One-to-many, or “bulk” disbursements, currently represent a small but fast growing portion of mobile money transactions (2.3% by volume at the end of December 2014). Established mobile money operators are increasingly focusing on this opportunity and targeting a broad range of business, government and NGO clients. In parallel, NGOs and the donors that fund them are increasingly ambitious to reduce their reliance on cash disbursements which tend to be expensive and even dangerous to administrate. For some time, operators and NGOs have been working together to digitise these payments using mobile money.
A new report by NetHope, “Mobile Money Bulk Payment Products: Capturing the Market Opportunity for Global Development Organisations” sheds light on both the nature of opportunity and the requirements for operators to work successfully with NGOS to digitise these payments. NetHope is a members association for 43 leading humanitarian organisations and the report is based on extensive qualitative and quantitative research with NGOs and their advisers – but we believe that many of the requirements are similar for government and business clients.
NetHope estimates that from $29bn of funding channelled to development organisations globally, between $1.9bn and $3.7bn is passed to beneficiaries directly, primarily as hard cash as well as cheques, electronic funds and vouchers. As well as transferring cash to beneficiaries, NGOs frequently use bulk payments for travel and expenses, permanent and temporary staff salaries, and paying suppliers.
According to the report, these high volume, low-value payments are concentrated in East and Central Africa, South and Central Asia and the Middle East, and are split roughly equally between urban and rural recipients. Making these disbursements tends to be painful and expensive process for NGOs; and major concerns include the security of staff and recipients when carrying cash, processing inefficiencies, leakage of funds, the speed of receipt and the convenience for recipients. All of these pain points could be addressed with robust mobile money-based solutions.
While almost 20% of NGOs that NetHope surveyed have already used mobile money for bulk payments, success to date has been mixed. NetHope’s report usefully highlights the detailed requirements of a typical NGO based on experience using mobile money; these include technical features like enhanced reporting functionality and improved payment interfaces, improved agent and liquidity management, and dedicated client and end-user support.
NGOs have been early adopters of mobile money for bulk payments – and this report suggests that, given the inconvenience and cost of cash-based solutions, they are willing to pay for the right solution. This report helps operators to understand what it takes to unlock the NGO opportunity, which could be a good springboard towards a wide range of enterprise mobile money customers.