Since USAID’s August 2014 Procurement Executive Bulletin making electronic payments (e-payments) the default payment mechanism for USAID implementing organizations, the Agency has released a variety of tools and resources to support partners in making informed decisions around the adoption of the new preferred payment method. Earlier this month, during an event hosted by USAID, FHI360, InsideNGO, and NetHope around how to comply with the procurement language, USAID introduced a new tool to further assist implementing partners and USAID mission staff in determining the feasibility of a transition to e-payments: the Mobile Financial Services Market Viability Tool.
The market viability tool provides insights into the overall maturity of the mobile financial services (MFS) ecosystems of the 104 countries where USAID works. Although the procurement language USAID released is payment channel agnostic (whether paying by card, mobile, or bank transfer), this particular tool focuses on the mobile channel. It sources several existing international data sets and aggregates 40 different indicators, grouped into six key indicator groups: demographics, business environment, financial environment, network environment, mobile payments, and regulatory environment. The tool provides an overall score for each of the 104 countries based on these indicators—a high ranking in overall score generally indicating that a country’s relevant market conditions are conducive to exploring the expansion and adoption of MFS. The tool also allows users to rank countries by individual indicator.
Who should use it, and how?
The market viability tool was originally developed to provide USAID staff and implementing partners a high level snapshot of key market conditions that provide insight into the feasibility of adopting e-payments for their country's context. This tool is a direct complement to the new procurement language, and allows organizations and USAID mission staff to conduct a quick initial assessment on the strengths and weaknesses of a particular country, leading to an informed decision on whether to pursue MFS as a payment methodology or consider a specific program or operation context as an exemption to the rule.
As this is third party data collected at a country level, the tool should be used to supplement further due diligence around the availability of payment products and services in the particular region an organization plans to work in. Tools around how to effectively engage service providers can be found in the NetHope e-Payments toolkit (specifically, Steps 4 and 5), in addition to Mercy Corps' E-Transfer Implementation Guide.
The market viability tool can also be used by researchers interested in a centralized database that brings together a variety of indicators from multiple international data sets (i.e. World Bank, WEF, GSMA, IMF, The Economist). Researchers can leverage the tool to quickly locate data around bank penetration, mobile money accounts, network coverage, and financial inclusion policy for each of the 104 countries.
NetHope intends to continue to iterate on this tool as datasets are updated and improved, keeping inputs as recent as possible while also continuing to think about better ways to tap into third party data sources to help determine MFS ecosystem viability. Adopting e-payments can be a major undertaking, and often times will require time and effort to catalyze organizational behavior change and understanding. Tapping into tools such as this one will provide decision makers with the resources they need to make an informed ruling on the best path forward for incorporating MFS into their programs and operations.