes the project's final report, draws on insights emerging from the workshop “Landscaping Mobile Social Media and Mobile Payments in Indonesia,” which took place in Surabaya, Indonesia, on September 28 and 29, 2012.  

Image from a shopping mall in Surabaya. Photo credit: Tom Boellstorff

Key insights, about which the team is currently completing additional research, include the following:

1) The dominance of BlackBerry

2) The importance of providers and websites  

3) Place and time

4) Risk and reward 

Click here for full summary of insights emerging from the workshop “Landscaping Mobile Social Media and Mobile Payments in Indonesia,” which took place in Surabaya, Indonesia, on September 28 and 29, 2012.

Click here for the previous Interim Report by Tom Boellstorff and IMTFI Director Bill Maurer, published October 31, 2012.

Tom Boellstorff is Professor of Anthropology at the University of California, Irvine. His research interests include contemporary Indonesian society (where he has conducted ethnographic research since 1992) and digital culture. His books, among others, include Coming of Age in Second Life: An Anthropologist Explores the Virtually Human (2008) and with Bonnie Nardi, Celia Pearce, and T.L. Taylor, Ethnography and Virtual Worlds: a Handbook of Method (2012).

Barriers to mobile money adoption among rickshaw pullers in Delhi: The first of two personal stories

IMTFI sponsored researcher Mani Nandhi highlights barriers to mobile money adoption among rickshaw pullers in Delhi by sharing her notes from the field in the first of two personal stories.

I would personally like to see all of the un-banked rickshaw pullers in Delhi be able to deposit their savings safely via a mobile phone into a bank account. Is this wishful thinking? Do these poor migrant pullers have the same desire as I do in finding a safe place to save? Are there factors beyond their control or my vision that comes between desire and effort? The following is the first in a two-part blog post looking at my encounters with two rickshaw pullers in Delhi. In the process of trying to unravel the main issues I pay particular attention to the way poor people's desire and choices can inform us about context and culturally specific barriers to mobile money adoption.

Tulsi Ram guessed that he is about 55- 57 years old. He is an uneducated rickshaw puller who migrated from Madhya Pradesh to Delhi with his wife and five sons, 12 years ago. Within a day of our meeting him, he was interested in acquiring a bank account. He explained that up until then he had not been able to get one because he had no savings. Softly-spoken but determined that he should think of saving for his twilight years, he volunteered with us to get a mobile bank account. It was a real achievement for him when, after using his thumb print on the application form, he received the EKO Okeykey code book. It was the sign that he had opened a new account with EKO mobile money. Tulsi received a message about his successful account opening and was told that another message would come for activation. Tulsi said “Since I cannot read I automatically delete the messages always.” We told him to show the messages to someone to check about how to activate his account. 

The train was on track. I was happy. Will the ride be a smooth one? I contacted Tulsi to check that he had managed to register successfully but his mobile phone was answered by his son who informed me that his father had been hospitalised with an eye ailment. 

Days passed....

Two main problems became clear to me as I continued to work with Tulsi. The first was an error made by the retail agent. His thumb impression was taken in red ink when it should have been done in blue or black ink. The agent’s error was rectified when Tulsi made a fresh application, this time at the counter. The second barrier was Tulsi's illiteracy. Later I understood that his account had not migrated to the CBS platform of the State Bank of India (SBI) because he had given only 9 digits for his mobile number. When his 10 digit number was relayed to the EKO office, the account was finally activated, 61 days after the first step. During the long waiting period Tulsi kept asking me two questions: "Madam, I was told that account activation status would be known through a message, but it’s not yet received in my mobile phone.” And: “Madam, when can I go to deposit some money?" 

Four days after his account was opened he went to deposit a small sum of money to operate his “first bank account” but his enthusiasm was immediately dampened. The customer service representative told him to come back after 3pm the same day. Time is precious for rickshaw pullers and Tulsi could not go to deposit his money at a time that was convenient for him. In the interim, he lost his mobile phone while visiting his village two days after Dipavali (a major Indian festival.) When I met him on 23rd November 2012, he said he could not go again to the EKO counter because he did not have the mobile phone and had neither time nor money to buy another mobile phone now. He did not know about blocking the mobile phone (SIM) number with the service provider nor did he know about lodging a police complaint about the loss of his mobile phone and SIM card. When I told him that his lost mobile number is the account number for his mobile banking account and that he needs to get a duplicate number, he exclaimed: "Madam, what can I do? I don’t have time to go for this because I need to earn?” Nonetheless, he promised to speak to his son to get a duplicate number. 

Exactly a month later on 22nd December 2012, I met him again and he had not been able to get a duplicate mobile number; instead, he had found it easier to buy a new SIM card and a new mobile phone. What were the factors involved in this decision? "Time constraints" and "illiteracy"? Or should that be "time constraints" and his own "rational choice" from his perspective? I explained to him that he still needed to register the new mobile to his bank account.

After a missed meeting and repeated reminders we finally met, albeit two hours after the arranged time. But there had been a domestic crisis. His daughter-in-law had left for her mother’s village in a huff after a fight with his second son. His son had left soon after to bring her back. Tulsi’s mobile phone was taken by this son because the family only has two mobile phones – one with Tulsi and another at home with his wife. From my perspective, another delay, yet Tulsi was unperturbed. His concerns were more immediate such as how to meet domestic expenses in the face of spiralling prices, recurring health issues and his hand-to-mouth existence. As much as he wished to have a bank account, his desire to use the account to save was outweighed by the demands of his daily hardships. To put it another way, his daily struggles to make ends meet overwhelmed his desire to save in a bank account. 

As I write this post, tomorrow is another day when I am going to meet to take him to the EKO counter to get his account number changed. I am hoping that his desire to use the mobile banking account grows stronger than his never ending problems...

Remittances vs. Savings on the Mobile Money Platform (Part 1)

IMTFI fellow Ishita Ghosh (along with her colleague Kartikeya Bajpai) studied the mobile banking partnership between the State Bank of India (SBI) and Eko in the bank-led regulatory environment in India. The following post reflects on her research findings.

Mobile banking as transformational channel in the developing world can bring financial services to the hitherto unbanked populations in regions that are typically unserved by brick-and-mortar bank branches. Ever since M-Pesa’s unprecedented success in fulfilling the need for secure, convenient platforms for remitting money in the Kenyan market, mobile banking iterations in the developing world has been predominantly built and used for remittances, micro-payments, and micro-transfers. As providers and scholars alike think about expanding the available financial suite of services on the mobile backbone, and especially about moving from remittance to savings services, it becomes important to consider the many factors that may drive the development and uptake of different types of services.

The first thing to consider is the regulatory environment within which the mobile banking model is implemented. As far as the telecom operator-led mobile banking model prevalent in African countries is concerned, there is a general drive for telecom operators to enter into unique partnerships with banks and thus connect mobile money users to formal bank accounts. Although instances of using the mobile money “wallet" as a temporary savings or storage device have been recorded in telecom-led mobile banking platforms in Kenya and Uganda, regulators have not permitted telecom operators to leverage these accounts as interest-bearing savings accounts, thereby rendering this collaboration with banks inevitable. In contrast, the bank-led mobile banking model, such as the SBI-Eko partnership in India, is already capacitated to offer formal bank accounts to its users. While telecom-bank partnerships dictate the sharing of all operations, payment instructions, and branding, which may well displace the telecom’s leadership, banks already possess the infrastructure to design and deliver a wide range of financial services and can provide interest-bearing savings accounts without having to disturb any existing headship.

When we consider the nature of remittance and savings services specifically, it is important to remember that while the former tend to be discrete, unidirectional, one-time transactions, the latter are longer-term financial transactions, where money is locked-in with (typically) a penalty on withdrawals to limit them. What we discovered during our appraisal of the SBI-Eko mobile banking service in India is that this is a crucial difference that may form consumer trust in an atypical banking platform such as mobile banking, and therefore drive the uptake of the financial services. 

An Eko agent outlet in New Delhi (photo by the author)

For instance, due to their discrete, one-time nature, remittance services can be easily tested on an alternative platform. We observed such practice in Delhi where users would remit a small amount of money (between 20 and 40 cents) that they could afford to lose, the first time they were using the SBI-Eko service. They would then call their recipients up to confirm that the money had been transferred successfully. If so, users would then begin to trust the service and use the SBI-Eko remittance service again. Sometimes users would use the service based on the successful trial experience of a friend or family member. We met one user in particular who was sending money to his wife in small amounts, but doing so frequently. He did not fully trust the SBI-Eko service provider, because it was a departure from the traditional, brick-and-mortar banks, despite having successfully sent money many times over. He reasoned that the smaller quantum of remitted money was a loss he could afford to bear, in case a given transaction did not complete. Therefore, we discovered that users were putting the remittance service on trial directly, or they were depending on the successful trials of their friends or family members. In some cases, the outcome of a preliminary trial determined the service’s continued patronage, whereas in other cases the discrete nature of the remittance service permitted the testing of the service even on a sustained basis.

Savings services, on the other hand, inherently do not allow users to put the service on a quick trial - at least, not without sufficient risk to their savings. Therefore, when such an option is lacking, users tend to trust atypical channels such as mobile banking for savings transactions, if they trust the partner bank (users were almost never aware of Eko’s brand). We also observed that in a few instances users signed up for savings services when they trusted the agent directly. In general, users tend to be less obliging of any breakdown in the completion of a savings services, when compared to remittance services, since this would entail the potential loss of a larger chunk of money.
 
In fact, we discovered during our fieldwork that users exhibited dissimilar expectations from remittance and savings products. We observed such behavior in Patna where a collapse in the back-end handling of savings accounts led to a severe erosion of confidence in the Eko-SBI savings product. Due to an operational glitch, all activity had been suspended temporarily on the newly opened savings accounts. When savings customers first realized this, they instantly panicked, and any reassurance provided by the agents or Eko’s representatives was disregarded. As soon as their accounts were reinstated, most customers immediately withdrew all their savings and ceased to transact with their savings accounts. Unsurprisingly, this severely impacted the reputation of the SBI-Eko savings product in Patna. Interestingly, however, customers still trusted the SBI-Eko remittance service. In fact, customers continued to return to the remittance service despite frequent server downtime and other network snags. This example demonstrates a complex picture of how users may trust and consider the same service provider in different ways according to the financial service in use. It also indicates that providers must especially focus on providing seamless savings services, as any failure adversely impacts the reputation and thus the subsequent uptake and activity on these accounts.

To conclude, we want to point out that, despite these important differences in their temporal spans and in the possibility of testing them, remittance and savings services may not be in practice completely divergent. As a migrant in Delhi, who was originally from Bihar, told us, “I send what I save to my family.” It begs the question: does this count as a remittance or savings practice? Typically, this difference is recorded on the provider’s end based on the service platform used to complete them. But remittance and savings services demonstrate some inherent affordances that can collapse any disparities between them, if provisionally. For instance, we met one user in Delhi who sent money to his wife in Bihar 2-4 times a month on average. However, instead of using the SBI-Eko remittance service to transfer money to his wife’s account, he was actually depositing money into his own savings account at a lesser fee. He had left his ATM card (and the PIN) with his wife back in Bihar, who could now go to the nearest ATM machine and withdraw money directly. We met another user in Delhi, who had a regular savings account that was registered in the state of Madhya Pradesh. He was therefore incurring a severe liability for making deposits out-of-state. To prevent the fee, he was using the remittance service to send money into his savings account at a lower cost. He then used his ATM card to withdraw money from the many ATM machines around the city. These examples demonstrate that users may use the savings service as a remittance service, and vice versa. This is something that providers and scholars must remain mindful of while designing financial products and services for unbanked and under-banked populations.

Can social transfers boost electronic payment adoption and financial inclusion? Lessons from Palawan, Philippines

IMTFI fellow and researcher Anatoly (Jing) Gusto’s project looks at dispensing cash grants in the Philippines. You can find out more about the project here.

The potential of social transfer schemes to boost electronic payment adoption and ultimately financial inclusion is starting to gain recognition (see, for instance, Zimmerman 2012).  Our findings are drawn from a study involving a group of beneficiaries of the “Pantawid Pamilyang Pilipino Program” (4Ps), a conditional cash transfer (CCT) program based amongst an indigenous group in the Philippines. They point to three major issues that stakeholders need to think about when selecting channels to make it an effective gateway for financial inclusion. The following is a roundup of how continual changes in Technology, user and cultural contexts and the denomination of bank notes are major factors in promoting financial inclusion and particularly savings among the poorest of the poor.

ATM dispenses only 500 & 1,000 peso bills

1. Continual Changes in Technology
Regulators have made a concerted effort to help distribute cash grants to beneficiaries by thinking about how to apply new technology. But just as project proponents, channels, and direct beneficiaries are starting to get accustomed to one mode, new technologies and models begin to appear.

In the Pantawid Pamilyang Pilipino Program (4Ps), several disbursement modes were adopted by the Department of Social Welfare and Development (DSWD) and the Land Bank of the Philippines (LBP), a depository and disbursing bank of the Program. At the start, cash grants were disbursed through the LBP Cash Card (non-interest bearing debit card account) and could only be withdrawn from Automated Teller Machines (ATMs). Today, a portion of the grants are already released via the over-the-counter method in the LBP bank branches and through other conduits including rural banks, cooperative banks, cooperatives, non-government organizations, merchant partners of one electronic money issuer, and through the Philippine Postal System (PhilPost).

Each new technology brings not only new business models and processes, but also new information that needs to be learned and accepted by all concerned. The pace of change is daunting, especially for organizations that must work with millions of individuals nationwide, not to mention other social welfare functions they have to attend to.

Positive effects of technological changes

LBP has shown its openness to other disbursement channels, most recently one that involves point-of-sale (POS) terminals. Post fieldwork meetings with DSWD and LBP revealed that there is an effort to explore how other channels, including biometrics and POS terminals, can be used in partnership with conduits and merchants. In a recent payout in Palawan in 2013, CCT beneficiaries reportedly got the chance to purchase and pay for goods in the merchant’s store without using cash by swiping their ATM cards on a POS terminal and entering their Personal Identification Number (PIN) which is the same PIN used in the ATM.

A payment transaction which results in an electronic deduction of the purchase amount from the beneficiary’s cash card and corresponding credit to the merchant’s deposit account is believed to be convenient as it eliminates or reduces the need for beneficiaries to take the extra step of going to the ATM to withdraw money.

2.  User and Cultural Contexts

Regulators and providers must understand that the CCT beneficiaries are a new and unique client segment that enjoys regular, steady flows of capital (sometimes into a deposit or debit account). While technological advancement offers new options in the distribution of cash grants, the context with which the “target clientele” operates is still the same.  CCT beneficiaries are economically vulnerable, with relatively low levels of education, they may also be more comfortable operating in the informal sector. In the case of Indigenous groups, their traditional cultural practices and rudimentary experience in using/storing physical cash causes problems. Regulators may be ill-equipped at the moment to serve and monitor this market if their focus is limited to formally regulated institutions.

In the Philippines, indigenous people, particularly from the uplands, had initial doubts with the program and at first could not believe that the government would give them money for the betterment of their children’s education and health. Fortunately, with the help of locals known by the indigenous group (municipal links and parent leaders), DSWD was eventually able to allay fears and gain their trust. Municipal links and parent leaders were able to help by carrying out the transactions for the indigenous groups.

At least in the areas visited, cash is perceived with little value beyond its function as a means of exchange. In fact, storing cash in physical wallets or purses among indigenous groups is not a common practice. When asked where they store their money, they said they just put them in plastic bags or in an envelope containing their other CCT documents.  There are a few who set aside some amount of cash for covering future school related expenses of children, in particular school projects and food and transportation allowances, and for emergencies. What is more common are baskets that indigenous groups carry in their backs which they use for transporting goods they barter, sell, or purchase.

Making things work for financial inclusion

There is evidence that regulators can be flexible and creative which is what is needed to develop digital strategies that work in a specific context. For example part of the recent enhancements carried out by LBP and DSWD involves partnering with non-bank financial institutions as well as civil society organizations (CSOs) in the implementation of the program. Furthermore, there are signs that they are interested in knowing whether cash is really a prerequisite to be able to promote access to investment goods for the education and health of children. Is there a way for poor households to have better access to these funds or equivalent goods for education and health without using cash?

Merchant paying in candies due to
lack of coins and smaller bills

3. Denomination of Bank Notes
vs. Amount of User Transactions 

A conditional cash transfer, paid in high-denomination banknotes can result in “value leakage” as problems of access to the entire amount of the grant arise. For example, take a payment of ₱2800. If the ATM only dispenses ₱500 or ₱1000 notes, this is disbursed as two ₱1000 and one ₱500 bills, forcing a “leftover” of ₱300. Some merchants who sell goods during payouts have difficulty in giving the exact change as most transactions involve high-denomination banknotes for small purchases (e.g. less than ₱100).  One merchant resorted to using candies in lieu of coins when he runs out of smaller bills for change.

We have seen that while technology can be considered a limitation in terms of providing recipients the immediate access they need to the exact amount of the grant, we have uncovered practices and a growing mindset among beneficiaries associated with the denomination of banknotes and coins that provide opportunities for mobile and electronic money development. In particular, ATMs that dispense only high-denomination banknotes force people into “saving” amounts of their cash transfer between those denominations—and some report satisfaction with this outcome, saying that it helps them to cover unexpected expenses in schools and buffer financial crises. In one instance, a recipient even inquired if it is possible to credit those funds to a deposit account. Banks that serve as conduit partners for CCT must grab the opportunity to help with account opening in order to ensure that recipients get a CCT payment.

Key Takeaways and Challenges

Not just to withdraw money but to shop “cash-lite” if not “cashless” 

The objective of conditional cash transfers is for poor households to be able to invest (spend) in the education and health needs of their children. Our research has shown that CCT proponents must not only ask about “how to improve the delivery of grants,” but also “how to ensure an affordable and convenient way to purchase/deliver the needed goods/investment in the poor households.” The relevance for CCT beneficiaries of any form of value is not just related to its ability to be transferred and cashed out (liquidity), but also the ease of dividing it into smaller units of value (divisibility) conducive for small purchases.

Need not for “new” but “better” technology

Aligning technology with the actual delivery capability in the field is a challenge that CCT proponents will need to face in considering any other distribution channel. In the case of the Philippines, cash grants are often still disbursed through a non-interest bearing debit account. Banks that serve as conduit partners might be able to take advantage if beneficiaries are offered the opportunity to open a savings account where payments can be made via SMA. This way beneficiaries can be given incentives to save and maintain a higher balance. The accounts can be made more appropriate if they also include features such as bank transfer/remittance, bill payments, airtime top-up, insurance availment, etc.

Need for end-user education

The example of indigenous groups using the ATM machines indicates that while there might be a relatively simple technology already available, the CCT segment is still typically characterized by lower education levels and lower exposure to technology. These will require that any new technology introduced will need to include a significant training component that emphasizes the benefits of using the service as well as the mechanics of accessing the service.


Link to their final report: "Delivering Cash Grants to Indigenous Peoples through Cash Cards versus Over-the-Counter Modalities:  The Case of the 4Ps Conditional Cash Transfer Program in Palawan, Philippines"