Lessons from Basa Pilipinas adoption of m-money payment

April 2014Manila, Philippines

USAID Philippines’ mobile payment initiatives• Actively works to develop mobile money via two projects.

– Microenterprise Access to Banking Services (MABS) Project– Scaling Innovations in Mobile Money (SIMM) Project

• Supports the Government of the Philippines’ participation in the Better Than Cash Alliance (BTCA)

• Supports the Better Than Cash Initiative. Worked to Include “hortatory language” to encourage use of electronic payments in all of the Mission’s grants and contracts

SIMM Project

• 2-year program funded by USAID which started in April 2012

• Objective is to increase financial inclusion with two inter-connected goals:1. Boost expansion and rapid adoption of mobile money (m-money) services

2. Create an enabling environment for m-money

• Agreed between Pres. Aquino and USAID Administrator Rajiv Shah in June 2012 in Washington, DC

• Supports GPH objective of inclusive growth in the Philippine Development Plan

• Supports USAID objectives for Partnership for Growth

• Working with LGUs and MFIs to use m-money to:o Disburse payroll, grants and loans to over 250,000 peopleo Collect taxes, fees and loan amortization

About Scaling Innovations in Mobile Money

Basa Pilipinas Program

• A four-year program funded by USAID which started in January 2013

• The program aims to support the Department of Education (DepED) toward improved reading proficiency for up to 1 million early grade students through:

1. Improved Reading Instruction - Train grades 1-3 teachers and school heads on effective reading instruction in Mother Tongue, Filipino and English 2. Improved Reading Delivery Systems - Work with DepED to set national reading standards and develop appropriate assessment tools - Support Community Awareness Raising efforts aligned with core programs 3. Improved Access to Quality Reading Materials - Develop and distribute appropriate reading and instructional materials - Engage private partners to provide supplementary reading materials

About Basa Pilipinas (Read Philippines)

Basa & SIMM synergy

Basa wanted to increase operational efficiency and ensure the safety of administrative staff during the preparation and distribution of cash reimbursements to teacher participants.

SIMM with its success in piloting m-money cash disbursement for LGUs and cooperatives provided Basa with an overview of m-money disbursement options in the Philippines and introductions to each provider. SIMM also described their own processes and lessons learned to Basa.

Basa designed a process, informed by SIMM’s experience, to distribute travel reimbursements to more than 2,000 teachers in La Union and Cebu. Plans are in progress to reimburse more than 8,000 teachers in the month of May during summer professional development for teachers in Regions 1 and 7. 

To ensure that teachers are supported throughout the reimbursement process, Basa also utilized frontline sms to send text blasts to teachers. Through text, Basa was able to troubleshoot payment issues, survey teachers’ reactions to the technology, and offer opportunities to answer questions.

Cash handling pain points

Consumer Institution

• Risk of theft– Physical cash is exposed to risk of

theft• Access

– Savings services are not easily accessible

• Costly– Transportation and insurance cost for

manual handling of cash from bank to office/recipients

• Operational inefficiency– Manpower costs– Human error in counting cash – Time consuming

• Risk of theft– Manual handling of cash poses threat of

theft or leakage

M-money benefits

• Convenience– Can transact anytime, anywhere– Can withdraw in over 10,000 Bancnet / Megalink

ATM and over to 12,000 cash merchants nationwide

• Cost-Effective– Cheapest way to send money to family and friends– Gives 10% rebate on purchase of pre-paid airtime

credits– Can save on transportation cost and opportunity

costs in making bills payment• Secure

– Requires M-pin– Generates electronic receipt as proof of

transaction– All transactions have electronic records

• Easy access to savings services– Mobile wallets can be linked to savings accounts

• Cost-Effective– Eliminates paper work– No ADB or maintaining balance required– Eliminates cash handling costs

• Efficient– Streamlines back-end process for disbursement– Quicker and more accurate management reports

• Secure– Requires two step approval (maker and approver)– Transaction logs are easily accessible from web portal

• Transparent– All transactions have electronic trail

• Promotes Transparency and Accountability– Minimize misuse of funds as payments are credited

directly to bank account—no manual handling of cash

Consumer Institution

Mobile Money Providers

M-money providers (MMP) in the Philippines

• MMPs presented their respective m-money disbursement products to Basa, after which Basa selected BPI Globe BanKO’s product

• BPI Globe BanKO is a virtual bank with its mobile wallet linked real-time to a savings account

• Basa and BPI Globe BanKO signed a partnership agreement to implement the project

• BPI Globe BanKO provided Basa with: - training on disbursement using BanKO’s web access - 2,000 Globe sim cards - 2 batches of end user trainings - 2,000 ATM cards

• With savings resulting from lower cash handling costs, Basa is able to subsidize cost of cash-out and ATM withdrawal fees for teachers

Payment of reimbursement prior to mobile money• For a 3-day Basa training for up to 500 teachers, manual cash disbursement

required a minimum of 5 finance staff on site working for a total of 250 man-hours (5 days at approximately 10 hours per day) to take care of the following tasks: 

-   Withdrawal of funds from banks in small currency -   Counting of money for each participant after review of claims and filling envelopes -    Distribution of funds to teachers -    Liquidation of all funds received - Other admin/finance tasks such as distribution, collection and review of transportation claims, verification of attendance

With mobile money cash disbursement

For a similar training (3 days for up to 500 participants), on site finance staff requirements have been reduced to 2 staff working 5 ten-hour days, for a total of 100 man-hours for mobile money payment processing, including other admin and finance tasks. The security risk is eliminated as staff no longer travel to remote locations with large quantities of cash. 

Process Flow

Teachers

Submit application

form

Account Opening (One-Time Process)

Basa/MMP

Submit toapplication

for activation

Deliver SIM and ATMTo Basa

Mobile Money provider

Distributionof ATM & SIM

Teachers withMobile MoneyBasa

Process Flow

Teachers withMobile Money

SubmitExpenseReport

SubmitVerifiedReportTechnical Finance

Upload account numberand amount to disburse to Web access of MMP COP

Approve disbursement

Through MMP Web Access

Disbursement (Recurring)

Lessons Learned

Stakeholder consultation is crucial prior to switching to m-money payments to avoid resistance in adoption.

The program should make it clear to the MMP early on about the potential scale of the service required in terms of no. of payees, frequency of disbursements, and amount of payments for easier appreciation of the business case by the MMPs. Depending on the scale, the program can negotiate better deals.

Program should give sufficient lead time from contracting period to actual implementation. This is usually 1-2 months, depending on the MMP.

Program should conduct pre-activation with MMP prior to program training or event to fully accommodate the volume of beneficiaries. Pre-requisites include complete and accurate data of beneficiaries for m-money account opening purposes, and adequate mobile network signal. Internet access is also preferable.

MMP should customize end user training according to beneficiaries’ needs, i.e. highlighting best savings interest rate in the market to drive interest in the other m-money services available.

Ensure after-sales support is well-established by the MMP and that other actors, i.e. DepEd superintendents, are also informed or trained about the service.

Quote

“The use of mobile money is amazing. We didn’t face danger anymore in carrying cash, and we no longer count money and place them in envelopes. We also incurred savings because of minimized involvement of support staff.”

Loreta Villones, Finance ManagerBasa Pilipinas Program

Activities

Public school teachers participating in a Basa Pilipinas training learn how to use a BPI Globe BanKO account in Cebu City on February 2014. Basa Pilipinas Program and SIMM Project are partnering to make disbursement of travel reimbursement of teachers more efficient and convenient through mobile money.

Thank youFor more information, please contact:

Basa Pilipinas ProgramMr. Lee MarshallDeputy DirectorOffice of EducationU.S. Agency for International DevelopmentAnnex 2 Building, U.S. Embassy1201 Roxas Boulevard 1000Ermita, ManilaEmail: lmarshall@usaid.gov

SIMM ProjectMs. Maria Teresita EspenillaProject Management SpecialistOffice of Economic Development and GovernanceU.S. Agency for International DevelopmentAnnex 2 Building, U.S. Embassy1201 Roxas Boulevard 1000Ermita, ManilaEmail: tespenilla@usaid.gov