Nandan Nilekani of Infosys and Aadhaar fame has been brought in to help the government of India accelerate the transition to e financial services in the aftermath of demonetization. 350 million with no phones and 350 million with feature phones is just the first problem. What happens when there is no signal, like in Chennai after the recent storm? The committee has a mega challenge ahead. The committee is expected to meet again this week to look at how to approach those with limited access to technology.
I frequently use the phrase “a crisis is too valuable thing to waste” usually attributing it to Rahm Emanuel, Obama’s first Chief of Staff. So I was intrigued by this column in the New Indian Express. The writer looks ahead beyond the blame game. The deed is done, however messy. Now how to make something out of it?
For bill payments over electronic means to work, it is necessary for the payee to have an electronic system. Some parachute advisers identified mobile payments as a low hanging fruit in the early days, even before the telecom reforms had started. But it took years to pluck this fruit because work had to be done on the pre-conditions. Not only was it necessary to get phones into the hands of the consumers, it was necessary to modernize the billing systems of the payee organizations. ConnectNPay, a joint venture between Myanmar’s MCC Group and Singapore’s Leo Tech, has since May provided an e-link between service providers, such as utility companies, and payment partners, such as banks.
It was in a difficult-to-find room, as far away as one could get from the conference registration area. But we had 50 engaged participants at the open session on systematic reviews organized by LIRNEasia at ICTD 2015. The presentations are below. Introduction Impact of mobiles Mobile financial services ICT in classroom ICTs in MSME The session report can be found HERE
Hard truth about why the successful mobile payments model pioneered in Kenya has failed to spread. However Kenya’s success has yet to be replicated much elsewhere. More than half of all the world’s mobile-money transactions are handled by Safaricom. Mobile money is popular in one or two chaotic countries, such as Sudan and Somalia, but barely used in most places where it could do immense good, including India and China. Not all countries need mobile money, of course.
According to this overview, m-money is the future. The survey, released earlier this month by the Pew Research Center’s Internet and American Life Project along with Elon University’s Imagining the Internet Center, asked just over 1,000 technologists and social scientists to opine on the future of the wallet in 2020. Nearly two-thirds agreed that “cash and credit cards will have mostly disappeared” and been replaced with “smart” devices able to carry out a transaction. But a third of the survey respondents countered that consumers would fear for the security of financial transactions over a mobile device and worry about surrendering so much data about their purchasing habits. Sometimes, those with fewer options are the ones to embrace change the fastest.
In the recent special issue of Information Technology and International Development, Ayesha Zainudeen et al. identified the non-ICT barriers to the spread of e commerce in developing countries, including payment mechanisms when credit cards did not exist and the bad state of the postal services. The NYT has a fascinating story about how Indian entrepreneurs are combining cheap and plentiful labor and ICTs, to develop workaround solutions. Several months ago, when Prabhu Kumar could not find a book he wanted in bookstores here, he found it online at Amazon.com for $10.
LIRNEasia’s IAB member and close collaborator Professor Ashok Jhunjhunwala has written a thought-provoking op-ed in the Times of India: Black money thrives in the cash economy. If we introduce traceability in financial transactions, it will be difficult to hide. We can do this using some simple available technologies. It is possible to carry out all transactions in electronic form, where money is transferred from the payer’s bank account to the payee’s. The back-end core banking system of almost all banks allows that.
A significant contribution to the m-money debate has been made by Chanuka Wattegama, until last month LIRNEasia’s Senior Research Manager and the person responsible for managing the Mobile 2.0 research module. The tightly argued piece contains many references to LIRNEasia work and is a perfect example of the success of LIRNEasia’s catalytic role. Worth reading in full by anyone interested in the subject. Ours is an anxious society that expects the protection of every electronic money transfer by the financial regulator.
Much has been written about Kenya’s m-money system. Here the Economist highlights a Gates Foundation paper that highlights an aspect that has not been much written about, the need to balance e money and real money in the hands of the retailers. There are many elements to a successful mobile-money scheme: the right technology, simple marketing, partnerships with banks, support from regulators. But keeping it all going are people like Gaudencia, moving bundles of cash around, on buses and in vans, behind the scenes.