Government Transfers To Drive Mobile Money Usage?

With some 124 mobile money deployments already launched globally, and almost as many again in the pipeline, it seems consumers in the developing world are not short of opportunities to make mobile payments. Yet an interesting statistic came out of a Microfinance Club UK event a few weeks back discussing customer usage patterns from MPESA financial diaries - there are more people using the MPESA service than all the other mobile money deployments around the world combined. One of the critical messages on the evening was that if you don’t design a mobile money service based on the needs of its target customers, they will not use it. It’s worth remembering that MPESA itself was originally set up to facilitate microfinance disbursements and repayments, and that person to person transfers (P2P) were only added after it was discovered that there was an unmet demand for them.

For MPESA it was a well documented confluence of events, unlikely to be repeated elsewhere, that allowed for rapid adoption. But what factors could drive customer acquisition and usage in countries outside of Kenya? Well one possibility, often overlooked, is government to person (G2P) disbursements. Traditionally G2P payments have been thought of as being a natural follow-on from a successful P2P launch – i.e. once there is a critical mass of people using a mobile money service then it becomes an attractive channel through which to distribute government payments. However, could G2P actually be a driver to facilitate rapid adoption of mobile wallets across the developing world?

Governments like the concept of G2P mobile payments, as they can directly target individuals in hard to reach places without the logistical difficulties of having to physically distribute cash to them. For instance, the World Food Program used Globe to disburse relief payments (for these purposes considered G2P) following flooding in the Philippines last year, and since then we have seen similar G2P programs in Pakistan and Kenya to name two. Some governments also insist that civil servant salaries are paid into low cost bank accounts. Those governments wishing to promote mobile payments in their countries could conceivably extend this provision to include mobile wallets.

There are some organisations that actively promote mobile as a channel for government disbursements. One such organisation is RT Pay, a not-for-profit company dedicated to improving tax collection efficiency in developing countries. They propose a real time PAYE collection system where salaries are paid gross to a clearing system overseen by the central bank, which in turn pays the net salary amount direct to employees and any income taxes direct to government. In those countries where many employees don’t have bank accounts, the mobile is an obvious channel through which to distribute these payments. If adopted widely, initiatives like these could promote the rapid adoption and use of mobile wallets across the developing world, a fact not lost on Visa who recently declared their intention to target this market following the launch of their virtual pre pay card, which they aim to promote through their Fundamo deployments.

It would appear that in some countries governments, and the public sector in general, have at least as important a part to play as the private sector in the promotion and adoption of mobile payments.