Published :
Updated :
For all latest news, follow The Financial Express Google News channel.
Some young and talented researchers - Fakir Md Yunus, Safayet Khan, Tanjilut Tasnuba, Paroma Afsara Husain, and Amanda Misiti - undertook a research on transfer of money via mobile phones. Their insights could make important policy suggestions regarding the future workings of an inclusive financial market.
Cell phones around the world are increasingly being used for empowerment of people in general and for poor people in particular. This digital technology has become successful in making the market more efficient in some underdeveloped regions with inadequate infrastructure facilities (e.g., bad roads and slow postal services). It also helped facilitate entrepreneurship by allowing information to move more freely. Research findings tend to show that the usage of extra ten phones per 100 people in a typical developing country boosts GDP growth by 0.8 percentage points. Worldwide more than 4 billion handsets are now in use, three quarters of which are in the developing world.
Pari-passu penetration, they are increasingly being used in many countries to transact money, not to speak of information socio-economic parameters. Almost one-tenth of adults in 20 different countries used mobile money at some point in 2011. In some countries, more people have registered for mobile money accounts than traditional bank accounts. Mobile money can be much faster, less expensive and a safer way to transfer. It creates opportunities in a regime of non-inclusive financial market for unbanked poor people who may be illiterate and do not have access or are intimidated by the rules, and schedules of formal banks. Mobile banking is also safer than storing wealth in various forms particularly during the time of natural disasters. In some cases, mobile money has helped increase household income. It has been found from a recent study that incomes of Kenyan households using mobile money service have increased by 5-30 per cent since they opted for it. Mobile money also gives its users a way to save small amounts of money and thus develop their savings habit. A research report published by the World Bank found that mobile money users in Kenya are a third more likely to maintain savings than their peers.
A lack of appropriate financial tools and services impedes efforts to reduce poverty and provide better services. Mobile money provides a stepping stone to formal financial services for the billions of people who lack access to savings accounts, credits and insurance. It enables people who cannot access a branch or ATM to use financial services. This also helps offset the bias of the banking system for the well-educated.
People across the developing world go to small retailers nearby their house to buy vouchers to top up their phone credit. Mobile-money services enable these small retailers a safe, fast and relatively inexpensive way to send, receive and store money. Small retail shops thus act like informal bank branches where people transact and help those retailers to develop as small entrepreneurs. In Bangladesh, approximately half of the adult population is unbanked. Over the past three years, a mobile banking industry has emerged to help meet these individuals' needs, and has already reached 13 million users. In addition, as Bangladesh is urbanising rapidly, young adults working in the city send money home through mobile money. In 2013, over BDT 500 billion was transacted via mobile money.
Previous studies on the use of mobile money by the rural poor reported a positive perception on it. This study however suggests that implementation of this innovative method might have some positive and negative effects. In this study, the researchers conducted qualitative research to try to understand the perception of introducing mobile money in the non-profit development sector.
Most of the respondents were aware of mobile money, understood how it works, and had a mobile account. They first came to know about this through advertisements by different service providers such as bKash, DBBL mobile banking. Some of them came to know about this from other people. Safe transactions were the main benefit that they mentioned. Some of them also mentioned benefits such as trouble-free transaction and the ease of access. Some of them think it is a better system because they can save time during their daily work. Introducing mobile money would reduce respondents' workload as there will eventually be no paper work. As this was a new initiative, some people mentioned that there will be some extra work at the beginning. Some people expressed concern that staff might become redundant and lose their jobs because of this new system.
Mobile money can be beneficial where there is little or no formal banking. In 'char' and disaster-prone areas, mobile money can be useful to save or transact money as well as to buy relief goods quickly. One of the accounts officers said that banks remain closed for two days every week and queuing for withdrawing money can be time-consuming. This system would further reduce organisation's expenses as it does not need to reimburse its field-based employees for their transportation.
bKash charges a fee for its services and this is considered by some a problem. Some of the respondents were confused about mobile money charge rates and stated that this varies geographically. bKash agents sometimes ask for double money and the service charges could be the main barrier to the use of mobile money. Some respondents pointed out that they would support the traditional cash system, if they find that mobile money costs them extra money. Several East African countries including Kenya levies tax on all kinds of mobile money transfer systems and have experienced a downward trend in the value of mobile payment.
Many clients may not understand how mobile money works and experience challenges, like remembering their passwords. Moreover, not having a National ID card and access to mobile networks could be big challenges for opening up a bKash account and using the services. Thus, the level of education of the clients is also important because clients need to understand the short message, which is in English, received from bKash. It is also equally important for client to know the benefits and challenges of the bKash system. Regular follow-up in person is necessary for those who have not used a mobile phone before or who have recently opened a mobile banking account. A majority of respondents suggested that if a program organizer goes door-to-door, it would be easier to collect money.
In general, people were willing to use mobile money in the non-profit sector. Mobile money transactions could make people's lives easier compared to the current cash transfer system. It could save their time and money.
Abdul Bayes is a former Professor of Economics at Jahangirnagar University.