After leading a workshop on electronic payments (e-payments) in Dar es Salaam, Tanzania last year, I heard the same question from many of the participating international development organizations: “I am sold on all the benefits of e-payments, but how do I actually implement a transition away from cash?”
It was this question that inspired us at the NetHope Payment Innovations Team to take the opportunity to share our learnings and insights with others. In collaboration with our partners at the Digital Development Team at USAID’s Global Development Lab, we consolidated our experiences with those of early e-payment solutions adopters to create a free, practical Toolkit on how to transition away from cash. As discussed in our previous introductory blog, we’ve divided the Toolkit journey into ten steps, providing users with key tools and use cases. These steps are broken into three core sections: an introduction to e-payments, internal and external analysis, and implementation. This blog, the second in a series of three, will focus on the thinking behind Section Two.
A transition to e-payments is no easy feat. Often times early adopters of e-payment solutions have had to convince their organizations that the change is in the best interest of all parties involved. Neil Mendieta, Finance Manager for JSI Inc. in Tanzania, has been working on transitioning training per diems to mobile payments for over a year now.
“Although we are glad with the results of switching to mobile money, it has been a challenging process to adopt—especially because it is so new to us.”
Neil had to present a sound case to the internal audit team at JSI, which meant having a strong understanding of both the pain points they were experiencing with cash, as well as details on the e-payment alternatives available in the market.
The key tools provided in Section Two offer guidance to finance and program managers like Neil who are looking for ideas on how to internally assess their organization's need to transition to e-payments. The Payment Scoping Survey included in Step 2, for example, helps scope an organization’s cash payment streams and identify the associated barriers and pain points. On top of identifying existing cash payment streams with the survey tool, organizations can use the Costing Utility Analysis Tool in Step 3 to determine the cost of cash in order to build a stronger business case for journeying to e-payments.
In addition to building a case internally, Neil had to consider and assess the e-payment infrastructure around him. Understanding all of the stakeholders in the e-payments ecosystem of any given country can be a daunting task. It’s likely that a program manager overseeing an agricultural value chain project may not have the time and resources to perform a complete market diagnostic. In Step 4, the Toolkit offers a very high level Market Assessment of the various market stakeholders relevant to e-payments, as well as key metrics to research and references to where you can find data on those metrics.
Part of market analysis that merits closer attention is the need to know the market’s available e-payment service providers and whether they have the capacity to provide a robust e-payment product. Neil had to research and develop a strong request for proposal (RFQ) to guide service providers in submitting a solid proposal for what their product could offer.
When a potential client has a stronger understanding of their e-payment product needs, it makes finding the right service provider partner that much easier.
Dan Klienbaum, COO of a bulk mobile payments provider in Uganda named Beyonic, says, “A clean and clear RFQ process can speed up the adoption of mobile money as service providers do not have to guess the clients needs.”
To address this need, the Step 5 of the Toolkit equips organizations with a sample statement of requirements for an ideal bulk e-payment product. It also includes interview question guidance for discussing options with service providers.
NetHope has been able to aggregate lessons learned thanks to people like Neil, who have been willing to share their experiences in the interest of paving a smoother road for those following in their footsteps. While RFQs and budget spreadsheets admittedly may not be the sexiest, the Toolkit helps provides essential templates and resources that help to lay the groundwork for transitional success.
Section Two provides easy to use analytic tools to help people like Neil get a head start on analyzing internal and external capabilities available in the market, ultimately leading to making an informed decision as to whether e-payments are right for you and your particular country context.
Stay tuned for the last installment of this blog series, which covers Section Three on the implementation of e-payment solutions.
Haven’t seen the Toolkit yet? Click here to download it now >