March 27, 2019
By Naomi de Groot and Sanjay B. Shah
Creating new ways using existing tools
The key to making a product profitable is uptake and usage. This same principle applies to youSave, a micropension product for Solomon Islanders working in the informal sector. It is essential that youSave clients can easily make deposits into their long-term savings. youSave was developed by the Solomon Islands National Provident Fund (SINPF) with support of the Pacific Financial Inclusion Programme (PFIP).
Currently, informal workers with a youSave account can make installments at a bank agent or at the Provident Fund itself. Occasionally, youSave field staff set up a stall at local markets where deposits can also be made. However, these marketing drives are costly and not held regularly. In order to increase the opportunities for youSave customers to make deposits, the option of using airtime credit for micropension installments was explored.
The PFIP assessment team, with support from PHB Development, met with key stakeholders from the Central Bank of the Solomon Islands, Solomon Telekom, bmobile-Vodafone, the Inlands Revenue Department and the youSave team from SINPF to explore the opportunities to test such a solution and assess the commercial viability. The team also spoke to various existing and potential youSave customers to understand their views on this option.
How will this work?
By allowing youSave customers to use airtime credit to make installments into their micropension account, project partners are essentially leveraging an existing product for a new use case. With this in place, a youSave client can buy airtime credit, which they would normally use for making calls, send an SMS or for data, and make a deposit into their youSave account, using a simple three-digit USSD code.
Easy to use
By using an already existing and intensively used service, airtime top-ups, less effort will be needed on customer education, since most people know how to use the USSD menu on their phones. They already do so regularly when buying airtime bundles.
youSave customers were excited when they heard about this new possible way to make installments during our research phase. “Can we already use it now?” And: “Can I also use it to send money to other people?” were some of questions people asked our research team.
As the largest mobile network operator in the country, Solomon Telekom has over 6,000 active airtime resellers that are present in all the nine provinces of the Solomon Islands. In addition, bmobile-Vodafone has 4,000 active airtime resellers and is present in four provinces. Majority of these agents provide services for both MNOs and so the estimated total amount of agents in the country is around 8,000. These are all access points that can enable youSave customers to save regularly.
In order to make this solution viable for all parties, customers will need to pay a 5% transaction fee. youSave clients mentioned that this is a reasonable cost, which they are willing to pay. As most people will be making small and regular deposits, the costs of saving will remain relatively low.
In addition to the fee charged to the customers, SINPF will pay a 3% aggregation fee to the mobile network operators. And, during a one-year trail period in which this channel will be tested, the Internal Revenue Department has agreed to waive the 10% tax that usually applies on airtime purchases. People who now want to make a cash deposit into their account, also do not have to pay tax over this installment.
Finally, airtime reselling agents will see an increase in volume transacted with this new use case.
And so, in order to test using airtime credit to make installments for micropensions, all parties involved have found a way to make this work. Together, stakeholders are forming a unique partnership between government entities, private sector and development partners, committed to making this new service work for Solomon Islanders.
When the project partners test this solution, next to the technical implications, the sales team at the SINPF will need to be ready to smoothly and quickly onboard a lot of new customers in a short time. To ensure consistent uptake and activity, new customers should be able to make their first installment as soon as they sign up.
An increase in uptake will ensure the success of youSave, as customers will be able to make regular payments more easily. youSave has the potential to provide nearly 80% of the Solomon Islanders who are currently working in the informal sector, a more secure future.
More facts about youSave and information about the product design and development can be found here.
Sanjay Shah is a senior digital financial services consultant at PHB Development.