Mobile payments is the most exciting space in tech right now according to a blog in the Washington Post last month. And we couldn’t agree more—especially after reviewing the wide range of applications for the 2014 Visa Innovation Grants. In its second year, the grant program, administered by NetHope, is awarding $500,000 in funding from Visa to development organizations pushing the boundaries around the innovative use of digital payments in emerging markets.
“The applications submitted this year took the global movement towards digital payments one step further, with proposals to use the power of current digital payment systems to support customized services to empower the poor,” said Shelley Spencer, NetHope Payment Innovations Program Director. “Two organizations in particular stood out in their efforts to push the envelope of innovation in areas of digital health and customizing MFI loan products to borrowers’ profiles.”
We are pleased to announce that this year’s $250,000 grants are awarded to Naya Jeevan and World Vision for projects in Mexico and Tanzania – countries not touched by the first round of Visa Innovation Grants. These organizations will support Visa’s efforts to advance financial inclusion around the globe.
“We could not do this by ourselves, we need to get insights from people in the field that experiment like our grantees,” said Visa Head of Global Financial Inclusion Stephen Kehoe last night at the NetHope Global Member Summit.
Launching Nueva Vida for Healthcare Needs in Mexico
Naya Jeevan will use the Visa Innovation Grant to replicate its model of integrating digital healthcare and digital payments in Mexico. Naya Jeevan pioneered this model in Pakistan where it provides low-income communities with cashless access to a nationwide network of hospitals, clinics, diagnostic labs and pharmacies. Naya Javeen does this by purchasing bulk group health insurance and wrapping these plans in a shell of digital health services, tailored exclusively to meet the healthcare needs of its low-income members who pay for those services with digital payments rather than cash. Using funds from the Visa Innovation Grant, Naya Jeevan will launch Nueva Vida (“New Life” in English) in Mexico to offer a similar integrated digital health and payments service targeted to low-income stakeholders working in corporate value chains, e.g. tienderas (small businesses operated by women) and muchachas (maids). The grant targets the enrollment of 5,000 low-income workers into the cashless, digital health plan in the first year, as well as the activation of at least 1,000 mobile savings accounts.
“We’re really excited to partner with NetHope and Visa on this unique opportunity,” said Dr. Asher Hasan, Founder & Chief Executive Officer of Naya Jeevan. “Especially at a time when there is such a rapid convergence of digital health and digital finance.”
Enabling Customized MFI Loans in Tanzania
Through Vision Fund, World Vision operates microfinance institutions in 36 countries, serving over 1,000 loan clients with a portfolio of $550 million. In Tanzania, Vision Fund Tanzania issues and collects loan payments through its fully integrated mobile money solution, “Chap Chap” (translated as “fast fast” from Kiswahili to English). While disbursements and collections already run through this platform, World Vision will use the Visa Innovation Grant to take the innovation one step further and develop a technology-enabled process to customize loan products and payment schedules to the needs of each borrower. Today, Vision Fund Tanzania issues loans with standardized payment terms—one size fits all. The payment terms do not account for the reality of variation in the borrowers’ needs for funds (i.e. staggered disbursement) or match revenue cycles (such as the rice harvest in Tanzania) to re-payment dates. This mismatch can create economic challenges for the borrowers.
With the Visa Innovation Grant funding, Vision Fund Tanzania will develop mobile data collection methods to capture the cash flow patterns of each of its loan applicants – effectively mapping loan disbursement and collection to the cash flows of each borrower. Using software developed to analyze the cash flow cycles of the borrowers, Vision Fund Tanzania will be able to offer loan payment terms customized to each of its 35,000 clients. Following the development and testing in Tanzania, Vision Fund plans to roll out and scale the mass loan customization product to its microfinance institutions in other African countries and in Asia.
“We are excited to see the cycles of innovation continue with digital payments. The Visa Innovation Grants provide a great resource for experimentation, documentation and contribution to the growing use of digital payments in development,” said Lauren Woodman, NetHope CEO. “It is indeed one of the most exciting sectors in tech and NetHope is proud to be involved!”