September 15, 2020
By Alex Reddaway
Since Vodafone Fiji launched its M-PAiSA mobile money account in 2010 the number of active accounts has steadily increased each year. For some of those people M-PAiSA is the first formal financial service they’ve used, and for many more it’s the first digital financial service they have used. While this shows an encouraging increase in financial inclusion it raises the question of whether the usage of formal financial instruments is making a real difference in improving people’s lives, let alone how this links to the achievement of the Sustainable Development Goals (SDGs).
The Impact Pathways methodology was developed to find out whether financial services benefitted users, and to establish whether those benefits contributed towards achieving the SDGs. Visit the Impact Pathways website to learn more about this methodology. By taking a closer look at the human stories behind these numbers we can gain further insights into the specific ways in which they impact individuals and communities.
We interviewed two high volume users of Vodafone’s M-PAiSA mobile money account, Manish and Elsie. They spoke to us why they chose to use mobile money and explained the impact that its benefits had on their lives.
Manish, a warehouse manager in Nadi, was persuaded by a friend to open an M-PAiSA account in 2019 and, having initially been sceptical, now uses it whenever possible. With a wife, three children and his mother all depending on him, Manish places great importance on maintaining a sound financial footing. He maintains a traditional savings account and pension but prefers using M-PAiSA for all day to day transactions because of the control that it offers him over his finances.
Each month, Manish’s salary is automatically split between his conventional savings account and his M-PAiSA account, allowing him to set his budget for the month. He uses M-PAiSA to pay for bills, top up his phone and send his daughter her monthly allowance for university. When he does need cash, he is able to quickly withdraw it from any Vodafone shop. However, it was the QR payment tool that cemented the shift to digital financial services: he now uses the M-PAiSA on a daily basis and avoids cash transactions where possible. His one complaint is that it is still not accepted at petrol stations!
While Manish clearly values a number of M-PAiSA features, such as not wasting his lunch hour in a queue at the bank, the main benefits are the improved safety that came from the shift away from cash payments and the fact that clear oversight and control of his finances reduces stress and anxiety. Nowadays, after each purchase he receives a text message with the transaction details, his updated balance and a link to his full transaction list. By keeping tight control over his finances, Manish is confident that he can ensure the long-term well-being of his family and confront any unexpected events along the way.
Elsie is from the remote island of Rotuma but is now studying chemistry at USP in Suva. Similar to Manish, a friend recommended her to opnen an M-PAiSA account in 2019 and it did not take long for her to see its potential. Asked to explain how she uses it, her answer is simple: “I use it for everything!”
Elsie’s primary income is her student loan which she receives directly into her M-PAiSA account. Thanks to the app she always know exactly how much money she has in her account and she can set herself a weekly budget, which she explains as follows: a fixed weekly amount for shopping and expenses, with one week a month “sacrificed” to pay the rent. Student budgeting principles appear to be alive and well.
Elsie still keeps a bank account, but she rarely uses it. Her main expenses such as rent, utility bills and phone credit can all be paid through M-PAiSA. Unlike her bank, M-PAiSA doesn’t charge any fees so long as she has over $100 in transactions per month. She no longer maintains a balance with the bank and, in the rare event that a transfer can’t be done through M-PAiSA, she sends the required amount to her bank account and immediately sends it on to the end recipient.
Much like Manish, the new QR payment feature played an important role in convincing Elsie to complete the shift to mobile money. Without it, she needed to either carry enough cash for all her day to day expenses or have a second financial product for card payments. Thanks to QR payments, Vodafone’s mobile money product can offer all of the functionality of a conventional bank account and more, allowing customers to maintain a single financial product that covers all use cases. Elsie feels that her physical safety has improved now that she carries less cash and that she is less anxious because, thanks to the app, she has much better control over her spending.
Manish and Elsie’s stories show how digital financial products can bring about a range of benefits that contribute towards reaching the SDGs, but also the impact that specific product features can have on both uptake and usage.
Using the M-PAiSA account Manish is able to maintain control over his earnings, allocating money to current expenditure, savings and his pension. In doing so Manish is ensuring that his family is more resilient to shocks as he has a ready source of money saved for emergencies. Research shows that increased resilience dictates whether or not families fall into poverty in difficult times. The product also allows him to send money to his daughter in Suva without much hassle. Communities in low-income countries often rely on one another to send money to cover unexpected expenses, particularly in time of crisis. Digital financial services allow friends and families even in distant locations to send money. By providing sustained resilience and preserving social networks digital financial services contribute to achieving SDG 1: No Poverty.
The QR payment feature allows both Elsie and Manish to significantly reduce the amount of cash they carry and the number of cash transactions they perform each month, leading to a feeling of greater physical safety. Studies show that the shift from cash to digital transactions significantly reduces crime rates. Safer communities is a key element of SDG 11: Sustainable Cities and Communities.
Thanks to the app, M-PAiSA users can view their balance and transactions list at all times, giving them complete control over their spending. Both Manish and Elsie spoke of the sense of security and being in control that this gives them, resulting in significantly less stress. Numerous studies link financial strain to poor health, as stress can cause a variety of both mental and physical health issues. By reducing stress related to the financial situation of an individual or family, mobile money products can help achieve SDG 3: Good Health and Wellbeing.
Both conversations back up another finding of the Impact Pathways study, that the more features an account has, the more benefits it offers its users. Although the introduction of QR payments may not directly have an impact on the SDGs, but it appears to be driving much wider and more regular usage, expanding the pool of people who will enjoy the benefits of digital financial services.
For more information and resources please visit the Impact Pathways website.
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