Introduction
In a cybercafé in downtown Port-au-Prince, Jean Yves deposits money into his TchoTcho Mobile account. Michel, his brother who owns the business, recommended that he register for this mobile money service so that he doesn’t have to carry money across town and risk being robbed. Taking his brother’s ad-vice, Jean Yves deposits cash at the cybercafé and withdraws it via his phone when he arrives at his final destination.
One hour away in the busy port town of Saint Marc, Carmen receives a text message saying that Mercy Corps has deposited US$40 of food aid into her T-Cash account. She picks up her bag and heads off to her local merchant to purchase rice and beans using her phone.
These are just two small snapshots of how Haitians have been using mobile money services since they became publicly available in Dec. 2010 with Digicel’s TchoTcho Mobile and Voilá’s T-Cash. Mobile money was initially introduced to Haiti as a way to move money around following the January 12, 2010 earthquake. Widespread damage to financial, com-munications and transport infrastructure crippled Haiti’s already underdeveloped financial system. According to GSMA’s Mobile Money Deployment Tracker, formal banks have just 15 percent penetration in Haiti [1], and money transfer offices are not always easy to access.
Mobile money promises a more affordable and accessible way of conducting a wide array of financial transactions for a wide spectrum of Haitians, potential-ly even evolving into true mobile banking. Potential benefits of this new tech-nology range from the primarily economic (such as facilitating the circulation of currency and the ability of poor people to save money) to the overwhelmingly social (including sending money to a family member to pay school fees or help fund a cultural event, such as a carnival performance).
Since June 2010, we have been conducting fieldwork in Haiti, with the support of the Institute for Money, Technology and Financial Inclusion (IMTFI) at the University of California, Irvine. We have been mapping out money flows, re-searching people’s remittance needs and following the development of mobile mon-ey services. In Phase I of our research – before mobile money services were launched – we found Haitians to be enthusiastic about the idea of us-ing their phones to store and transfer money. Our interviewees told us that they would welcome a service that allowed them to avoid long bank lines, the high fees of money transfer offices and the security risks incurred in sending money across the country.
In Phase II of our research, we returned to Port-au-Prince to watch Haiti’s new mobile money services as they evolved and assess their potential impact on Haiti’s existing financial landscape. We found that mobile money was indeed pro-viding an edge over traditional financial services in terms of time, cost and security. However, mobile money faces some critical challenges if it is to achieve scale in Haiti and evolve into full-fledged mobile banking. We have do-cumented these possibilities and challenges in a blog and two research reports that are available on the Institution for Money, Technology and Financial Inclu-sion’s website (www.imtfi.uci.edu).
Barriers to Sending Money within Haiti
How important are domestic flows of money to Haiti’s economy? Until now, most research has focused on international remittances sent by the Haitian diaspora back home. The figures are astounding: in 2008, international remittances to Haiti totalled $1.3 billion, making up 18.7 percent of the GDP. [2] Conversely, there is little information about domestic remittances available. Presumably they are too small to worry about or too difficult to study, given that most money does not flow through formal channels.
Yet one only has to take a look around Haiti to realize that a great deal of cash flows through its market system. Far from being a stagnant economy, mer-chandise, money and people find ways to circulate despite the dire underdevelop-ment of the country’s transport system and financial institutions. Peasants liv-ing in the hillsides, far from a Western Union office, send money with friends to their relatives in town, thanking their friend by supplying them with money for a Coke and a sandwich. Professionals living in Anse-a-Pitres on the border of the Dominican Republic send cash to their children who are schooling in Jac-mel via the open fishing boats that carry cargo and passengers there twice per week. The boat captains do not charge for this service, and the money transfers are coordinated via text messaging. “Madame Sarahs” – women who sell produce in Haiti’s open-air markets – use these informal services to pay their debts for merchandise they bought on credit.
However, informal methods of sending money tend to be very slow, and they can be risky. Yet even where formal financial services are available, they are not necessarily much better than sending money via boat or taptap. Our Phase I re-search report, Haitian Monetary Ecologies and Repertoires: A Qua-litative Snapshot of Money Transfer and Savings, [3] identified three main issues that make using both formal and informal financial services difficult: 1) time and cost; 2) security; and 3) bureaucracy.
Banks are a case in point. There are few branches outside of Port-au-Prince, and even if one lives next door to a bank, it can take hours to achieve the sim-plest of transactions due to long lines out the door. Money transfer offices, such as Western Union or MoneyGram, hold an advantage over banks, because their offices are more widespread and their lines are generally shorter. However, lack of privacy can prove daunting, as fellow customers can overhear the clerk check-ing personal details, such as one’s name, identification number, phone number and the amount of money being transacted. Security is also a concern, because exiting a bank or transfer office increases one’s risk of being robbed. The need to present valid identification is also an issue, as many rural people do not have the time or money to travel to the city to apply for it.
Given these constraints, our 90 interviewees were overwhelmingly enthusiastic about the possibility of mobile money becoming available in Haiti. They espe-cially welcomed the idea of being able to send money instantly, and they did not seem to be concerned about the security of keeping money in remote accounts. In-deed, they tended to assume that their money would be safer than their current practices of hiding it around their homes. Most Haitians have access to a phone and are financially and numerically literate. We left the field with the feeling that mobile money could indeed prove to be a useful and desirable service for Haiti’s majority low-income population.
The Beginnings of Mobile Money in Haiti
On June 10, 2010, the Bill and Melinda Gates Foundation and the USAID-funded Haiti Integrated Finance for Value Chains and Enterprises (HIFIVE) announced the launch of the Haiti Mobile Money Initiative (HMMI) to stimulate the development of mobile money services in Haiti. [4] The HMMI offered $10 million in prizes and $5 million in technical assistance for companies to develop and expand mo-bile money services across the country. Six months later, two functioning mobile money services existed in Haiti: Digicel’s TchoTcho Mobile and Voilá’s T-cash. Mobile money in Haiti loosely follows a bank-led model, which in this case means that the partner banks hold the money, while the telecommunications compa-nies administer customers’ accounts. In effect, TchoTcho Mobile and T-cash are agents for Scotiabank and Unibank respectively.
NGOs were the ear-liest adopters of mobile money in Haiti, partnering with TchoTcho Mobile and T-Cash in November 2010 to deliver food aid and cash donations to internally dis-placed persons (IDPs) within the earthquake zone and to victims who had returned to their home towns for safety and shelter. Digicel launched TchoTcho Mobile on November 22, 2010. [5] In their pilot project, they worked with World Vision to pay 230 cash-for-work employees via TchoTcho Mobile. They also recruited indi-vidual users and ran training sessions, approaching people in different areas of Port au Prince, especially post-earthquake camps and university campuses.
On January 10, 2011, Digicel’s TchoTcho Mobile was awarded a $2.5 million “First to Market” award for having achieved 10,000 cash in/cash out transactions at 100 new outlets in the six months after the award was announced. [6] Both TchoTcho Mobile and T-Cash are now competing for the scaling awards to be granted between now and June 10, 2012.
Adoption and Adaptation of Mobile Money: Key Research In-sights
We returned to Haiti in Dec. 2011 to watch as mobile money rolls out across the nation. We are particularly interested to see who adopts it, how they use it and whether it really does resolve some of the problems of the informal system. We want to see how people are adopting the service, what they’re using it for and if it is helping them resolve the problems they encountered when using transfer service providers, such as Western Union or public transport. Our Phase II research report, Mobile Money in Haiti: Potentials and Challenges, [7] presents six key insights describing creative ways that Haitians are using mobile money and suggests how mobile money’s appeal can be leveraged to facilitate its geographical and social integration into Haiti’s ex-isting financial landscape.
Insights for now
1. Me2me transactions have emerged as an important use of mobile money services. A broad spectrum of Haitians is at-tracted by the ability to store money and withdraw it at different geographical locations due to security concerns, inaccessible infrastructure and uncertain-ties they face in their daily lives. No story could illustrate the significance of mobile money for adding airtime value to your phone as this scenario pre-sented by Samuel, a 19-year-old university student. He said, “Have you ev-er been talking to a girl late at night, and just when the conversation gets in-teresting, you run out of money on your phone? At this hour there is not a store open or an available Pap Padap vendor. Even if there were, you would be too scared to go out at that time. With mobile money, you can continue the conversa-tion without losing momentum, because once lost, you cannot recapture that mo-ment.”
2. Customer experience is a crucial part of why mobile money is a viable and attractive alternative to existing financial services. For example, visiting a bank branch can be an uncomfortable experience for clients who cannot speak French (the official language of business) and for those who primarily operate in the informal sector. Fear of humiliation and the inability to speak on one’s own behalf causes many Haitians to avoid banks and other official settings. Depositing money in a clothing store or a computer center may prove far less daunting, especially if the mobile money outlet exists in one’s own neighborhood. Fast service, reliability, informality, security, trust and accessibility are areas in which mobile money can hold an edge over banks and transfer houses. To maximize this edge, mobile money services should be distinct from those offered by other financial institutions.
3. Who is an agent? Our research has found that there are several types of agents offering mobile money services, and that the service they offer is not consistent. Ideally, each outlet should always have a member of staff on shift who is trained to do mobile transactions. Howev-er, we have found that trained staff are often absent. Furthermore, at times, the business itself is not actually an official outlet. Rather, it calls in a trained individual who is not a direct employee of that business. Outlets may need to be incentivized to provide consistency of service.
Insights for the long term
4. Trade is likely to make up a greater percentage of P2P transactions than domestic remittances (gifts or loans). Use of mobile money for trade is feasible, because mobile service covers most trade routes adequately. For example, on Haiti’s southern trade route, fishermen sell their catch twice a week to buyers from Port-au-Prince. Buyers pay on cre-dit and pay the fishermen back when they return to Marigot’s market a few days later. Mobile money systems could be used for buyers to pay fishermen as soon as they sell their catch, allowing fishermen to pay their debts and return to fishing sooner. The primary limiting factor in the use of mobile money for trade will be the wallet size permitted by each mobile provider.
5. Horizontal and vertical integration across Haitian geography and society will facilitate mobile money’s abili-ty to contribute to both commerce and socioeconomic development. One challenge for mobile money will be whether it can gain broad market appeal. In Kenya, M-PESA was marketed as a service for all Kenyans to avoid becoming stig-matized as a service that only poor Kenyans use. [8] It essentially became an aspirational product, facilitating its adoption throughout a broad spectrum of society. Promoting mobile money in Haiti as a tool of commerce for a range of businesses (informal enterprises, store purchases, restaurant payments and bill payments) will not only open up a large sector of the economy to its use but normalize it as an economic tool rather than a ”product for the poor.”
6. Achieving scale across Haiti could be facilitated by adapting providers’ local level initiatives (matching customers with mobile money outlets) to projects that work with existing flows of money across the country. Local projects initiated by TchoTcho Mobile and T-Cash pro-vide a promising model of matching customers and agents, thus overcoming the problem of generating an initial user base, educating people in the use of the technology and providing reasons for customers to continue to use the services beyond the short term. This approach could be easily adapted to join users across Haiti by targeting sectors of the population who need to move money. Edu-cating and incentivizing individuals is difficult, but there are plenty of groups in Haiti who could benefit from mobile money. Fishermen, peasants, market women, educational institutions and savings circles are just some examples of Haitian groups who may prove enthusiastic about potential applications of mobile money.
We are optimistic about mobile money’s future in Haiti and feel that this is a promising opportunity to achieve both commercial profits and so-cioeconomic development goals. Maximizing mobile money’s promises will require ongoing dedication, creativity and cooperation between players in the private and public sectors, especially taking into consideration emerging uses of mobile money among different sectors of the Haitian population. Over the next few years, we will be watching how mobile money impacts upon Haiti’s socioeconomic landscapes and compare our observations with similar developments around the world.
This research discussed in this article was supported by the Institute for Money, Technology and Financial Inclusion at the University of California, Irvine. Under the directorship of Professor Bill Maurer, the Institute supports original research on poor people’s money transfer and savings practices and how these practices are being impacted by the development of new technological systems for payment and value storage.
[1] See GSMA Mobile Money Exchange Deployment Tracking, available at http://www.wirelessintelligence.com/mobile-money
[2] See “A Fact Sheet on Haiti,” The WorldBank Blog, posted Jan. 27, 2010, available at http://blogs.worldbank.org/peoplemove/a-factsheet-on-haiti
[3] Espelencia Baptiste, Heather Horst and Erin B. Taylor. Haitian Monetary Ecologies and Repertoires: A Qualitative Snapshot of Money Transfer and Savings. Report for the Institute for Money, Technology and Financial Inclusion (IMTFI), December 2010, available at http://cast.nacs.uci.edu/socsci/imtfi/baptiste_horst_taylor_report_haitian_monetary_ecologies_and_repertoires_112310.pdf
[4] The Bill and Melinda Gates Foundation, Press Release, Gates Foundation and USAID Announce Innovative Fund to Incentivize Mobile Money Services in Haiti, June 8, 2010, available at http://www.gatesfoundation.org/press–releases/Pages/building–assets–with–mobile–money–service–in–haiti-100608.aspx
[5] Digicel, Press Release, Mobile Money Service Comes to Haiti with “Tchotcho Mobile” from Digicel and Scotiabank, November 22, 2010, available at http://www.digicelbusiness.com/tt/en/about/news/mobile-money-service-comes-to-haiti-with-tchotcho-mobile-from-digicel-and-scotiabank
[6] Salah Goss, “Mobile Money Services Have Arrived in Haiti!” The Bill and Melinda Gates Foundation Blog, comment posted January 10, 2011, available at http://www.gatesfoundation.org/foundationnotes/Pages/salah-goss-mobile-money-services-in-haiti-110110.aspx. For information on prize criteria, see http://www.microlinks.org/ev_en.php?ID=46077_201&ID2=DO_TOPIC
[7] Erin B. Taylor, Espelencia Baptiste and Heather A. Horst, Mobile Money in Haiti: Potentials and Challenges, Report for the Institute for Money, Technology and Financial Inclusion (IMTFI), University of California Irvine, April 2011, available at http://www.imtfi.uci.edu/files/imtfi/images/2011/haiti/taylor_baptiste_horst_haiti_mobile_money_042011.pdf
[8] R. Kuriyan et al., Reassessing ICTs and Development: The Social Forces of Consumption, Research report released at 2010 World Congress on Information Technology, WCIT 2010, Amsterdam, May 25 – 27.
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