DIGITIZING BULK PAYMENTS IN AGRICULTURE: IS MOBILE … · Farmer VPM –Receipts Value Proposition...

October 25, 2017

9 – 10:30 a.m. (U.S. EDT)

DIGITIZING BULK PAYMENTS IN

AGRICULTURE:

IS MOBILE MONEY CHEAPER

THAN CASH?

WEBINAR

© CGAP 2017

Nathan Were

Speakers

2

Bram Peters Pall KvaranCiprian Panturu

© CGAP 2017

Agenda

9:00 Introductions

9:05 Value Chain Context and Project Objectives

9:15 Value Proposition Mapping Results

9:45Business Case for Mobile Network Operators –

Unlocking the Mobile Money Potential

10:00 Conclusions

10:10 Q&A

3

© CGAP 2017

4

Source: http://www.uncdf.org/article/2471/payments-in-agro-value-chains-the-tea-value-chain

UNCDF is involved in the digitization of five agricultural value chains

Value Chain Context in Uganda

http://www.uncdf.org/article/2471/payments-in-agro-value-chains-the-tea-value-chain

© CGAP 2017

Identify (if any) positive value propositions for the provision of digital

financial services (DFS) along the coffee value chain, in partnership with

agribusiness Kyagalanyi Coffee Limited (KCL).

• This required:

– Detailed mapping of payment processes and modeling of related value

propositions (cash vs. DFS) by stakeholder category

Value proposition mapping (VPM)

– Using the VPM results to inform a business model aimed at identifying

optimum pricing of DFS while ensuring positive value propositions for

all stakeholders throughout the coffee value chain

DFS business case

5

Value proposition mapping and transformative DFS business case

Project Objectives and Approach

© CGAP 2017

– Main focus on building the VPM models:

• Exploratory research with small, non-random sample

• Low variance in collected data inspires some confidence in the results

– 22 in-depth qualitative and quantitative interviews within the community:

• 8 small and medium farmers

• 12 small and medium traders

• 2 large traders

– Detailed analysis of agribusiness’s payment process and cash movements

– Detailed analysis of mobile network operator (MNO) mobile money revenues and cost structure

6

Exploratory research, non-random sample

Research Overview

© CGAP 2017

• Approach adapted from traditional activity-based costing (ABC)

• Stakeholder’s payment behavior mapped for a year …

• Mapped monthly

• Incorporating virtually all sales and purchases

• And where the transactions took place

• To estimate the cost of conducting payments in cash …

• Direct transport cost

• Cost of time spent

• The value of risk interviewees place on traveling with cash

• And compare with the cost of making the same payments digitally.

• Fees charged to do transactions (“P2P”)

• Fees for cashing out (regular practice in Uganda)

= Net value proposition (positive/negative) of DFS vs. cash

7

Value Proposition MappingWhat is it?

© CGAP 2017

Example of an Average Farmer Profile

8

Location: 30 minutes (medium) drive

from Manafwa WS, gravel road

Farm size: 5 acres (3 coffee, 2 other)

HH: Wife and five children live on farm

Cash risk value: 20,000/800,000

Thinks mobile money would be a good

way to get paid (*varies)

Fred: 37 years old, married, five children

© CGAP 2017

Farmers Analysis

Data Consolidation from Interviews Cost of Cash Transactions (100% cash) Cost of DFS Transactions (100% DFS)Retained Activities

for DFS Integration

Note: All Monetary Figures below are in Thousands of UGX ('ooo)

Cash

Risk

Value

Cost of

Time

(kUGX/

Transport

Cost

(one way)

Travel Time

(min. one

way)

Avg.

Value/

Transactio

mars-16 avr.-16 mai-16 juin-16 juil.-16 août-16 sept.-16 oct.-16 nov.-16 déc.-16 janv.-17 févr.-17

Yearly

Balanc

e

% of

Total

Paid in

Cash

Paid in

MM

Avg.

Nb.

Of Tnxs

Total Cost

of Cash Risk

Total Cost

of

Transport

Total Cost

of Time Lost

Total Cost of Cash

(risk+time+transp.)

Total Cost of Cash

(risk only)DFS Category

Cost of DFS

(no Cash

Out)

Value

Prop.

VS Cash

Cost of DFS

(with Cash

Out)

Value

Prop.

VS Cash

Integrate

on DFS

Value of

DFS txns

Receipts 620 668 317 332 598 713 416 546 2,031 2,395 423 557 9,617 5,595

Coffee Sales 1.37% 7.29 8.56 56.67 250 0 0 0 4 19 128 198 314 1,849 2,093 106 126 4,837 ###### 4,430 407 19.22 3.46 17.11 7.20 27.77 3.46 Merchant Payments 0.00 POSITIVE 3.58 NEGATIVE yes 4837

Livestock / Livestock Products 2.02% 4.41 0.00 0.00 63 13 13 13 21 17 17 17 21 21 21 21 21 217 2.25% 217 0 10.00 1.24 0.00 0.00 1.24 1.24 P2P Payments 0.00 POSITIVE 1.93 NEGATIVE 0

Other Agricultural Produce 1.25% 7.89 2.78 30.56 157 586 630 227 277 510 520 133 144 86 182 236 276 3,805 ###### 3,805 0 21.89 2.94 5.56 8.14 16.64 2.94 P2P Payments 0.00 POSITIVE 3.58 NEGATIVE 0

Trade Sales (Agricultural/ Other) 3.30% 2.38 0.00 0.00 365 5 3 3 9 4 5 9 17 11 9 6 86 167 1.73% 167 0 14.00 9.34 0.00 0.00 9.34 9.34 P2P Payments 0.00 POSITIVE 5.78 POSITIVE yes 167

Employment (permanent/ casual) 3.66% 2.66 0.00 0.00 30 17 17 17 17 11 11 17 17 17 17 17 17 189 1.96% 189 0 65.00 0.91 0.00 0.00 0.91 0.91 P2P Payments 0.00 POSITIVE 0.88 POSITIVE yes 189

Remittances Received 2.98% 2.33 15.56 93.33 88 0 6 2 4 0 0 9 3 14 40 6 0 84 0.88% 0 84 3.50 2.35 70.00 15.05 87.40 2.35 P2P Remittances 0.00 POSITIVE 1.93 POSITIVE yes 84

Assets Sale 0.00% 0.00 0.00 0.00 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0.00% 0 0 0.00 0.00 0.00 0.00 0.00 0.00 P2P Payments 0.00 POSITIVE 0.00 POSITIVE 0

Loans Received 2.83% 1.87 0.00 13.33 500 0 0 56 0 0 0 0 0 0 0 0 0 56 0.58% 56 0 1.00 14.15 0.00 7.49 21.64 14.15 Service Payments 0.00 POSITIVE 5.78 POSITIVE yes 56

Other Income 1 4.00% 2.99 0.00 0.00 300 0 0 0 0 37 32 31 30 33 33 33 32 262 2.73% 0 262 8.00 11.80 0.00 0.00 11.80 11.80 P2P Remittances 0.00 POSITIVE 5.78 POSITIVE yes 262

Other Income 2 0.00% 0.00 0.00 0.00 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0.00% 0 0 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 POSITIVE 0.00 POSITIVE 0

Payments 1,483 852 870 1,233 729 365 961 391 448 572 912 339 9,154 5,388

Seeds & Seedlings 1.26% 7.09 5.56 76.11 139 136 29 0 6 31 0 0 0 63 33 0 0 298 3.26% 298 0 2.00 1.60 11.11 11.44 24.15 1.60 Merchant Payments 0.95 POSITIVE 4.53 NEGATIVE yes 298

Herbicides/ Pesticides/ Spraying 1.79% 5.45 2.56 43.33 84 28 0 13 6 1 8 22 0 13 0 8 0 99 1.09% 99 0 1.67 1.48 7.67 4.66 13.81 1.48 Merchant Payments 0.66 POSITIVE 2.59 NEGATIVE yes 99

Fertiliser 1.43% 6.76 6.44 77.78 181 121 24 0 41 0 58 80 4 44 0 0 0 373 4.08% 373 0 2.00 2.94 14.50 18.32 35.76 2.94 Merchant Payments 0.95 POSITIVE 4.53 NEGATIVE yes 373

Livestock Purchases 2.57% 3.01 2.00 41.11 571 102 83 0 56 0 0 0 0 67 6 94 44 453 4.95% 453 0 1.14 13.80 5.14 8.73 27.68 13.80 P2P Payments 2.20 POSITIVE 12.65 POSITIVE yes 453

Trade Purchases (Agricultural/ Other) 2.63% 1.76 0.89 23.33 225 0 0 0 0 0 0 0 0 0 0 50 22 72 0.79% 72 0 1.50 6.04 8.00 6.18 20.22 6.04 P2P Payments 1.40 POSITIVE 4.98 POSITIVE yes 72

Workers 1.14% 6.91 0.00 0.00 69 62 13 13 52 7 3 16 13 25 27 3 3 239 2.61% 239 0 19.67 1.19 0.00 0.00 1.19 1.19 P2P Remittances 1.40 NEGATIVE 2.59 NEGATIVE 0

Land Purchase/ Rental 1.71% 7.40 1.67 26.67 2,072 522 0 133 837 333 0 0 0 0 0 78 0 1,903 ###### 1,903 0 1.33 40.73 5.00 9.53 55.26 40.73 P2P Payments 2.20 POSITIVE 37.40 POSITIVE 0

Electronic Equipment (TV, Radio) 1.38% 8.10 7.44 56.67 386 306 2 0 0 0 139 4 0 22 0 3 0 476 5.20% 476 0 1.29 5.71 19.14 15.27 40.12 5.71 Merchant Payments 1.25 POSITIVE 7.03 NEGATIVE yes 476

Machinery & Motor 0.00% 0.00 0.00 0.00 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0.00% 0 0 0.00 0.00 0.00 0.00 0.00 0.00 Merchant Payments 0.00 POSITIVE 0.00 POSITIVE 0

Food & Beverages 1.51% 5.67 0.00 1.11 79 98 98 98 98 98 95 95 95 95 98 98 98 1,164 ###### 1,164 0 28.33 1.17 0.00 0.08 1.25 1.17 Merchant Payments 0.66 POSITIVE 2.59 NEGATIVE 0

Clothes 0.81% 9.64 4.22 63.33 486 0 28 0 0 8 0 0 0 0 331 0 0 367 4.01% 367 0 2.40 3.53 15.20 27.56 46.29 3.53 Merchant Payments 1.25 POSITIVE 7.03 NEGATIVE yes 367

Airtime 1.44% 7.72 0.00 1.11 41 36 36 36 36 36 36 36 36 36 36 36 36 435 4.75% 435 0 12.00 0.59 0.00 0.09 0.68 0.59 Airtime 0.00 POSITIVE 0.00 POSITIVE yes 435

Cable TV (DsTV) 1.25% 1.83 0.00 0.00 10 1 1 1 1 1 1 1 1 1 1 1 1 13 0.15% 13 0 12.00 0.13 0.00 0.00 0.13 0.13 Service Payments 1.00 NEGATIVE 1.00 NEGATIVE yes 13

School fees 1.39% 7.83 34.22 68.33 858 56 144 533 64 161 0 682 150 17 0 533 126 2,465 ###### 2,077 388 2.89 12.73 68.44 16.85 98.02 12.73 Service Payments 10.70 POSITIVE 10.70 POSITIVE yes 2465

Loans Repaid 1.26% 1.55 0.00 0.00 451 4 137 4 4 4 17 17 17 17 13 0 0 233 2.55% 233 0 5.00 2.07 0.00 0.00 2.07 2.07 P2P Payments 1.40 POSITIVE 7.18 NEGATIVE yes 233

Veterinary/ Medicine 1.65% 6.40 3.33 54.44 75 5 6 28 0 6 0 0 3 36 3 0 0 86 0.94% 86 0 1.25 1.37 7.50 11.60 20.48 1.37 P2P Payments 1.40 NEGATIVE 3.33 NEGATIVE 0

Health Expenses 0.99% 9.23 5.67 76.67 168 0 97 4 3 37 0 0 65 4 11 0 0 221 2.42% 221 0 3.75 1.51 25.50 44.71 71.72 1.51 P2P Payments 1.40 POSITIVE 4.98 NEGATIVE 0

Remittances Sent 3.55% 2.70 26.67 126.67 79 6 6 6 29 6 6 7 6 6 12 6 7 104 1.14% 3 101 4.25 2.30 120.00 20.13 142.42 2.30 P2P Remittances 1.40 POSITIVE 2.59 POSITIVE yes 104

Other Expenditure 1 0.17% 1.35 0.00 0.00 1,320 0 147 0 0 0 0 0 0 0 0 0 0 147 1.60% 147 0 1.00 2.20 0.00 0.00 2.20 2.20 P2P Payments 2.20 POSITIVE 22.00 NEGATIVE 0

Other Expenditure 2 0.17% 1.35 0.00 0.00 4 0 0 0 0 0 0 0 0 0 0 0 0 5 0.06% 5 0 12.00 0.01 0.00 0.00 0.01 0.01 P2P Remittances 0.50 NEGATIVE 0.58 NEGATIVE 0

Excel-based collection and analysis tool

Value Proposition Mapping

9

Sample extract from VPM analysis master file

© CGAP 2017

Farmer VPM – Receipts


10

Farmers Analysis

Data Consolidation from Interviews

Note: All Monetary Figures below are in

Thousands of UGX ('ooo)

% of

Total

Total Cost of

Cash

(risk+time+tra

nsp.)

Total Cost of

Cash

(risk only)

Cost of

DFS (no

Cash Out)

VP.

VS

Cash

Cost of DFS

(with Cash

Out)

VP.

VS Cash

Receipts

Coffee Sales 50.30% 27.77 3.46 0.00 POSITIVE 3.58 NEGATIVE

Livestock / Livestock Products 2.25% 1.24 1.24 0.00 POSITIVE 1.93 NEGATIVE

Other Agricultural Produce 39.57% 16.64 2.94 0.00 POSITIVE 3.58 NEGATIVE

Trade Sales (Agricultural/ Other) 1.73% 9.34 9.34 0.00 POSITIVE 5.78 POSITIVE

Employment (permanent/ casual) 1.96% 0.91 0.91 0.00 POSITIVE 0.88 POSITIVE

Remittances Received 0.88% 87.40 2.35 0.00 POSITIVE 1.93 POSITIVE

Loans Received 0.58% 21.64 14.15 0.00 POSITIVE 5.78 POSITIVE

Other Income 1 2.73% 11.80 11.80 0.00 POSITIVE 5.78 POSITIVE

• Figures are in

thousands of UGX.

Each is an average

of all farmer

answers and refers

to how much it costs

to conduct one

average sized

transaction.

1 USD = 3600 UGX

© CGAP 2017



11

Farmers Analysis




% of

Total

Total Cost of

Cash

(risk+time+tra

nsp.)

Total Cost of

Cash

(risk only)

Cost of

DFS (no

Cash Out)

VP.

VS

Cash

Cost of DFS

(with Cash

Out)

VP.

VS Cash

Receipts









1. Remittances (large

portion of current

MNO revenue) have

a very positive value

proposition as

farmers do not need

to travel to pay.

© CGAP 2017



12

Farmers Analysis




% of

Total

Total Cost of

Cash

(risk+time+tra

nsp.)

Total Cost of

Cash

(risk only)

Cost of

DFS (no

Cash Out)

VP.

VS

Cash

Cost of DFS

(with Cash

Out)

VP.

VS Cash

Receipts










portion of current

MNO revenue) have


proposition as

farmers do not need

to travel to pay.

2. But in other cases,

only cost of risk is

compared to cost of

DFS as farmers

need to travel

regardless.

© CGAP 2017




portion of current

MNO revenue) have


proposition as

farmers do not need

to travel to pay



compared to cost of

DFS as farmers

need to travel

regardless

3. Value proposition for

coffee sales and

other major receipts

is slightly negative.

13

Farmers Analysis




% of

Total

Total Cost of

Cash

(risk+time+tra

nsp.)

Total Cost of

Cash

(risk only)

Cost of

DFS (no

Cash Out)

VP.

VS

Cash

Cost of DFS

(with Cash

Out)

VP.

VS Cash

Receipts









© CGAP 2017



14

Farmers Analysis




% of

Total

Total Cost of

Cash

(risk+time+tra

nsp.)

Total Cost of

Cash

(risk only)

Cost of

DFS (no

Cash Out)

VP.

VS

Cash

Cost of DFS

(with Cash

Out)

VP.

VS Cash

Receipts









Overall, the cost of DFS without cashing out is zero

because it costs farmers nothing to receive…

… but if we look at payments…


portion of current

MNO revenue) have


proposition as

farmers do not need

to travel to pay.



compared to cost of

DFS as farmers

need to travel

regardless.

3. Value proposition for

coffee sales and

other major receipts

is slightly negative.

© CGAP 2017

Farmer VPM – Payments


1. Cash-out fees have to

be considered in the

transaction cost (the

usual practice in

Uganda is that when

users want to pay with

mobile money, the

receivers ask them to

add the cash out fee).

15

Farmers Analysis




% of

Total

Total Cost of

Cash

(risk+time+tra

nsp.)

Total Cost of

Cash

(risk only)

Cost of

DFS (no

Cash Out)

VP.

VS

Cash

Cost of DFS

(with Cash

Out)

VP.

VS Cash

Payments

Seeds & Seedlings 3.26% 24.15 1.60 0.95 POSITIVE 4.53 NEGATIVE

Herbicides/ Pesticides/ Spraying 1.09% 13.81 1.48 0.66 POSITIVE 2.59 NEGATIVE

Fertiliser 4.08% 35.76 2.94 0.95 POSITIVE 4.53 NEGATIVE

Livestock Purchases 4.95% 27.68 13.80 2.20 POSITIVE 12.65 POSITIVE

Trade Purchases (Agricultural/ Other) 0.79% 20.22 6.04 1.40 POSITIVE 4.98 POSITIVE

Workers 2.61% 1.19 1.19 1.40 NEGATIVE 2.59 NEGATIVE

Land Purchase/ Rental 20.79% 55.26 40.73 2.20 POSITIVE 37.40 POSITIVE

Electronic Equipment (TV, Radio) 5.20% 40.12 5.71 1.25 POSITIVE 7.03 NEGATIVE

Food & Beverages 12.72% 1.25 1.17 0.66 POSITIVE 2.59 NEGATIVE

Clothes 4.01% 46.29 3.53 1.25 POSITIVE 7.03 NEGATIVE

Airtime 4.75% 0.68 0.59 0.00 POSITIVE 0.00 POSITIVE

School fees 26.93% 98.02 12.73 10.70 POSITIVE 10.70 POSITIVE

Loans Repaid 2.55% 2.07 2.07 1.40 POSITIVE 7.18 NEGATIVE

Health Expenses 2.42% 71.72 1.51 1.40 POSITIVE 4.98 NEGATIVE

Remittances Sent 1.14% 142.42 2.30 1.40 POSITIVE 2.59 POSITIVE

Other Expenditure 1 1.60% 2.20 2.20 2.20 POSITIVE 22.00 NEGATIVE

© CGAP 2017



1. Cash-out fees have to

be considered in the

transaction cost (the

usual practice in

Uganda is that when

users want to pay with

mobile money, the

receivers ask them to

add the cash out fee).

2. The cost of cash for

most of the payments

is reduced to risk only,

as the users still have

to be present for the

exchange of goods.

16

Farmers Analysis




% of

Total

Total Cost of

Cash

(risk+time+tra

nsp.)

Total Cost of

Cash

(risk only)

Cost of

DFS (no

Cash Out)

VP.

VS

Cash

Cost of DFS

(with Cash

Out)

VP.

VS Cash

Payments

















© CGAP 2017



3. Positive value

propositions are there

(e.g., school fees,

land, livestock).

But these are high-

value transactions

likely to be affected by

the limited level of

agent liquidity.

Moreover, the timing

for these does not

necessarily match that

of their income.

17

Farmers Analysis




% of

Total

Total Cost of

Cash

(risk+time+tra

nsp.)

Total Cost of

Cash

(risk only)

Cost of

DFS (no

Cash Out)

VP.

VS

Cash

Cost of DFS

(with Cash

Out)

VP.

VS Cash

Payments

















© CGAP 2017



4. Faced with the cost of

cashing out, farmers

are left with limited

use cases for the

digital income they

receive (mainly airtime

and remittances sent).

18

Farmers Analysis




% of

Total

Total Cost of

Cash

(risk+time+tra

nsp.)

Total Cost of

Cash

(risk only)

Cost of

DFS (no

Cash Out)

VP.

VS

Cash

Cost of DFS

(with Cash

Out)

VP.

VS Cash

Payments

















© CGAP 2017



4. Faced with the cost of

cashing out, farmers

are left with limited

use cases for the

digital income they

receive (mainly airtime

and remittances sent).

5. As a result, there is a

need to eliminate the

need for cashing out,

enabling farmers to

use mobile money for

nearly all transactions.

19

Farmers Analysis




% of

Total

Total Cost of

Cash

(risk+time+tra

nsp.)

Total Cost of

Cash

(risk only)

Cost of

DFS (no

Cash Out)

VP.

VS

Cash

Cost of DFS

(with Cash

Out)

VP.

VS Cash

Payments

















© CGAP 2017

Off-taker results overview


KCL faces positive value proposition from direct cost savings when shifting to DFS.

• Digital payments are 27% less expensive than cash payments.

• Main cost driver for cash payments is staff (75% lower with DFS).

• Main cost driver for DFS payments is the fee per transaction (73% of costs).

20

Cost of Staff48%

Cash Transport

Cost17%

Cost of Working Capital

13%

Cash Insurance

Cost12%

Bank Fees2% Stationery

8%

Direct Cost per Cash Payment

Cost of Staff11%

MNO Fees32%

Aggregator Fees21%

DFS Equipment

9%

Economy VS Cash

27%

Direct Cost per DFS Payment(as % of Direct Cost of Cash)

© CGAP 2017

Off-taker results overview


21

The indirect benefits push the DFS value proposition even further.

• Digital payments become 45% less expensive than cash when accounting

for the additional opportunities that they bring.

© CGAP 2017

Farmers and off-takers: high-level analysis


Short-term recommendations:

Receipts:

• Continue digitizing coffee sales.

• Uptake is likely to be slow, as the cost of cash vs DFS (including cash-out fee) is

similar (3,460 UGX vs. 3,580 UGX per transaction).

22

50% DFS Receipts

41% DFS Payments

Payments:

• Digitize agricultural input purchases.

• Cash is cheaper than DFS (including cash-out

fee). However, KCL has a strong interest in

promoting the use of quality agri-inputs.

• Digitize school fee payments.

• This provides an immediate use case, thus

reducing the cost induced by the digital coffee

receipts.

© CGAP 2017

That’s a lot of transactions…

A Typical Day in Uganda

23

• 10 payments a day:

• 6 related to transportation

• 4 related to consumption

• Payer always physically present

• Marginal distant service payments (i.e.,

remittances, utilities, school fees, TV, etc.)

© CGAP 2017

Pricing as a key barrier for mobile money services

DFS Business Case

24

MTN Mobile Money - Customer Fees in Uganda

(1 USD ~ 3,600 UGX)

From ToP2P MTN

Users

Cash Out

@Agent

Bills, Goods

& Services

500 2 500 250 330 110

2 501 5 000 500 440 140

5 001 15 000 1 000 880 500

15 001 30 000 1 000 880 500

30 001 45 000 1 000 1 210 500

45 001 60 000 1 000 1 210 550

60 001 125 000 1 500 1 925 660

125 001 250 000 1 500 3 575 950

250 001 500 000 1 500 5 775 1 250

500 001 1 000 000 2 000 10 450 3 200

1 000 001 2 000 000 2 000 19 800 5 500

2 000 001 4 000 000 2 000 35 200 10 000

Most payments take place

on first 3 tariff bands.

P2P tariffs are prohibitive:

17% of first band, down to 10%

of third band’s average value.

Considering previous example,

the client would have a daily

cost of 5,800 UGX (1.6 USD):

10 transactions x (250 UGX

P2P + 330 UGX cash-out fee)

Regular mobile money

payments are unlikely to

catch on with the current

pricing!

© CGAP 2017

DFS providers: high-level analysis

DFS Business Case

25

Long-term recommendations:

• Provide affordable (additional) payment use cases for DFS to reduce the

cash-out/withdrawal need, creating a positive value proposition for most of

the transactions.

• DFS providers should shift from value to volume-driven pricing models.

Today mobile money is primarily known for remittances, where the value

proposition is highly positive and straightforward. This is not the case for

regular payments, where the user is physically present (DFS is no match for

cash in this context).

• Build the ecosystem from the end user upward. If positive value

propositions are created for farmers so they accept DFS as means of

payment, the traders and merchants are likely to follow as well (ecosystem

driven by customer demand).

© CGAP 2017

Conclusions

Value chain actors are inter-linked with the community as a whole.

– The value proposition for DFS must be positive not only for the stakeholders

involved in the value chain itself, but well beyond to drive adoption and use.

– An ecosystem rather than value chain approach is more likely to get traction.

Mobile money is regularly cheaper than cash when there is no cash out.

– End users have to top up their payments with the cash-out fee, as someone

ends up cashing out eventually.

– When adding the cash-out fees, the cost becomes prohibitive for the adoption

and regular use of DFS by all actors, across and beyond the value chain itself.

There are ways to address the challenge of cash-out fees.

– DFS providers can grow revenue by lowering transaction fees, relying on high

numbers of small-value payments instead of small numbers of large transfers.

This would lead to positive value propositions at almost all levels and for the

entire ecosystem, effectively unlocking the payments potential in rural areas.

26

© CGAP 2017

Value Proposition Mapping – Useful Links

Further Information

Blogs & Articles:

• Going Digital, or Stick to Cash? (UNCDF)

• Making Mobile Money More Attractive to Farmers (UNCDF)

• How to Make Mobile Money More Appealing than Cash (UNCDF)

• Digital Payments that Work for Low-Income Farmers (CGAP)

VPM Model Templates:

• Email Nathan Were, CGAP ([email protected])

Youtube Tutorials:

• Digital Payments Value Proposition Mapping Tool

27

http://mm4p.uncdf.org/going-digital-or-stick-cash

http://mm4p.uncdf.org/making-mobile-money-more-attractive-farmers

http://mm4p.uncdf.org/how-make-mobile-money-more-appealing-cash

http://www.cgap.org/blog/making-digital-payments-work-low-income-farmers

mailto:[email protected]

https://www.youtube.com/playlist?list=PLoTEnNTEgjOXUzM6d7PYSoRkmwoazqN5d

Thank you To learn more, please visit

www.cgap.org

www.uncdf.org

www.phbdevelopment.com

Q & A

http://www.uncdf.org/

http://www.phbdevelopment.com/

DIGITIZING BULK PAYMENTS IN AGRICULTURE: IS MOBILE … · Farmer VPM –Receipts Value Proposition...

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Transcript of DIGITIZING BULK PAYMENTS IN AGRICULTURE: IS MOBILE … · Farmer VPM –Receipts Value Proposition...