Valuable Bits

We haven’t really started doing formal interviews with people about mobile banking services yet but still we take every opportunity to ask people if they use MMT services or if they send money in other ways.

The other day we talked to Musa who is a young tennis player. He didn’t use any of the available MMT services but he was well aware of their existence. Instead he sent money home with the use of top-up vouchers from Tigo. Tigo is the only big NMO in Tanzania that does not provide MMT services at the moment, and what we have heard they have no plans of doing so in the near future.

Musa buys top-up vouchers for usually 10 000 - 20 000 TZS and sends the codes via SMS to his mother in Mwanza. She then visits a local entrepreneur who pays in cash for the voucher codes at a price 10% under their value.

It’s interesting to see that this actually works. The pre-paid model’s popularity has enabled top-up minutes to become an accepted form of currency, easily translated into cash. It was these kind of stories that first introduced us to mobile banking, before we heard about M-Pesa, G-Cash and so on. People finding own solutions to a problem with the help of technology. So it was fun to hear it for ourselves. But this also shows the need for more information about the MMT services that is currently available, with them being much cheaper than the 10% that the local entrepreneurs charge (sometimes its even up to 20% of the transaction in fees). Almost everyone that we have talked to sends money at occasions, but very few uses the services offered by the MNOs. Awareness seems really to be an obstacle at the moment.

Still, this way of sending money is easier for the sender. You can buy top-up vouchers almost everywhere and all you then do is to send an SMS. No hassle becoming a customer, having to learn the system or to find an agent. It’s the receiver that experience the negative side of this service by paying a higher fee and time finding a specific dealer. The receiver also has to withdraw the whole amount at the same time. It is the sender that has the most influence over the choice of service so you need to make the service as attractive as possible for him/her. Here there’s still work to be done for the money transfer services provided by mobile operators.

One disadvantage with using this informal way of sending money is that it doesn’t provide the users with a digital money account. It is probably the opportunity to expand the use of a MMT account that has the most potential to deliver further financial services to the unbanked population.

We have a lot of unanswered questions on this topic, for instance:
- who are the agents that accepts vouchers for cash? How many are they? And are they also official agents of M-Pesa/Zap/Z-pesa?
- is it only the sender who chooses which service to use?
- for how much are the sent vouchers re-sold? Are the agents making a larger profit this way than M-Pesa/Zap/Z-pesa?