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 [email protected].
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