[From NextBillion.net
blog, 22 December 2011]
If you talked publicly about
mobile money as often as I do, you'd probably have some sympathy for me. I like
talking about how to build it, how people use it, what additional functionality
can be built on it, and how it might give people more opportunities to improve
their lives. I could be wrong about many of the hopes I raise and ideas I
express. But I often find myself side-tracked into slaying ill-articulated
fears which, while valid at some level, feel like conversation downers to me.
Here are five concerns I wish people didn't lock into quite so quickly.
Doesn't mobile money
make money laundering easier? I wish that wasn't the very first question I usually get
asked when I talk about how mobile money can help poor people make small
payments and save small amounts. Yes, money laundering aspects need to be
addressed, but surely we can limit the risk of misuse of mobile money by
capping transaction sizes and monitoring when too many small transactions are
channeled into one big account. The bigger criminal will always be the guy with
the bigger account - or the guy who is opting out of electronic money
altogether and keeping it all in cash. Making transactions electronically
traceable and making cash suspect should be a help in fighting illicit
activities.
How can they possibly
understand how it works? The premises are reasonable enough: Many poor people are
illiterate, have never dealt with money in other than touchable form, and have
seldom used a mobile phone for anything other than making the odd call - and
now you want them to type numbers into a phone to transfer money electronically
into a virtual account? All I can say is: people do learn, if only you market
to them a service that they want to learn about. The real
marketing challenge at the base of the pyramid is not so much telling
them how to use it but why they should use
it. If you have their attention (and for me the litmus test is: does this
address one of the 'top 10' practical problems of being poor?), they'll make
sure to find out they can use it. They'll pick up the details - not necessarily
from the provider but perhaps from a savvy nephew, a friend who came over from
the big town, or the corner shop that wants to be your cash merchant. It's
worked for mobile phones in general: think of how complicated it is even for
you to choose a phone and a tariff plan, and how badly they explain it to you
at the mobile phone shop. But you still want one! And it's worked for M-PESA in
Kenya, with its 'send money home' marketing mantra.
Aren't you exposing
people to potential abuse? I've come to realize that many people find universal
financial access scary, though they would never admit it, least of all to
themselves. I often hear about how poor people (and here the word 'poor' subtly
shifts from representing lack of means to connoting ignorance and
defenselessness) won't be able to keep their PIN secret and will be forced or
smooth-talked by fraudsters - and husbands- into giving them all the money in
their account. I think there are two fallacies going on here. The first fallacy
lies in the fact that mobile money won't grow big until people have learned to
trust the system. People won't shift their lifetime savings from under the
mattress to the mobile wallet on day one. Instead, they will learn
experientially how to make it safely work for them, including the need to keep
the PIN secret. The second fallacy is to look at the risks of mobile money in
absolute terms rather than in relation to the alternatives (such as hiding cash
under the mattress, which is not very safe).
Why not make it more
secure with biometrics? Oh,
the seductive appeal of fingerprints: the certainty of knowing who people are,
no more issues remembering PINs. Resist it! Let's just be practical: the
financial inclusion goal calls for stripping out costs and using infrastructure
that already exists. Going biometric means deploying an entirely new
infrastructure - you can no longer rely on people's mobile phones or the bank's
existing ATMs, because those don't take fingerprints. And biometrics may not be
everything live up to the hype. It identifies the person with full certainty
only if (i) you recorded the right name against a fingerprint
in the first place (and how can you be sure about that, unless there is a
biometric national ID system?), and (ii) you apply a rigorous
matching standard when you read people's fingerprints (but that will create
lots of problems for the provider with all those false rejects, and nobody
discloses the degree of match they are willing to accept anyway). Biometrics
may just be giving the illusion of security. But for me the bottom line is: if
PIN-based authentication is good enough for you and for me with our bulging
bank accounts, surely it's good enough for poor people.
It has to be a bank! What's in a name? I often
get asked how one can trust mobile operators to safe-keep people's money. A
facile answer is, of course, that you do when you buy their prepaid airtime
from them. But in any case, the money collected from the public under all
mobile money schemes is (let me say: ought to be) safely put away in a bank
account. I find it strange how many people who have heard about mobile money
enough to have opinions about it still think that Safaricom uses people's
M-PESA money to build itself some more base stations. Since the money is always
with a bank, the prudential regulation and supervision of banks automatically
covers the prudential risks of mobile money. Yes, I'd like banks to be more
involved so that they can offer a broader range of financial services to
customers, but if banks don't step up to the plate I'm more than happy to let
mobile operators give a minimum set of payment and store-of-value services to
their customers.
These issues are
important and need to be aired and addressed fully. I just wish we gave
ourselves a little bit more time upfront to get excited before coming in with
all the but's. We have to keep the conversation focused on how to
create opportunities to include the 70 - seventy! - percent of the population
in developing countries that are not being served by the formal financial
system. |