Show Me the e-Money! Using Payroll to Support Your Mobile Money Liquidity Strategy

This is the second blog in a series of posts where the contributors, all involved in the creation of WING Cambodia, share their thoughts on the importance and challenges of e-money and liquidity management

A core component to any mobile wallet business is how easy it is for a customer to fund their account to do transactions. A lot of the focus needs to be given on building the capability in the ‘cash-in & cash-out’ network to enables the unbanked to convert physical cash into electronic-money, however an important channel of electronic funds will come through the integration to existing banking infrastructure.  This makes sense as the majority of the money in the economy resides in bank accounts, and more importantly can be transferred electronically. Integrating to the banking infrastructure will allow the flow of money from the banked (corporations and people) to the unbanked.

Show Me The E-Money: Keeping it under control.

This is the first in a series of posts where the contributors, all involved in the creation of WING Cambodia, share their thoughts on the importance and challenges of e-money and liquidity management.

Mobile Money is sexy.  It uses technology in new and exciting ways, it reaches out to millions who were previously excluded, and it gives innovators a chance to build new networks from the ground up. But if you look behind the scenes, there’s a whole lot of boring-but-important stuff going on. Managing and reconciling your accounts isn’t sexy but is absolutely necessary for the success and growth of your business. 

Better Than A Pig: Why Financial Inclusion Matters

For many of us who work in mobile money, the benefits that come from financial inclusion are clearly understood, and to a large extent provide intrinsic motivation for us to work in this industry. It serves as a timely reminder when we come across people who either don’t understand the benefits of financial inclusion, or perceive that reaching those who are unbanked is too hard, unprofitable or unnecessary.

I had an interesting experience some weeks ago when I met an experienced banker in an emerging market that has a sizeable unbanked population, but has not really seen huge steps in financial inclusion to date. We discussed the size of the market, the substitutes for formal financial services, and the solutions that had been tried to date without much success. The market is significant, with approximately 35-40 million people who have not been banked, and GDP per capita of approximately US$3,300. 70% of the population is rural, with urban migration of about 3% per annum. Many of those migrating are moving to manufacturing jobs in the cities, so domestic remittances are a large component of rural income. Substitutes for formal financial services proliferate, with remittances being sent by bus regularly, and in some cases through the post office. Solutions for the unbanked have primarily been government driven, and have relied on payroll cards for workers. Not surprisingly, the majority of these payments are converted to cash with remittances being sent through the informal market.

A missed opportunity: Mobile money failing to meet the needs of small businesses

During my time with a nascent mobile money venture I was always frustrated at how difficult we found it to work with small businesses. It is not something we suffered from exclusively; I see it when I look at the large number of mobile money operators out there.

Much effort is put into enabling large utility bill payments as a way of attracting customers and driving transaction volume. These efforts, undoubtedly important, are often pursued at the expense of enabling payments for smaller businesses. I argue that both are essential and should be pursued in parallel.

Let me give you an example. Soon after launch, small businesses were clamouring to meet with us and work out how they could use our product to collect payments. We had small billers, restaurants, and delivery companies all keen to meet with us. They seemed to instinctively grasp the opportunities our product presented before individual customers did. In addition, their needs were broadly the same.

One of the businesses that came to us was a gaming company, which ran a Massively Multi player Online Role-Playing Game (MMORPG). Their biggest problem was distribution. Their customers, in order to play, had to visit one of a network of stores that had a computerized voucher system and purchase game time from them. This meant that the company was forced to maintain a network of stores and all the cash management problems that came with it. Their customers were increasingly playing from home and were demanding a means to buy game time, at all hours, from the comfort of their home.

Their request was simple. Could we provide an account and access to a real time report? They would do the rest.