To convince the unbanked that Digital Financial Services (DFS) can be an alternative solution to conduct more reliable and convenient financial transactions, we need to start by enabling this segment to experience the service first-hand.
This is why e-MITRA and Indosat joined forces to set up a pilot for DFS ecosystem development in Pamijahan, a sub-district of Bogor, West Java, replacing cash with digital money.
This practical implementation is expected to provide useful insights related to the community’s perception toward DFS. In turn, this can ignite the development of a sustainable “cashless” society ecosystem.
e-MITRA and Indosat work alongside local Microfinance Institution (MFI) named Baytul Ikhtiar (BAIK), which currently has more than 31,000 women as members – about 2,000 of whom are located in Pamijahan.
BAIK offers loans to their members without requiring any fixed assets as collateral. The average weekly loan repayment for each member is less than IDR 150,000. The average transaction amount fits under the current e-money regulation issued by Bank Indonesia (BI). BI allows e-money transaction up to IDR 1 million for unregistered e-money users and up to of IDR 5 million for registered e-money users within the monthly limit balance.
BAIK members regularly place deposits and receive loans in cash. Field officers collect the weekly loan installments in the field and deliver the money to the nearest BAIK branch. These daily activities subject officers to theft and injury since they have to carry the cash along the way.
BAIK selected around 250 members with mobile phones and zero non-performing loans to participate in the DFS ecosystem development pilot. These two requirements are crucial in this initial stage because we want to make sure we are working with participants who are familiar with financial transactions, make routine payments every week, and have a certain discipline in managing cash. Participants are also encouraged not to cash-out in order to help build the DFS ecosystem.
Our expectation is that these pilot participants will ultimately become mobile money ambassadors for their family and communities.
First encounters: managing a mobile wallet
For the kick-off event, we gathered ten women between the ages of 25-50 years old from a selected BAIK branch in Cibening, Pamijahan. Three of these women share their mobile phone with other family members and typically only use the phone for voice calls and text messages.
At one of the member’s houses, we introduced the concept of a mobile wallet with an emphasis on the idea that the value of e-money is equal to the value of conventional money; stressing this point was important because some of them compare e-money with airtime value. (In this district, airtime of IDR 10,000 is normally purchase around IDR 11,000-IDR 13,000, so the value after purchase is different.)
When we asked these members about their regular spending habits, most said they use their money to purchase household commodities (such as sugar, milk, and toothpaste) and to top-up airtime from local convenient stores/airtime re-sellers nearby. For larger transactions amounts (up to IDR 250,000), they usually go to local modern retail chains such as Alfamart and Indomart, which are present within 15-30 minutes walking distance. In this pilot, the modern retail chains are also expected to be the cash-in and cash-out point.
The women were interested in learning about the digital money service, although they did have a bit of initial difficulty in memorizing the steps and the password to execute the transaction. Most questions raised were around cash-in and cash-out location, consumer complaint handling, and merchant partners. Some participants were quick to see the potential behind business as an airtime re-seller since the mobile functionalities allow them to purchase airtime for someone else–even for other cellular service operators.
All in all, the introduction to Indosat’s DFS initiative was well received and participants were very excited about the possibilities – a good sign as we continue to lay the bricks as a foundation for the digital village.
This post is the second installment of an ongoing blog series following the journey of the women of Pamijahan as they make the transition from cash to digital money.
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