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Mobile Money for the Unbanked

By Yasmina McCarty

Microinsurance to reward mobile money wallet activity: Examples from Pakistan and Tanzania

Microinsurance to reward mobile money wallet activity: Examples from Pakistan and Tanzania

Both for commercial reasons and also to achieve greater financial inclusion, mobile money providers would like to see subscribers maintain balances in their mobile wallets. Storing funds electronically rather than immediately withdrawing the full amount in cash could benefit the customer, in increasing digital transactions and reducing cash-out expense and could benefit the provider, by reducing commission expense and increasing transaction revenue.

Some MNOs are turning to loyalty-based microinsurance to address this challenge.

Telenor Pakistan and Tameer Microfinance Bank have launched one of the more elegant products. Easypaisa Khushaal uses microinsurance to reward customers for keeping balances on their mobile money wallet. Easypaisa customers who maintain an average monthly balance of PKR 2,000 (USD 21) are eligible for life insurance coverage of PKR 50,000 (USD 521) for natural death and PKR 100,000 (USD 1,039) for accidental death.  Higher average balances result in even higher insurance coverage.

The State Bank of Pakistan was congratulatory in their remarks at the product launch, with the Deputy Governor, Kazi Abdul Muktadir commenting, “The State Bank looks forward to the success and positive outcomes of Easypaisa Khushaal and expects more innovative products from TMFB [Tameer Microfinance Bank] for promoting deposit mobilization and financial inclusion agenda.”

Vodacom Tanzania has also recently launched loyalty-based microinsurance. The microinsurance product Faraja does not drive stored value but rather rewards customers for transaction volumes.  Customers who make ten M-PESA transfers per month are eligible for free insurance cover (funeral benefit) of TZS 200,000 (USD 126) in the subsequent month.

Whether encouraging stored balances or transaction frequency, both of these microinsurance products should have the same effect – encouraging more wallet activity.

Is microinsurance an effective tool to encourage mobile money wallet usage? We welcome your feedback: you can post comments below or email us directly at mmu@gsm.org.

For additional details on microinsurance products see MMU publication Emerging Practices in Mobile Microensurance and MMU’s recent blog post on Tigo, Bima and MicroEnsure

2 Comments

  1. I think this is an excellent way to improve usage of mobile money services for operators who have crossed that initial barrier of 500K to a Million customer. A reward scheme would encourage these initial group of satisfied customers to speak about these benefits to their peers and followers.. which would eventually lead to more uptake of Mobile Money and improve financial inclusion.. However, the key point would be to keep such rewards program to be as simple as possible..

  2. There seems to be two emerging approaches to microinsurance loyalty programs. One is to reward loyalty of airtime purchases with free insurance (Tigo, yuMobile, DiGi etc) and the other is to reward the use of the wallet either from frequency of use or from value stored in the wallet (these two examples). Most MNO’s natural reaction to “insurance” is to link it to the wallet to drive take up and transactions yet take up of these programs has been much lower than those that are embedded into airtime sales. Some of the MNO’s that start with embedded insurance on airtime are now transitioning their large (million plus) client bases from free to paid and it may be that this is a better way to ultimatly drive volumes of users onto the wallets.

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