Mercy Corps Diary of a Mobile Money Program by Cameron Peake

DIARY OF A MOBILE MONEY PROGRAM e-Book Three: Scaling Up — Growing a Merchant-Agent Network

FORWARD This is the third and final installment of Diary of a Mobile Money Program, an electronic book series in which we share our experiences with mobile money in Haiti. In eBook 1: From Planning Phase to Pilot Launch, we told the story of how Mercy Corps partnered with a private sector consortium to integrate mobile money across multiple programs in the post-disaster humanitarian relief context following the January 2010 earthquake. In eBook 2: Beneficiary Financial Diaries – In Their Own Words, we captured individual experiences using mobile money through information gathered from transaction logbooks, one-on-one interviews, and focus group discussions. We also briefly introduced a food security program called Kenbe La (a Creole phrase that means “hang in there”). The program was designed to provide vulnerable households with financial assistance over a nine-month period to purchase basic food provisions from local merchants using the mobile money service (T-Cash) provided by our partners Voila1 (a mobile network operator or MNO) and Unibank (a commercial bank). With eBook 3: Scaling Up – Growing a Merchant-Agent Network, we relate how Mercy Corps drove the development of a mobile money ecosystem in the city of St. Marc. We achieved this by training small and medium-sized merchants, previously unfamiliar with the service, to use, promote and eventually become agents for mobile money. It required not only strong relationships among local participating merchants, but also regular disbursements of electronic money (e-money) to ensure a consistent and sizeable volume of mobile money transactions for merchants to engage in. Vendors participating in a Focus Group Discussion. 1

Devan Wardwell for Mercy Corps

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On March 30, 2012, Digicel, a Haitian MNO, acquired Voila. As a result, Voila’s T-Cash service was discontinued. At the time of this installment’s publishing, it remains unclear what Digicel’s strategy for retaining and integrating existing T-Cash agents will be.

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Four years after the Haitian earthquake, daily life has rebalanced for most of the country’s citizens. In the months following the event, aid programming provided short-term relief from the disaster, and later supported the new systems and services to address deeper development challenges.

Acknowledgements

One of the most high profile post-earthquake investments was into the development of a mobile money ecosystem. Four years later, the conclusions about this payment innovation are mixed. While the product has not become entrenched at levels seen in Kenya or similar markets, the experience has encouraged payment providers to view low-income consumers as a central market segment. New and existing institutions are developing financial services for low-income communities. We anticipate exciting developments in this field over the years to come.

We extend special thanks to the Economic Recovery Program team responsible for the integration of mobile money across multiple programs, including the staff in our St. Marc field office who trained and supported thousands of local participants in financial literacy education and their usage of mobile money. We are extremely grateful to the merchants of St. Marc who provided valuable program feedback and let us profile their lives and work in this final edition.

As payment providers and social impact organizations continue to improve financial opportunities for the global poor, Mercy Corps wants to share our experiences, lessons, and challenges from building a mobile money program in Haiti as a way to create more informed products in the future. Our work there led to tens of thousands of new, successful m-commerce payments, and to the emergence of a core group of local merchants comfortable with and confident in a new transaction method made possible by mobile technology. We gained greater insight into how to integrate this service into NGO programs as well as mobilize and train program participants. Additionally, we developed a better understanding of the types of roles that NGOs and other institutions might play in supporting the emergence of a nascent mobile money sector through targeted pilots and programs, especially those designed to serve more isolated, vulnerable populations. We hope our experiences will shed valuable light on some of the core opportunities and potential obstacles facing NGOs that are considering whether, and how, to support an emerging mobile money sector or expand its ecosystem into new areas.

In this final installment, we recognize the various teams and departments within Mercy Corps Haiti whose efforts and contributions made this e-book series possible.

Additionally, we would like to recognize and thank our partner OpenRevolution, who helped draft the eBook series. We also thank our partners in Haiti—HIFIVE, Voila, Unibank, and UniTranser—whose support and commitment to mobile money made our work possible.

A Note about our Telecom Partner Our telecom partner in this program, Voila, was acquired on March 30, 2012 by Digicel, another Haiti mobile network operator. Included in that acquisition was Voila’s T-Cash service. Mercy Corps sees value in sharing lessons from our experience, particularly related to merchant incubation and agent development, for other NGOs and partners that aim to expand access to financial services in underserved communities. We see parallels with the challenges and opportunities in other markets, and we seek to ensure that our approach can contribute to the dialogue around strategies for financial inclusion. We believe our experiences are highly relevant for those operating in markets where mobile money services have just launched or are about to launch.

This Mercy Corps Initiative was supported by private funds and grants from the Office of U.S. Foreign Disaster Assistance (OFDA), Food for Peace (FFP) and Haiti Integrated Finance for Value Chains and Enterprises Programs (HIFIVE) of USAID.

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TABLE OF CONTENTS Key Ingredients of a Mobile Money Ecosystem

Merchants & Agents – An Essential Network of Service Points

Clients – Bridging the Gap Between Awareness & Adoption

Kenbe La Program – Incubating Mobile Money Agents

Merchant Selection & Mobilization

Initial Trainings & Dedicated Transactions

Building Agent Capacity: Liquidity Management

T-Cash Agent Pioneers: The Merchants of St. Marc

Mobile Money’s Impact on Day-to-Day Operations & Decisions

Mastering Mobile Money

Transitioning to Mobile Money Agents

Supporting Both Sides of the Mobile Money Equation: Financial Literacy with a Twist

Conclusion: Observations & Lessons Learned

Age ain’t nothing but a number: Financial Literacy Training beneficiaries.

Devan Wardwell for Mercy Corps

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Key Ingredients of a Mobile Money Ecosystem â&#x20AC;&#x201C; Merchants, Agents and Clients

Amicia with participating vendor Dorcent Exantus in his shop Nick Lesher for Mercy Corps

In Haiti, mobile money users can be grouped into three categories: affiliated merchants, agents and clients. Affiliated merchants and agents act as service points for clients, allowing them to conduct a variety of mobile money transactions, including cash-in/ cash-out, purchase, and transfer. Affiliated merchants are distinguished from agents by the types of transactions they are authorized to perform. In Haiti, the former are only authorized to conduct sales via e-wallet (electronic-wallet). The latter are authorized to conduct sales and Â provide additional services such as cash-in/cash-out (a process whereby money is exchanged for mobile money or vice versa) to registered e-wallet subscribers. Together, affiliated merchants and agents represent key drivers in the expansion and movement of mobile money within a given market.

bank, mobile network operator (MNO), or third-party provider) or a consortium of commercial actors. The service provider is responsible for maintaining the technology platform that manages mobile money user accounts and processes transactions. If these accounts are linked to bank accounts, the provider must ensure that its platform can communicate with the platforms of participating financial institutions. Participating merchant outside his shop. Devan Wardwell for Mercy Corps

Along with users, a functioning mobile money ecosystem requires a service provider. The mobile money service provider can either be a single entity (such as a

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MERCHANTS & AGENTS – An Essential Network of Service Points As demonstrated in a variety of deployments across the globe, the value and utility of mobile money diminishes considerably without a broad network of service points. These points must be affordable and convenient for consumers to access and inexpensive and easy for providers to establish. Furthermore, for mobile money to be commercially feasible, it must be widely and frequently used. To establish and enlarge these networks of service points, mobile money providers usually follow a three-step process: 1) identify and vet merchants or other commercial actors that exhibit agent potential (e.g. retail or distribution outlets such as grocery stores and gas stations); 2) contract and train them on a specific product and delivery of consistent service; and 3) support and monitor their progress. LIQUIDITY MANAGEMENT — refers to Each step can either be conducted by the a process whereby agents balance their provider itself or through an intermediary respective amounts of physical currency that specializes in agent network (cash-on-hand or in their bank account) management and monitoring. These and electronic money (e-money) so that networks are often first developed where they have enough of each to conduct any the potential for large and frequent mobile type of mobile money transaction. money transactions is greatest, namely in country capitals or other first-tier cities. Mercy Corps Haiti’s food security program Kenbe La contributed to the emergence of such a network by requiring participants— beneficiaries and merchants—to use an e-wallet to receive funds as well as to make or receive payments. Mercy Corps directly engaged merchant communities in and around St. Marc to ensure participants had a wide variety of store locations to choose from. We also played an active role during each step in the network development process. In total, Mercy Corps identified, mobilized, and trained 72 merchants to become T-Cash affiliated merchants who served approximately 7,600 beneficiaries living in greater St. Marc and the two surrounding towns of La Chapelle and Verrettes. 10

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Following a selection process, Voila offered contracts to 54 of the 72 merchants to become T-Cash agents. To support them in their transition from affiliated merchants to T-Cash agents, Mercy Corps designed and delivered a series of specialized trainings that expanded on concepts and skills already familiar to these merchants based on their experiences processing large volumes of mobile money transactions over a nine-month period. These trainings introduced concepts such as liquidity management so that vendors would understand and be able to effectively balance their physical and electronic liquidity in anticipation of greater and more frequent mobile money transactions. Additionally, Mercy Corps’ programmatic footprint outside of Port-au-Prince helped drive attention and efforts on acquiring affiliated merchants and agents in areas that were not an immediate commercial priority; thereby accelerating the expansion of mobile money to communities that typically must wait for access to these types of new services. In the example of Safaricom’s M-PESA service in Kenya, the country had a sizable CLIENTS – Bridging the Gap Between domestic remittance flows between urban Awareness & Adoption and rural areas. Previous methods for sending these remittances were timeIn a market environment such as Haiti, consuming, expensive and often insecure. there is not one clear, ubiquitous customer need to stimulate broad-based usage and The potential demand, therefore, rapidly familiarize the population with the for a faster, cheaper and more convenient service (as was the case with peer-to-peer money transfer service was extremely high. or “P2P” transfers in Kenya). eBook 2 When M-PESA launched, mobile money Beneficiary Financial Diaries—In Their Own transfer was a major hook to drive initial Words outlines the value of mobile money enrollment and usage, and familiarized to clients, including increased security and large sections of the population with the savings. This lack of a single use case makes service. When coupled with a range generating public awareness and adoption of of other use cases, it enabled M-PESA mobile money that much more difficult, and to grow to its dominant position today. more critical, for a successful sustainable deployment. Regardless of whether a “hook” exists or not, mobile money providers have to find ways to engage and motivate a population toward using its service. They cannot rely Rinn Self/Mercy Corps

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on traditional advertising strategies (e.g. TV or radio commercials, billboards) alone to bridge the gap between awareness and adoption. Given the novelty of the service, some mobile money providers have turned to dedicated awareness and education campaigns as a way of giving potential users a more in-depth, in-person introduction to their service and how it works. These campaigns can be costly for service providers as they often require a sizeable commitment of time and human resources. The benefit, however, lies in the captive audiences they create (e.g, street theater, targeted mobilizations or trainings, and other promotional events). These venues give promoters an opportunity to explain the advantages of the service relative to existing alternatives, familiarize users with the technology and interface, encourage usage, as well as enroll new customers. As with merchant and agent acquisition, public awareness and consumer education campaigns can be conducted either by service provider staff or contractors who are paid on an hourly, monthly, or per activity basis with built-in performance incentives (e.g. commissions for new client enrollment). In the case of Haiti, the country’s emerging mobile money sector and the parameters of the Kenbe La program created an opportunity for Mercy Corps to contribute to both consumer and merchant awareness/education through mobilizations and trainings. Typically, the strategic priorities and skill sets of NGOs do not place them in a position to directly or indirectly act as an acquirer or promoter of a commercial service. In this instance, however, Mercy Corps’ commitment to mobile money as a tool for financial inclusion and its willingness to build internal capacity and train program participants on mobile money overlapped with Voila and Unibank’s interests in expanding its service into an urban market like St. Marc with promising growth potential.

Mondy purchasing food stuffs from vendor Myslande’s shop. Devan Wardwell for Mercy Corps

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Kenbe La Program â&#x20AC;&#x201C; Incubating Mobile Money Agents Prior to the launch of the program in September 2010, no network of mobile money service points had been established by our partners in the city of St. Marc or the surrounding towns of La Chapelle and Verrettes. Generally, mobile money providers or specialized third parties assume responsibility for creating these networks, because they have the greatest commercial interest in their success. Although, who actually takes the lead in acquiring merchants and agents varies, since providers will often use third parties to identify, train and manage these networks. In this instance, a number of factors contributed to the absence of a mobile money network where Mercy Corps wanted to utilize mobile money to distribute funds and facilitate food purchases. First, while up-and-coming, St. Marc (population ~66,000) is a second-tier city, which made it an important but not an immediate priority for our partners. Second, the target date for T-Cashâ&#x20AC;&#x2122;s commercial launch was December 2010, which meant resources were not yet available to establish a network in St. Marc in time for a Fall 2010 Kenbe La program start date. Third, our partners decided to focus their initial enrollment efforts where population density and adoption potential was greatest: Port-au-Prince. Mercy Corps, therefore, had two options: allow market conditions to dictate the arrival of mobile money to St. Marc; or accelerate its arrival by assuming a lead role in the identification, mobilization and training of local merchants. We chose the second option and proposed to help establish a network of mobile money service points, focusing initially on selecting and training affiliated merchants. Mrs. Alexis Moise, a participating vendor, in her shop. Devan Wardwell for Mercy Corps

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The Kenbe La food security program in greater St. Marc was designed as a temporary emergency relief response to alleviate household food shortages for vulnerable families that had taken in internally www.mercycorps.org

displaced persons (IDPs) following the earthquake. Instead of distributing cash or paper vouchers, however, Mercy Corps elected to integrate T-Cash into its program. In doing so, recipients were able to use an e-wallet to receive disbursements and make food purchases at selected merchants (referred to as Kenbe La merchants) who also had e-wallets to accept payment. Mercy Corps then distributed funds to these recipients on a monthly basis over a nine-month period and monitored disbursement reliability and purchasing activity via a partner web portal and logbooks that Kenbe La merchants maintained, containing all sales transactions they conducted using mobile money. The majority of mobile phone subscribers in developing markets are Given the frequency and volume of these “pre-paid”, meaning they do not receive transactions, Mercy Corps recognized that the a monthly bill. Instead they pay as they go, purchasing airtime minutes in a variety Kenbe La Program could act as an incubator for merchants, and directly contribute to the of ways (e.g. physical scratch cards). development of a broader mobile money After someone loads airtime minutes, ecosystem that would include both affiliated they have the option to transfer those merchants and agents. Through a series of minutes to another phone, a common mobilizations, trainings, and regular transaction practice in Haiti. Regular communication experience, previously unaffiliated merchants with family and friends here often requires became proficient using mobile money. Then, sending airtime minutes to those who from this core group of experienced affiliated do not have, or cannot afford it. merchants, future mobile money agents were selected and provided with additional training.

Merchant Selection & Mobilization Mercy Corps selected participating merchants based on a number of factors: business capacity (number of clients, store size, sales volume, etc.), availability of approved food items (beans, rice, cooking oil, etc.), inventory/restocking capacity and geography. Mercy Corps selected micro and small-scale merchants in locations with a high concentration of recipient households. These merchants tended to

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be closer to and more convenient for recipients and had the potential to receive greater economic benefits proportionally from their participation than medium or large-scale merchants. Merchants from each section that met the criteria outlined above and expressed an interest and willingness to participate were invited to a round of preliminary conversations. The focus of these conversations was to describe how the program would work, and to introduce the concept of mobile money and explain how it would be used—with the goal of “mobilizing” a group of merchants. Mercy Corps sequenced these mobilizations by geographic location and kept attendance small (up to twenty) in order to foster an interactive, informal peer-group environment conducive to identifying key issues and concerns. During an early mobilization organized at the St. Marc field office, merchants from Blockhaus, one of the poorer sections of the city, expressed skepticism about the service and their ability to use it. We encountered a series of questions that would become a recurring theme during most of our conversations: “What do you mean there will be money on my phone? How does it get there? How does it move from one phone to another?” We responded by attempting to make the unfamiliar familiar. Specifically, we connected the concept of mobile money to a concept that virtually everyone who owns or uses a mobile phone in developing markets understands: pre-paid airtime. With the link established between airtime and mobile money, merchants were quick to grasp the concept. We then introduced the concept of the e-wallet and the different ways it can be used: to load, store and transfer mobile money, make purchases, check one’s balance, and review a mini-statement of recent transactions. Using airtime as a reference point, each one of these mobile money functions or “use cases” became more familiar, since there are equivalent functions associated with airtime, including loading, storing, verifying and transferring airtime. Once they were comfortable with the idea of mobile money, we proceeded to train them on the service. www.mercycorps.org

Vendor Alexandre Adeline in her shop. Devan Wardwell for Mercy Corps

Sex Female Age 34 Name of Business/Launch Date Fifi Boutique / 2005 (7years) Source of Start-up Capital & Plans for Business: Source: Family Funds. Plan: Increase available stock and add new products such as powered milk ( which is in high demand in her neighborhood) Average cash sales pre-KenebeLa program (monthly) ~$8,750 USD (~$350,000 HTG) Average additional sales from KenebeLa clients (monthly) ~$8,275 USD (~$331,020 HTG)

Alexandre Adeline

VENDOR PROFILE

Alexandre’s Fifi Boutique is a singlelevel concrete structure with a makeshift wooden railing at the front where customers queue to make purchases. On each of our visits, Alexandre brings out a few plastic chairs and kindly offers us a seat as a family member tends to those clients that arrive while she’s engaged with us. Alexandre decided to launch her own store partly due to family tradition (her mother was a merchant) and partly because she felt there were few other options available for her to earn an income. She began helping out in her mother’s store at age ten. By age eighteen, she started selling a variety of items— 18

sunglasses, mosquito repellent and petrol— on her own along the street markets that dot the downtown St. Marc landscape. Alexandre and her family were fortunate not to lose any family members or friends in the earthquake, but her parents lost their home. In the aftermath, she hosted several internally displaced persons (IDPs) for a number of months. All of them have since returned to Port-au-Prince. She also continues to pay university tuition for her nephew (~10,000 HTG or ~US$250 a month) in Port-au-Prince and provides him with a little spending money. Besides the additional revenue stream, Alexandre reports that the program helped attract new clients. She has decided to

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invest these profits in the construction of a new house for her family and in increasing inventory and the diversity of goods sold in her shop. When discussing her experiences with mobile money and how she managed to accommodate these additional transactions, she proudly points out that her 14-year old son Victor often helped her with the T-Cash transactions once he returned from school. One day we had the chance to ask Victor what he thought about his experience using mobile money. He nonchalantly told us that he was quite comfortable using the service. In addition to feeling at ease with the transaction process, he would regularly use the balance-check function and

occasionally request mini-statements of the most recent transactions. Although she hasn’t done many T-Cash transactions since the end of the program, as a result of the liquidity management training Mercy Corps provided, Alexandre now maintains a transaction logbook but uses it exclusively for those who buy on credit. Alexandre predominantly sells individual items and does a fairly large volume of daily sales, so she finds the maintenance of a complete transaction logbook somewhat time consuming. She has also decided to alter her inventory to eliminate less profitable items, such as fish, as it is too expensive for her clients and not in sufficient demand. www.mercycorps.org

T-Cash Transactions & Kenbe La Client Flow (Dec. ‘11 - Sep. ‘12)

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disbursements via e-wallet, and purchase goods from a Kenbe La merchant. Mercy Corps also distributed memory aids for merchants to reference during the trainings and, as necessary, when conducting actual transactions with recipients. The trainings concluded with multiple mobile money simulations to familiarize participants with different T-Cash transactions, build confidence, and address any problems or questions that arose during the simulations.

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T-Cash Transactions (HTG)

Initial Training & Dedicated Transactions Drawing from prior experiences mobilizing and training a small group of merchants in the rural village of Saut d’Eau (refer to eBook 2 for details), Mercy Corps developed materials and a presentation approach designed for capable business owners and managers who had moderate to high-levels of illiteracy and non-numeracy. We felt that the more hands-on we could make the training, the greater the likelihood that merchants would internalize and understand the service. Trainings began with an overview of the Kenbe La program and, to promote transparency, an explanation of the identification process for recipients and merchants. We relied heavily on large drawings to depict different activities associated with mobile money: how to activate a T-Cash account and use the various functions, receive

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Sample vendor mobile money training material.

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This training was immediately tested as Mercy Corps initiated a series of rolling disbursements over a nine-month period. Each of the 7,600 households received 2,000 HTG (~US$50) a month, which they had to spend entirely over the course of the month in order to receive the next disbursement. At the onset, all recipient e-wallets were open to the full range of possible transactions (e.g. purchase, cash-in, cash-out). When it became apparent that a small fraction of recipients had attempted to convert e-money into physical currency using the cash-out function rather than to make food purchases (which was outside the parameters of our grant), we coordinated with Voila to temporarily limit the e-wallet settings so that these funds could only be spent on food.

Vendor liquidity management training session. Serge Raphael, Mercy Corps

While the ratio of recipients to merchants was not constant across all locations, a single merchant could conceivably conduct ~100 mobile money transactions per month and ~1,000 transactions over the duration of the program. The program, therefore, offered merchants and recipients ample opportunity to familiarize themselves with the service and gain experience conducting m-commerce transactions. During the early stages of a mobile money deployment, this type of guaranteed transaction volume can play a useful role in promoting the overall ecosystem. Often the case in other markets, especially when a service is first launched, providers are unable to drive sufficient transactions to merchants they have just affiliated and trained. This can lead to a variety of potentially negative effects. First, it may inhibit the provider’s ability to gauge the effectiveness of its training or the capacity of recently-trained merchants, since there is no way to distinguish “good” performers from “poor” performers. Second, if merchants’ experience with the service is not repeated and reinforced, it may make them more reluctant to promote the service within their networks to non-mobile money users. Third, low transaction volume weakens the business case for merchants (e.g. commissions earned are too small and infrequent), which often leads to disinterest in or abandonment of the service.

Building Agent Capacity: Liquidity Management As mentioned above, agents comprise a second type of service point in a mobile money network. A variety of entities can become authorized mobile money agents. They range in size and capacity and are often structured in a hierarchy from largest and most sophisticated to smallest and least sophisticated. Financial institutions (e.g. banks and MFIs) sometimes sit atop this hierarchy (referred to as “super-agents”) with small and medium-sized merchants at the bottom (referred to as “sub-agents”). As a whole, these agents function similar to an irrigation system in that they facilitate the movement of physical cash and e-money throughout the network. Unlike a traditional irrigation system, however, agents either distribute or absorb physical cash and e-money based on local supply/demand dynamics. They achieve this by providing cash-in and cash-out services to mobile money users (e.g. clients, merchants and other agents), which means they need adequate reserves of both.2 They must also be able to balance the two to meet demand. This balancing process is commonly referred to as “liquidity management,” a critical skill that allows agents to more effectively provide their services and maximize commission-based revenue. Mobile Money Agent Hierarchy in Haiti:

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In other markets, mobile money users are not able to draw from or transfer to a bank account linked to their e-wallet. In Haiti, this seamless process is not available.

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Mobile Money Transactions & Agent Re-balancing:

The liquidity management trainings that Mercy Corps delivered were divided into three modules—Freeing up Cash, Becoming an Agent, and Managing Liquidity. For micro and small-scale merchants like the Kenbe La merchants in St. Marc, the additional services they would be providing (e.g. cash-in and cash-out) are akin to opening a new line of business, which requires additional working capital. However, many mobile money providers are reluctant to extend financing to this group of merchants given their size and perceived risk level. As a result, they often lack sufficient funds at the start or must find ways to generate it on their own. In the first module, Freeing up Cash, Mercy Corps presented tools and techniques such as calculating product profit margins as well as altering inventory to reduce or eliminate less profitable items and increase more profitable ones to unlock additional revenue.

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Merchants, regardless of size, should also have a working knowledge of how mobile money services function. In the second module, Becoming an Agent, a series of pictograms were used to illustrate the various types of possible mobile money transactions. Merchants were also presented with a detailed overview of the role, responsibilities and rights associated with being an agent and those of the service provider. Finally, merchants must understand how these transactions will impact their reserves of physical money and e-money and how to manage these fluctuations to maintain an appropriate balance. The third module concentrates on best practices for recording mobile money transactions, identifying customer transaction patterns, and balancing reserves of physical money and e-money over time, based on transactions conducted.

Vendor liquidity management training session. Serge Raphael/Mercy Corps

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Participating vendor Dupervil Bertha in her shop. For each module, our presentation approach followed that of prior mobilizations and trainings with an emphasis on visual images, interactive discussion, individual or group exercises, and simulations. During the third module, for example, we simulated how transactions alter a merchant-agent’s reserves of physical money and e-money by simulating these movements through the use of three small plastic buckets and stones. The buckets represented the three reserves of money and the stones represented either 1 HTG in cash or 1 HTG of e-money. Merchants who had been assigned the role of “customer” would then use the stones they received to conduct transactions (cash-in, cash-out, purchase, etc.) and have to specify to the merchants playing the role of “agent” whether the stones represented cash or e-money. Merchants found this particular simulation very helpful. For them, it reinforced three important liquidity management lessons: first, they must distinguish between the three reserves of money and treat them as separate “buckets”; second, it is important to closely monitor the amounts in each bucket as they can fluctuate rather quickly; and third, an agent must anticipate the need to balance his/her reserves to ensure there is enough physical money and e-money to meet customer demand for mobile money transactions. Vendors participating in a Focus Group Discussion. Devan Wardwell forMercy Corps

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Nick Lesher for Mercy Corps

Dupervil Bertha

VENDOR PROFILE

Duprevil’s store is just up the hill from Alexandre’s. Eclesiaste Boutique is a multilevel concrete structure with the shop below and the family apartments above. Customers must climb a series of steps from the road to reach a large window through which she sells her goods. The view from her landing offers a picturesque vista of the town center below and the blue Caribbean beyond. Duprevil’s mother encouraged her to enter the merchant business. She began selling smaller goods at age 18 and began a habit of saving a portion of her income. Once she saved enough, she opened her own store. Duprevil and her family were fortunate not to lose family members or property in the earthquake. But, like so many others, she offered to house several displaced people for a number of months until they could decide what to do next and where to go. Duprevil also decided to take the additional revenues she earned to re-invest in her business. She

reports increasing her inventory, diversifying her products, and purchasing in bulk with the goal of becoming a wholesaler of sorts to other small stores in her neighborhood. She has also used part of her profits to furnish her parent’s home with various items they’ve been lacking for some time. Similar to Alexandre, Duprevil has applied elements of the liquidity management training to her general business operations. She pays closer attention to her product profitability and has reduced her stock of boxed cereal and augmented stocks of bread, oil and eggs. Occasionally during the program, poor signal reception would result in failed or canceled T-Cash transactions. However, recipients in her neighborhood were accustomed to periods of weak cellular reception and would either wait or return later to complete their purchases. At the start, she reported having difficulties remembering the codes and the proper sequence to complete a sale, which could take upwards of twenty minutes. Over time, with the benefit of the visual aids that Mercy Corps had distributed and more experience using T-Cash, she became much more efficient, completing transactions in a matter of minutes. www.mercycorps.org

T-Cash Agent Pioneers: The Merchants of St. Marc The Kenbe La program operated in four areas of St Marc: Blockhaus, Mac Donald, Centre Ville, and Bocozelle. Both Blockhaus and Mac Donald are referred to as zones populaires, a term used to describe the poorest sections of a city. Employment in both is extremely low and unstable. Centre Ville or Town Center, as its name suggests, is centrally located around the cityâ&#x20AC;&#x2122;s main square. Employment is easier to find and maintain here and the quality of life on average is higher, with greater access to paved roads, electricity and piped water. Bocozelle, by contrast, is the most remote of the four locations. Off the main highway about 25-30 minutes northeast of the city center, residents here earn a living through some combination of farming, livestock husbandry and commerce. Of the 76 Kenbe La merchants in greater St. Marc that Mercy Corps had identified and trained, Voila selected 55 to become T-Cash agents. These agents varied in size and capacity from small stores staffed by owners and their spouses to medium-sized stores Map of St. Marc & Kenbe La Program Locations: with larger inventories and one or two full-time employees. Prior to their involvement in the program, they knew nothing about mobile money, and some were initially skeptical of whether such a service could work in a place like St. Marc. Several months and several thousand transactions later, these Kenbe La merchants had become seasoned mobile money users and some of the earliest Voila T-Cash agents outside the capital.

Entrance to St Marc. Devan Wardwell for Mercy Corps

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Participating vendor Lundy Myslande in her shop. Erin Wildermuth/Mercy Corps

Through a combination of interviews, focus group discussions, merchant transaction logbooks, and T-Cash activity reports, this section portrays how the volume of mobile money transactions generated by the Kenbe-La program impacted these merchants, their businesses, their perceptions of mobile money, and their ability to use the service.

Lundy Myslande

Mobile Money’s Impact on Day-to-Day Decisions & Operations Despite variations among locations, merchant feedback from our focus groups and one-on-one interviews revealed that the impacts of this new payments method were similarly felt across all four locations. On average, merchants in each location experienced similar monthly T-Cash sales volume (see Figure 1.1) and made similar adjustments in business operations and approaches to

Figure 1.1 Average Monthly T-Cash Sales in HTG (Dec ‘11 - Sept ‘12) 300,000 250,000 200,000 Avg = 190,621 (~$4,766 USD) 150,000 100,000 50,000

Bocozelle

Blockhaus

Centre Ville

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Mac Donald

For Lundy, the effects of the earthquake were more severe than for Alexandre or Duprevil. A number of close family members were badly injured. She also took in multiple IDPs who remained under her care until October of 2011. Besides re-investing in VENDOR PROFILE her business by expanding her inventory capacity and diversifying her stocks, she used Further up the road, across one of the additional revenue to pay down a second loan many hills of Blockhaus, you arrive at Rosie taken to buy the supplies necessary to start Boutique. Lundy Myslande’s storefront is just her business. to the right of a set of metal doors that leads Similar to Alexandre and Duprevil, into her family’s modest compound. Passing Lundy has made changes to her inventory through the doors, you descend a small (eliminating, reducing, or increasing certain driveway with a tin-roofed structure on the products) to maximize profitability and now right that doubles as a church, community keeps a transaction logbook to track clients gathering place, and most recently one of our who purchase on credit. During the program, training locations for Kenbe La merchants. Lundy’s brother would frequently help her Before Lundy started her business, she with the monthly Kenbe La sales activity used to put the money she made into a by conducting T-Cash transactions. He was savings account at the bank. She began to able to do so because he had attended the notice, however, that she was making lots of various mobilizations and trainings that we withdrawals and earning very little interest. had delivered. As we quickly discovered, Her husband also used to support her with the these trainings often served more than one income he earned from a job he had locally generation within a merchant household. It in St. Marc. Now that he has gone to look was also often the case that, where younger for work abroad, she receives more money generations demonstrated a faster ability to but less frequently than before. Her need for process T-Cash transactions, storeowners additional funds between remittances and her would assign them this specific task so they dissatisfaction with the dwindling funds in her could attend to other duties. savings account motivated her to open a www.mercycorps.org mercycorps.org little shop.

managing value stored on their e-wallets. As a result, the amount of practical experience gained from using this new service was fairly evenly distributed throughout the participating merchant population. The average sales volume by location, however, tells only part of a larger story. Within each focus group, there was often a cluster of average monthly T-Cash sales bound by one merchant that recorded significantly higher volumes and one significantly lower. Based on merchant and recipient feedback, three factors contributed to this type of variation: recipient choice, merchant location, and merchant competition. Given that almost all recipients spent the entire disbursement in one transaction, affiliated merchants were eager to attract new Kenbe La recipients and retain existing customers. In each location, but especially in Centre Ville, merchants deployed a variety of promotional and marketing tactics to encourage Kenbe La purchases at their stores, including: grouping approved food items in pre-measured amounts to reduce transaction time and increase consumer convenience; bulk discounts to stretch the recipientâ&#x20AC;&#x2122;s purchasing power; providing free home delivery or a stipend for transportation costs; and announcing their status as a Kenbe La merchant at local community events (e.g. after Sunday church services).

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Figure 1.2 Kenbe La Clients per Month (New v. Existing)

160 140 120 100

Avg = 112 25

80 60

40 20 0

43 Bocozelle

Blockhaus

Existing clients pre-Kenbe La program

Centre Ville

Mac Donald

Merchant estimate of new clients

Figure 1.2 illustrates the extent to which the Kenbe La program expanded the client bases of affiliated merchants. In each location, new clients accounted for nearly 25% of all Kenbe La clients. The most active merchants in terms of marketing and promotional tactics were from Blockhaus and Centre Ville. Merchants from these two locations reported the highest percentages of new vs. existing clients (43% for Blockhaus and 50% for Centre Ville).

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Figure 1.3 Merchant T-Cash Transaction Distribution Post-Disbursement (Dec. â&#x20AC;&#x2DC;11 - Sep. â&#x20AC;&#x2DC;12) 50%

Overall

74%

Mac Donals Centre Ville

35%

14% 42%

51%

Blockhause 38%

Bocozelle - Day 1

11% 3%

12%

7% 4%

43%

42%

- Days 2-3

9% 2%

- Days 3-4

Figure 1.4 Managing Additional T-Cash Volume

19%

- Days 5-7

- 8+ Days

Figure 1.3 shows that the majority of these T-Cash transactions occurred within a three-day period following a disbursement, although some merchants reported conducting transactions up to a week after funds had been transferred to recipients. From a business operations standpoint, merchants had to devise ways to accommodate this additional sales volume over multiple days rather than just one day. Among other things, they had to consider whether or not to bring on extra help or to assign specific tasks to people so that their stores could process both T-Cash and cash transactions.

Figure 1.4 shows that all but one of the merchants from our focus groups decided to make some type of adjustment to their operations. One merchant said she could manage the additional T-Cash sales herself given the relatively low volumes. For those merchants who required more staff, up to four additional people were recruited to assist them. If these additional people were family, they were less likely to be paid by the merchant although some were given either a small daily stipend or some percentage of the Kenbe La sales from that month. Any temporary employees or any permanent staff asked to work longer received additional payments, which varied depending on the merchant and the volume of T-Cash sales.

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Location

Details

Bocozelle

Range of people on hand: 2 - 4; tasks included: conducting and recording T-$ transactions, apportioning goods, writing receipts, and serving non-Kenbe La clients; most owners did T-$ transactions except for 2 (trained their children)

Blockhaus

Range of people on hand: 2 - 4; similar tasks were distributed; some additional people were paid a small stipend or percentage from sales (if family member, less likely they received payment); One owner trained his son-in-law to do T-$ transactions

Centre Ville

Range of people on hand: 0 - 4; specific tasks same as previous locations; more staff in these stores to assist, additional temporary staff also used as much as immediate family (pay varied: $12 - $70 USD/mo for services); owners were not exclusively handling T-$ transactions or logbook (would train staff or family)

Mac Donald

Range of people on hand: 3 - 4; similar to Blockhause more husban-wife combinations with additional support coming from family members (children, in-laws, etc.); 3/6 owners trained younger family members to conduct T-$ transactions without reporting slow or inefficient processing of sales volume (some youth attended trainings others were taught by parents); owners with staff paid additional compensation (~$50 - $60 USD/mo) for assistance during high T-$ volume

Overall

Over 95% of responding merchants made changes to their business operations to accommodate T-$ volume

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In terms of dividing up specific tasks, the dominant trend among merchants was to make sure that the person assigned to do T-Cash transactions had no other responsibilities. The only exception arose in instances where the merchant would also maintain the T-Cash transaction logbook, which they were required to submit to Mercy Corps. We were interested to learn that in each group at least one merchant assigned the T-Cash sales task to someone else. This other person was either a family member who had accompanied the merchant to each of the mobile money trainings or someone that the merchant had trained him/herself. Merchants then distributed the remaining tasks (such as writing out customer receipts, preparing and bagging items, taking care of non-Kenbe La clients and completing cash sales) to whomever else they had recruited.

Participating merchant Myslandeâ&#x20AC;&#x2122;s shop.

Given the impact of T-Cash sales on store operations, it is possible that this increased volume could disrupt cash sales or impede the merchantsâ&#x20AC;&#x2122; ability to service their non-Kenbe La clients. However, based on merchant feedback captured in Figure 1.5, less than 10% of the participating merchants reported a disruption. Those who did report disruptions cited the following reasons: insufficient staff or help on hand at certain times to complete T-Cash and cash sales and insufficient stock in certain items they used to carry before the Kenbe La program. For those merchants with limited additional support, they would regularly forego smaller cash sales from non-Kenbe La customers so they could maximize the number of much larger T-Cash sales. For those who no longer carried certain goods, this was an active decision on their part so they could free up inventory space and maximize their stock in food items sanctioned by the Kenbe La program. Figure 1.5 Perceived Merchant Disruption of Cash Sales due to T-Cash

Devan Wardwell for Mercy Corps

100%

100% 91% 83%

17%

82%

18% 9%

0% Bocozelle

0% Blockhaus

Centre Ville Yes

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Mac Donald

Overall

No www.mercycorps.org

Mastering Mobile Money As merchants adjusted to the increased transaction volumes that occurred over a one to seven-day period, they also became more efficient users of the T-Cash service (see Figure 1.6). At the start of the program, a number of participating merchants reported transaction times in excess of 10 minutes. In fact, one merchant in Bocozelle, Choute Roland, estimated that his first T-Cash transaction took nearly 60 minutes to complete. This was the result of a combination of factors, including: poor signal that led to multiple transaction cancelations, lack of familiarity with the codes required to initiate and confirm the purchase, and human error (e.g. client typed in an incorrect amount). Conversely, at the end of the program, the majority of merchants reported being able to conduct transactions in one minute or less, with many of them claiming it took them less than 30 seconds. When discussing their increased familiarity with T-Cash, Bocozelle merchant Jean Marc Renaud noted he had developed a shortcut to accelerate the sale process: “on high volume days I always kept *711 on my phone so I could begin transactions that much faster.”3 Figure 1.6 Time Taken to Conduct T-Cash Transactions (Start vs. End of Program)

17.3

8.3

7.9

3.9 2.1 17.3

Average at Start (minutes) Bocozelle

Blockhaus

2.1

3.9

8.3

7.9

Average at End (minutes) Centre Ville

Mac Donald

Overall

*711 is the three-digit short code that merchants must first enter before adding the transaction ID number unique to each sale, which generates a confirmation SMS text with the date, time, amount and cell number of the purchaser

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or damages to their home. Nonetheless, like so many other Haitians, Dormeus wanted to help others affected by the earthquake and took in five IDPs who remained under his care for several months. In addition to re-investing revenues back into his current business to increase his inventory, he is also applying a large portion of this extra money to a longerterm aspiration: the opening of a second, annex store further south along the heavily trafficked National Road between Port au Prince and St. Marc. Dormeus elected to train an employee VENDOR PROFILE on T-Cash using the methods and materials that Mercy Corps had developed. Given the A tall, broad-shouldered and rather softlow transaction volume since September spoken man, Dormeus Wilguens operates 2011, however, that employee decided to look Wilguens Provisions Alimentaires on a side for work elsewhere. Nevertheless, Dormeus street just off of the National Road that runs remains confident in his abilities to conduct through the center of St. Marc. His mother and mobile money transactions should the need father were merchants, so earning a living by arise. Like other Kenbe La merchants, he also selling goods came naturally to him. Dormeus’ made changes to his inventory as a result store was originally a snack bar called Wilny of the mobile money liquidity management Snack Bar, which was a combination of training. Specifically, he has reduced existing his last name and his wife’s last name. But stocks of less profitable items. He also plans with dust being a frequent nuisance in their to lower orders for other items with poor neighborhood due to the unpaved roads, turnover rates to make room for high turnover he and his wife decided to re-open as a items such as Coca Couronne, a type of soft convenience store after they had children. drink popular in St. Marc. Dormeus and his family were fortunate during the earthquake, suffering no injuries

Dormeus Wilguens

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Participating vendor Mrs Alexis Moise outside her shop Devan Wardwell for Mercy Corps

Alexis Moise VENDOR PROFILE

Alexis Moise and his wife operate the Betabara Store located diagonally across the street from Dormeus Wilguens and somewhat closer to the National Road. As children growing up in the countryside, both of them could recall their parents making some extra money as small merchants when they weren’t tending to their fields. After moving to St. Marc a number of years ago, they saw an opportunity to launch a store on their street because there weren’t any other shops there at the time. They had empty space on the ground floor of the building where they were living and the owner’s wife was pregnant but wanted to work at something. Prior to launching their business, Alexis has previously worked as a pastor, a lawyer and an electrician. His wife had been a

teacher for nine years and also worked briefly for a local community support organization. Alexis lost two family members in the earthquake. After the event, they received a number of people into their home and provided temporary shelter, supplies and some transport money to pastors making their way to Port-au-Prince to assist in the disaster. Overall, his affiliation with the Kenbe La program has been quite positive. Like other merchants, he has benefited from higher sales and re-invested the revenue to increase his inventory. Alexis claims that Betabara Store is known throughout the neighborhood for carrying the widest selection of products and goods. With this additional capital, he wants to diversify his inventory further and retain that reputation.

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Transitioning to Mobile Money Agents For a mobile money ecosystem to function properly, affiliated merchants and agents should be proficient in conducting transactions with individual customers and managing their e-wallets. In all markets where mobile money is offered, there are limits placed on the amount of e-money that can be stored on an individual e-wallet. When affiliated merchants or agents approach their e-wallet maximums, they must off-load e-money. Affiliated merchants do this so they can continue to accept e-money as a form of payment. Mobile money agents do this so they can continue to offer cashout services to individual clients. During the Kenbe La program in St. Marc, our bank partner Unibank designated its subsidiary UniTransfer (a cash transfer service), as the off-load point for all Kenbe La merchants. As shown in Figure 1.7, affiliated merchants were offloading multiple times each month in a nine-month period, with over 50% of them visiting UniTransfer on average between two and three times per month. In certain locations such as Centre Ville and Blockhaus, some merchants reported offloading as many as five times per month. However, a decision by the Haitian regulators to increase merchant e-wallet maximums from 100,000 HTG (~US$2,500) to 400,000 HTG (~US$10,000) greatly reduced the need for multiple visits to UniTransfer in a given month. Dorotee purchasing hair braids from vendor Dorcent. Devan Wardwell for Mercy Corps

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Figure 1.7 Average # of Merchant Offloads at UniTransfer per Month (Dec ‘11 - Sep ‘12)

Overall

52% 50%

Mac Donald Centre Ville Blockhause

39% 50%

40%

50%

20%

33% 67%

Bocozelle 1

17% 33%

2-3

3-4

Furthermore, during the focus groups, merchants expressed confidence in the reliability of the service and their ability to offload e-money in exchange for cash when needed during the program. Many reported using the e-wallet as an additional savings mechanism, electing to leave whatever balance remained after they had taken out enough funds to resupply their inventories. They would then put the remainder toward their business, deposit portions into a bank savings account, or invest in home improvements (e.g. home construction and basic furnishings). One of the more outgoing Kenbe La agents from Blockhaus, Jean-Pierre Frico, told us: “I only took off what I needed and kept the rest on my phone. I know it’s not going anywhere. Besides, leaving it on the phone is an easier way to store money and I won’t be as tempted to spend it or use it. Similarly, Jean Louis Marcel, a young, enthusiastic store owner based in Mac Donald treated the e-wallet as an additional bank account: “with T-Cash, I know how much I have at any time, can check it whenever I want, and know it’s secure. I’m really looking forward to the day when this account can be linked my actual bank account. That would be something.”

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As mentioned earlier, prior to the Kenbe La program, mobile money was a complete unknown to the merchant communities in and around St. Marc. It was unclear at the program outset, therefore, whether merchants would see a distinct value in this kind of service moving forward. It was also unclear whether they would emerge from this exposure to nine months of dedicated transactions and a series of targeted trainings confident in their abilities to use mobile money. When the focus group discussions turned to the topic of assisting with T-Cash promotional activities after the program, overall willingness among participating merchants was quite high (see Figure 1.8). In each location, however, this willingness came with a caveat. Most merchants felt that Voila/Unibank should incentivize their participation in the form of a small one-time stipend, a commission linked to new customer enrollment, free airtime or perhaps additional e-money. Figure 1.8 Willingness to Assist with T-Cash Promotion Post Program

Overall

87% 100%

Mac Donald 82%

Centre Ville Blockhause

13%

18%

67%

33% 100%

Bocozelle Yes

www.mercycorps.org

Participating vendor Mrs Lormestoire Henry Sainte & a member of the family in their shop. Devan Wardwell for Mercy Corps

The list of promotional activities that merchants said they would either agree to conduct or thought would be most effective included: engaging clients in their stores, hanging posters, and talking with family, friends and other community residents. Julia Belotte, an eager merchant from downtown St. Marc, claimed she would promote T-Cash by using a bull-horn and walking the streets of her neighborhood, approaching office buildings and schools. As she put it: “T-Cash is a secure and more private way to store and use your money. People need to know about this service and they need to use it.”

Lormestoire Henry Sainte

A number of merchants also reported that they were already actively marketing T-Cash to non-Kenbe La clients without prompting or support from Voila/Unibank. In addition to the additional commissions they would earn from future T-Cash sales, these merchants were enthusiastic about the concept of brining a valuable new service and technology to their communities.

VENDOR PROFILE

Following the National Road south out of St. Marc toward Port-au-Prince, there is a small community of residents living in a section named Mac Donald. Before moving here several years ago, Lormestoire and his family owned land outside St. Marc where they grew a variety of crops. After realizing that residents of Mac Donald had to commute to the town center to buy basic goods and supplies, they saved enough money to relocate and open a store to meet this demand. When they first opened La

Pause Boutique for business, Lormestoire decided to carry large quantities of a local peppercorn. He noticed that residents here enjoy fresh fish caught along the coast and this ingredient was an essential element in the various dishes they would prepare. Lormestoire’s daughter was hospitalized following the earthquake with a number of injuries, including a broken arm. Following her release, she went to live with him for several months. Recently, she returned to her mother’s house and is

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now under her care. When asked about his experiences with Kenbe La and mobile money, Lormestoire primarily focused on the access and benefits to a new technology, citing the speed and security afforded by the e-wallet service. He pointed out that by training another family member on the service and explaining how to conduct cash-outs at the local UniTransfer branch, it saved him from having to spend a couple of hours of travel and wait time that he could instead spend running his

business. Additionally, because of the mobile money liquidity management training, Lormestoire now pays closer attention to his business expenses through record-keeping, which has improved his cash flow management. He also follows client consumption patterns more closely and plans to stock up on seasonally popular items in order to generate more revenue.

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When asked, a number of merchants summarized the benefits of mobile money as follows: “I tell my clients, the worries you have with cash are not there with T-Cash. It’s safe, private, and nobody knows how much you have or how much you have spent. It’s peace of mind.”

Ifana Dorvilus, downtown St. Marc

“It’s easier to use than a bank account and the places you can use it are open when you need them so you can buy things, store money, or take out money.”

Touissant Clicie Alexandre, Mac Donald

“There is less risk than cash and greater convenience than a bank or MFI branch. If you want to access your money, check your account balance, the information is all right here.”

Kenbe La-affiliated merchants processed large volumes of T-Cash sales and were provided with specialized training intended to build their capacity as mobile money agents. For a variety of reasons, however, the volume of T-Cash transactions dropped significantly after the final Mercy Corps disbursement in September 2011.4 Of the merchants we interacted with, only a handful had conducted T-Cash transactions between September and December. Despite the drop-off in activity, merchants in all four locations commented that the trainings had prepared them to be mobile money agents (see Figure 1.9). Jocelyne Auguste, a soft-spoken middle-aged woman who runs a small store in downtown St. Marc, observed: “we received the theory during the Mercy Corps trainings and now we have all been able to put that theory into practice. We’re simply waiting for more opportunities to practice.” Figure 1.9 Sense of Preparedness to be a Mobile Money Agent Post Program

Dorceus Wisly, Bocozelle

Overall

39%

61%

50%

Mac Donald

50%

Prepared 91%

Centre Ville

Not Prepared Mostly Prepared

Blockhause Bocozelle

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17%

83% 100%

Two reasons are worth noting here, one related to demand; the other, supply. First, our food security program was designed as a temporary measure to provide vulnerable households with access to additional funds to buy food. Income streams for these households are often small and unpredictable. Typically, mobile money service providers initially target client segments bases with greater discretionary income and more reliable employment patterns (e.g. government workers) as they generally have greater potential to conduct more frequent, larger value mobile money transactions. Second, despite the growing awareness and popularity of the T-Cash service generated by the Kenbe La program, our partners Voila and Unibank were not able to build on the initial “buzz” created in large part given their strategic push to acquire customers in Port au Prince. Outside of Mercy Corps’ activities in the St. Marc region, there wasn’t much of a marketing or promotional presence to drive service enrollment and adoption.

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Supporting Both Sides of the Mobile Money Equation: Financial Literacy with a Twist Over a nine-month period, Kenbe La program beneficiaries used their e-wallets exclusively for two purposes: to receive funds from Mercy Corps, and to make food purchases at designated merchant locations. Because the parameters of the program did not allow for these funds to be used for other transactions, Mercy Corps tailored its beneficiary mobile money trainings to emphasize and explain a sub-set of e-wallet functions, namely, merchant purchase, account balance check and transaction history mini-statement.

At the end of the program, beneficiaries gained access to the entire suite of functions—enabling them to transfer, deposit or withdraw funds from their e-wallets. To complement these new services, Mercy Corps created a financial literacy training course course for these beneficiaries in order to provide specific examples of when and how to use these new functions so they would be able to maximize mobile money’s potential to meet basic transaction and financial needs.

Illustration from Mercy Corps Based on a preliminary assessment and subsequent observations financial literacy made during the program, we identified three financial concepts training that were lacking among a majority of the Kenbe La beneficiary population: budgeting, spending prioritization and personal savings. To make these concepts more accessible to beneficiaries, Mercy Corps used a story-telling format that followed the financial decisions of a husband and wife living in a rural town.

Mobile money was seen to have the greatest potential value as a savings tool and as a way to distinguish funds designated for a specific purpose or goal (e.g. school tuition, business reinvestment, loan repayment). Beneficiaries could use the e-wallet as a more private, secure and reliable way to save funds compared with existing informal alternatives such as: stashing money under a mattress, putting it into a “boite secrete” (a type of piggy bank that must be broken in order to access money), or contributing to a community-run savings scheme. In these instances, money can be lost, stolen or mismanaged, but they are frequently used because they are familiar, accessible and convenient for people without formal accounts. Mobile money was also viewed as a convenient and accessible savings alternative compared with existing formal alternatives of a checking or savings account at a commercial bank or micro-finance institution (MFI). Unlike banks and MFIs that keep strict hours with branch locations that are not always easy or inexpensive to reach, mobile money agents are more numerous, accessible and cheaper to get to if someone wanted to deposit or withdraw funds.

Illustration from Mercy Corps financial literacy training

Furthermore, Mercy Corps recognized that these trainings had broader value for the mobile money ecosystem it helped develop in St. Marc. A more informed and educated client base would be more likely to use mobile money for multiple purposes. And it would be easier for mobile money providers to incentivize these clients, given their understanding and prior experience with the e-wallet, through targeted marketing and promotional campaigns.

At regular intervals, the audience was asked to identify what the husband and wife might do next, options available to them in a given situation, and discuss the potential advantages and disadvantages of each. 48

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Conclusion: Observations & Lessons Learned Mercy Corpsâ&#x20AC;&#x2122; primary objective when it launched the Kenbe La program was to alleviate food insecurity in the short-term among IDPs and vulnerable households that had absorbed large numbers of IDPs following the earthquake. Our secondary objective was to lay the groundwork for a mobile money ecosystem and provide program participants with an alternative transaction and savings mechanism, with the objective of promoting financial inclusion among vulnerable, underserved communities. Institutions evaluating whether and how to integrate a mobile money offering into their work will have to contend with a diverse range of factors including: market conditions, organizational capacity, external partnerships, and program execution. Given the unique operating environment in Haiti following the earthquake, we recognize that what we encountered on the ground may not be directly applicable in other contexts. That said, we feel these observations and lessons learned will prove informative and useful to NGOs and other institutions weighing the pros and cons of a similar undertaking. Market Conditions It is important for any institution interested in leveraging a particular mobile money service to evaluate partner motivations and the level of development of the sector. Program design, desired scale, and core objectives should complement partner priorities and reflect service reach in terms of numbers and locations of agents. Mercy Corpsâ&#x20AC;&#x2122; efforts to integrate T-Cash began when the service was in a nascent, trial stage of development. The actual commercial launches of both MNO-led mobile money services occurred four to six months after our first integration trials began. There was no existing network of service points to leverage, and we could not build off of a basic understanding of the service among the populations we had selected. However, because growing and testing the network was a priority for Voila, they agreed to move forward with this unusual partnership. 50

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Beneficiary Financial Literacy Training

Devan Wardwell for Mercy Corps

www.mercycorps.org

Following Digicelâ&#x20AC;&#x2122;s acquisition of Voila, broader market forces in Haiti ultimately led to T-Cashâ&#x20AC;&#x2122;s discontinuation. Institutions should, therefore, proceed with the recognition that mobile money initiatives without proven business models are riskier ventures, and design their programs and partnerships accordingly. In markets where NGOs or other institutions partner with MNOs to extend the service to new markets, Mercy Corps encourages a focus on service sustainability. Using mobile money for short-term payments is of little value if the service will go unused at the end of the program period, either because it is too expensive, not useful for consumers, or the provider does not see a market opportunity. Assess and validate before rolling out a mobile money product that conditions are in place for long-term use. Organizational Considerations Unless local or ex-patriot staff is already familiar with an existing service or are themselves mobile money users, institutions will have to develop an internal mobile money knowledge and skills base to align departments, train relevant staff, and develop methodologies and tools to engage program participants. Within Mercy Corps, we developed specialized trainings for staff based on department and function, for program participants, as well as creating supporting materials to minimize barriers to comprehension. There were also new process steps and slight variations around the disbursement and accounting of funds using mobile money that impacted multiple departments (e.g. Procurement, Programs and Finance), which had to be properly coordinated. External Partnerships View of the Sea from Blockhauss, St Marc.

Devan Wardwell for Mercy Corps

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The integration of mobile money will involve some degree of collaboration or partnership with a service provider. Developing and managing this relationship can be time-consuming, but is especially critical in markets where the service has recently launched or is just beginning to expand. At the outset, these relationships are necessarily cultivated by one individual, but organizations should www.mercycorps.org

attempt to institutionalize these relationships over time to avoid one person having to manage all facets of the relationship (strategy, operations, and communications). Equally important is the need to clearly articulate an institutionâ&#x20AC;&#x2122;s role and the value they bring in a way that a service provider can understand. Although there are differences in terminology, outlook, and priorities, NGOs and other organizations and mobile money providers can find common ground and establish mutually beneficial relationships. In Haiti, our willingness to enroll and train several thousand mobile money users as well as our ability to guarantee a certain volume of T-Cash transactions each month meant that Voila could count on a revenue stream for their mobile money operation while incurring fewer costs.

of an innovative technology solution to provide Haitians with a new way to transfer money, make payments, and access basic financial services using their mobile phones. Mercy Corps is proud to have played a part in the initial deployment and expansion of mobile money in Haiti. We are also pleased and encouraged by the continued interest in this service from commercial, government, and non-profit partners. We hope that where strategic and appropriate, this mix of partners can continue to work together to promote mobile money services and sustainable financial inclusion.

Program Execution While the vulnerable or marginalized populations that NGOs seek to support and strengthen typically exhibit high rates of illiteracy and non-numeracy, these characteristics do not preclude their ability to understand mobile money or to use it. The community-based approach we employed was particularly effective in establishing the trust and relationships necessary to introduce, mobilize, and train program participants on mobile money. This was particularly true among Kenbe-La merchants. The amount of time and effort invested by our field teams provided them with a responsive resource when questions emerged, and a reliable advocate when issues or concerns regarding mobile money were raised. This level of interaction went a long way to reinforcing merchant confidence in the service and maintaining their willingness to participate in the program. NGOs and other institutions should recognize and anticipate that they may become an informal yet important intermediary between the provider and their participants, especially in markets with a recently launched mobile money service. Building on a Promising Start The humanitarian response effort sparked by the January 2010 earthquake galvanized attention and funding from NGOs, donor organizations, and interested governments around the emergence 54

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Amicia interviewing merchant Dorcent outside his shop.

Devan Wardwell for Mercy Corps

www.mercycorps.org

For more information on the program, please contact Cameron Peake, Director, Social Innovations Special Initiatives cpeake@dc.mercycorps.org For more information about Mercy Corps, please contact Andie Long, Senior Communications Officer along@sea.mercycorps.org

45 SW Ankeny Street 888.842.0842 Portland, OR 97204 www.mercycorps.org