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TANZANIA MOBILE MONEY

ASSESSMENT AND CASE


STUDY
EXAMINING CASH PAYMENT STREAMS AND
THEIR ELECTRONIC ALTERNATIVES AMONG
USAID IMPLEMENTING PARTNERS

February 2013
NetHope and The Mennonite Economic Development Associates (MEDA) prepared this publication for
review by the United States Agency for International Development.

TANZANIA MOBILE MONEY


ASSESSMENT AND CASE
STUDY
EXAMINING CASH PAYMENT STREAMS
AND THEIR ELECTRONIC
ALTERNATIVES AMONG USAID
IMPLEMENTING PARTNERS

DISCLAIMER
The authors views expressed in this publication do not necessarily reflect the
views of the United States Agency for International Development or the United
States Government.
2

TABLE OF CONTENTS

ACRONYMS ......................................................................................................................... 5
EXECUTIVE SUMMARY ....................................................................................................... 6
INTRODUCTION AND PURPOSE ......................................................................................... 7
ANALYSIS OF CURRENT TANZANIAN MOBILE PAYMENTS ENVIRONMENT ..................... 9
OVERVIEW ....................................................................................................................... 9
Table 1: Mobile Phone and Mobile Money Usage by Provider ............................................. 10
Figure 1: Mobile phone vs. Bank penetration ....................................................................... 10
Figure 2: Mobile money agents vs. Traditional financial service access points .................... 11

REGULATORY ENVIRONMENT....................................................................................... 12
TANZANIAN MOBILE MONEY SERVICES ........................................................................ 13
Table 2: P2P Tariff Comparison for a transaction of TSH 50,000 / USD 30.54 ...................... 14
Table 3: Illustrative B2P Tariff Comparison ........................................................................... 15
Table 4: Cost Comparison of Money Transfer Fees............................................................... 16
Table 5: Partnerships for Mobile Banking, by Provider ......................................................... 17
Table 6: Mobile Money Services in Market Today ................................................................ 18

THIRD PARTY SERVICE PROVIDERS ............................................................................... 18


Table 7: Third Party Bulk Payment Product Profile ............................................................... 19

CONSUMER PROTECTION ............................................................................................. 20


Table 8: General Consumer Protection for Mobile Money ................................................... 20

THE COST OF CASH ........................................................................................................... 21


CASE STUDY: COST OF CASH IN THE HEALTH SECTOR .................................................. 23
Table 9: The Cost of Cash for Health Trainings, Organization 1 ............................................ 24
Table 10: The Cost of Cash for Health Trainings, Organization 2 .......................................... 25
Figure 3: Breakdown of the Line Item Costs of Cash Payments for Two Health Programs
(USD) ...................................................................................................................................... 26

TRANSITIONING MOBILE PAYMENTS TO THE LAST MILE ............................................... 26


PATHFINDER: USE CASE FOR MOBILE PAYMENTS AT SCALE ........................................ 26
Table 11: Pathfinder Mobile Money Challenges and Troubleshooting ................................. 29

D-TREE: A PROGRAMMATIC USE CASE FOR MOBILE PAYMENTS ................................. 30


TOWARDS FINANCIAL INCLUSION ................................................................................... 31
RECOMMENDATIONS ....................................................................................................... 33
IMPLEMENTING PARTNERS .......................................................................................... 33
Table 12: Suggested Due Diligence Activities and Tools for Implementers ......................... 34

USAID/TANZANIA MISSION AND OTHER DONORS ....................................................... 34


FINAL ANALYSIS AND CONCLUSIONS .............................................................................. 35
APPENDIX I: RESEARCH METHODOLOGY ........................................................................ 37
APPENDIX 2: INTERVIEW QUESTIONS ............................................................................. 38
APPENDIX 3: FULL TARIFF SHEETS ................................................................................... 40
APPENDIX 4: USAID FINANCIAL DOCUMENTATION GUIDE ............................................ 43
APPENDIX 5: MNO WORKSHOP Q & A ............................................................................ 55

ACRONYMS
B2P
BOA
BoT
BTC Alliance
CHW
CRDB
EFT
FTF
GoT
GSMA
IP
MEDA
MFI
MNO
NGO
NBC
NPS
P2B
P2P
PEB
PIN
SIM
SOP
TSH
USAID
USD
VAS

Business-to-person money transfer, also known as bulk payment service


Bank of Africa Tanzania
Bank of Tanzania
Better Than Cash Alliance
Community Health Worker
Corporate Rural Development Bank
Electronic Funds Transfer
Feed the Future
Government of Tanzania
Global System for Mobile Communications Association
Implementing Partner
Mennonite Economic Development Associates
Micro Finance Institution
Mobile Network Operator
Non-governmental organization
National Bank of Commerce
National Payment Systems
Person-to-business money transfer, also known as bill pay service
Person-to-person money transfer
Procurement Executive Bulletin
Personal identification number
Subscriber Identity Module
Standard Operating Procedures
Tanzanian Shillings (currency unit)
United States Agency for International Development
United States Dollars (currency unit)
Value Added Service

EXECUTIVE SUMMARY
In just four years, mobile money usage in Tanzania has grown from zero to at least 5.5
million active users1. This rapid expansion highlights the fact that there is clear need for
safe, inexpensive, and efficient ways to send money around the country. Due to this,
USAID/Tanzania requested an assessment of how current partners are utilizing mobile
money as an electronic payment system to replace cash for both operational and
programmatic payments.
USAID implementing partners, like many organizations operating in Tanzania, struggle
with cash payments, which they are still using mainly for issuing per diems for training
participants and paying field staff. To make these payments, they are often using bank
branches in the field in order to decrease the distance across which cash is transported.
Yet, even with this strategy, they are still experiencing many of the challenges commonly
associated with cash: cash can be dangerous, costly, and can lack transparency since it
is hard to track. In recognition of the problems with cash that exist worldwide, the United
States Agency for International Development (USAID) has made a commitment to the
Better Than Cash Alliance (BTC Alliance) to examine how electronic payments solutions,
such as mobile money, can improve aid effectiveness and strengthen programs.
This assessment contributes to a wide variety of reference materials and tools, which
USAID is producing as part of this commitment. It summarizes the findings of a team of
consultants from USAID/DC, Nethope, and Mennonite Economic Development
Associates (MEDA), who conducted a survey of implementing partners, a literature
review, and in-country interviews with implementing partners and key stakeholders.
After describing the reasoning behind this report in more detail within Section II, Section
III provides an overview of the mobile money market in Tanzania as of February 2013,
and Section IV outlines the current regulatory environment. Section V provides more
detail on the five main services offered through mobile money, highlighting how
functionality and usage is becoming increasingly innovative and diverse. It also
discusses the role of third-party companies who are providing added value to the basic
products offered by the MNOs.
Section VI takes a more in-depth look at how implementing partners are using cash for
last mile payments in the field, and uses two organizations to illustrate the risk and cost
of these cash payments. Section VII details the experiences of two organizations,
Pathfinder and D-Tree, who are already using mobile money as a replacement for cash
payments. These examples show that there are still challenges for organizations using
mobile money, but that the overall experience is positive and is showing preliminary
benefits of cost savings, increased flexibility, and time savings for both staff and program
participants. Section VIII looks at FINCA, a financial institution, which is already using
mobile money on a large scale, and is one example of how the new technology is
beginning to expand access to formal financial services.
Based on these examples and the assessment of the mobile money market, Section IX
provides recommendations to implementers and donors on how both can properly
assess opportunities and challenges for using mobile money to replace cash payments.
1

Active definition in this case meaning at lease one transaction in the last 30 days

Finally, in the Appendix, there is additional information on many of the themes covered
in the report, including the USAID Draft Financial Documentation Reference Tool, which
provides detailed information on the functionality that different mobile money service
providers in Tanzania offer for tracking and recording bulk payments.
In summary, there is a clear possibility for organizations to benefit from the use of mobile
money in their operations and program. At the same time, they need to conduct a
thorough due diligence by assessing provider capabilities and a cost-benefit analysis of
the financial and non-financial costs of both cash and non-cash options. Only through
this due diligence can implementing partners determine if mobile payments are truly
better than cash for their program, at this time.

INTRODUCTION AND PURPOSE


Cash has long been the only way for USAID and the larger international development
community around the world to make payments in remote areas. Whether to pay
vendors in rural Uganda to conduct residual spraying of bed nets to fight malaria, send
per diems payments to civil society field staff in Haiti, or reimburse attendees of a health
training in Tanzania for their travel costs, implementing partners and their beneficiaries
often lack the convenient and secure payment mechanisms to complete these types of
transactions.
However, electronic payments are increasingly available in these countries. Now, it is
possible to send payments virtually to a pre-paid card, bank account, voucher, or directly
to a recipients mobile phone, rather than using cash. In Tanzania, the ability to send
mobile payments is significant, as mobile phone ownership has grown rapidly in recent
years, expanding from 275,560 mobile accounts in 2001 to 25,600,000 in 20112. This
impressive growth is predicted to continue: Business Monitor International projects 36
million mobile accounts by 20153. This rapid growth, combined with efforts by the mobile
network operators (MNOs) to expand the reach of mobile network coverage, means that
mobile phones are reaching an ever expanding number of rural and poor Tanzanians.
This uptake has opened the door for innovative value-added services (VAS) to
compliment the traditional voice and SMS messaging services MNOs offer their
customers.
Mobile payments are facilitated through one of these services, mobile
money, which allows any individual to register for a mobile wallet, through which they
can store and send money on even a basic, inexpensive phone.
As mobile money and other electronic payment solutions become more readily available
in emerging markets around the world, USAID has begun to examine how it can utilize
its financial footprint and global presence in more than sixty countries to encourage a
systematic movement away from the use of physical cash in the field by its implementing
partners. As part of this process, USAID has made a commitment to the BTC Alliance, a
coalition of corporations, international development organizations, and governments
committed to promoting cash-lite societies across the globe. The BTC Alliance promotes
the use of electronic payments, such as mobile money, as a replacement to physical

2
3

Databank, World Bank, World Development Indicators: Infrastructure/Communications/Mobile Cellular Subscriptions


The number of mobile accounts is not the same as the number of actual users, since many Tanzanians have more than one account.

cash in order to catalyze financial inclusion, transparency, and efficiencies in payment


and revenue streams in the developing world.
USAID has made a commitment to the BTC Alliance in several ways: first, Administrator
Rajiv Shah has made a commitment to encourage the transition to electronic payments
in programs and operations, where appropriate, worldwide. As part of this commitment,
USAID has created tools (including case studies and diagnostics) for Missions and
partners to use in this effort, as well as procurement language that can be included in
solicitations to support this transition. In addition, as part of USAIDs larger reforms,
called USAID Forward, USAID is calling on Missions to develop programs that support
the development of mobile money ecosystems in their respective countries. These
activities include: increasing the use of e-payments in all US Government programs in
that country (not limited to USAID); working with host country governments to transition
payroll, pension, and social benefit payments from cash or check payments to epayment; and developing Technical Assistance facilities to promote the mobile money
ecosystem in that country. Thus far, six USAID Missions have committed to
implementing at least two of these three activities: Afghanistan, Bangladesh, Haiti,
Indonesia, Malawi, and Philippines.
To support Missions and implementing partners in the transition to e-payments, USAID
has begun to collaborate with its country Missions to better understand where
implementing partners can benefit from an increased use of electronic payments, and
how, if at all, this transition can improve program transparency, security, and cost
effectiveness. As part of this process, USAID is developing reference documents and
tools to inform implementing partners of the best ways to analyze and implement a
transition within their programs.
This report serves to build this body of reference materials by offering a context-specific
analysis of the mobile payments environment in Tanzania. To facilitate this analysis,
USAID/Tanzania volunteered to host a team to explore the alternative payment systems
to cash in the country. While keeping the focus on electronic payments overall, both the
assessment team and the Mission agreed, after an initial desk review, to focus on mobile
money payments, rather than the two other common e-payments: Electronic Funds
Transfer (EFT) and card-based payments. This decision was based on the fact that
card-based payments are very rare in the country, and with respect to EFT, standards
are fairly well known and EFT transactions are already widely used by IPs as a secure
way to make payments. Mobile money, on the other hand, has been adopted on a wide
scale by individual Tanzanians, and offers organizations a way to reach these individuals
for whom EFT does not work due to challenges with bank branch availability, as will be
discussed in more detail throughout this report.
The team, comprised of mobile money specialists from the USAID Mobile Solutions
office, NetHope, and Mennonite Economic Development Associates (MEDA) conducted
an online survey, desk research, a stakeholder workshop and field interviews to examine
the last mile payments being made by implementing partners and determine where, if at
all, opportunities exist for a transition from cash payments to mobile money payments.

ANALYSIS OF CURRENT TANZANIAN MOBILE PAYMENTS ENVIRONMENT


OVERVIEW
An estimated 30% of the adult population in Tanzania actively uses at least one of the
four mobile money deployments in the country, according to a recent household survey
completed by Intermedia4. This high level of adoption places Tanzania on an elite list of
countries that have reached a critical mass of active users, a milestone that is
recognized in the industry as a strong indicator that mobile money is a sustainable, longterm product in those countries.
This level of adoption is indeed rare. In 2012, the GSMA, the global association of
telecommunications companies, found 163 live mobile money deployments in 74
countries around the globe 5. However, the GSMA estimate only eleven deployments
host over one million registered customers6. Two of the eleven are in Tanzania, and
they each have over one million active users. This is a key distinction - a registered
customer is only considered active if they conduct one transaction every 90 days. In
Tanzania, the two most successful mobile money deployments have over one million
active customers, even if the indicator of active user is changed to one transaction in the
last 30 days.
There is no single reason for this success. However, there are a variety of market
factors that likely contributed to the rapid uptake, including:
1.
2.
3.
4.
5.
6.
7.

A strong mobile phone market penetration (50% of the total population)


Wide mobile network coverage (76% of the total population have access to at
least one mobile network)
A relatively young population (median age of 18.5 years), as youth are often
amongst the first adopters of new technologies
A relatively strong literacy rate (70%)
An enabling regulatory environment (further described in Section IV)
Significant time and financial investment from MNOs
A highly competitive market for both mobile voice and mobile money services

The importance of the last two factors cannot be overstated. There are currently seven
MNOs offering traditional mobile voices services in Tanzania. The competition in the
voice market drives down price points, and is now driving similar consumer benefits in
the mobile money market. The first mobile money service in the country, Vodacoms MPesa, had very slow uptake in its first few years of operation. Despite the success of the
same product in nearby Kenya, many wondered if the product would ever take off in
Tanzania. However, the company continued to invest and to adapt prices, commissions,
and marketing messages 7 . These changes, along with the introduction of new
competitors to the market, are all strongly correlated with the sudden shift from slow to
4

Intermedia Tanzania Mobile Money Tracker Study Wave 3 Report November 2012
GSMA: Mobile World Live http://www.mobileworldlive.com/mobile-money-tracker
6
Mobile Money for the Unbanked "Annual Report 2012" GSMA Note: in this particular report, active customers being defined as
having conducted at least one transaction in the last 90 days.
7
Information from primary interviews with CGAP, the Consulting Group to Assist the Poor.
5

extremely rapid growth in the use of M-Pesa and other mobile money services in the
market.
Table 1 below is a summary of the mobile voice market as well as mobile money active
users in Tanzania. The names of the MNOs are withheld for privacy reasons at the
request of the providers themselves.
Table 1: Mobile Phone and Mobile Money Usage by Provider
MNOs8
Market Share
Mobile Money 30
Voice services9 Day Active
Subscribers10
MNO #1
35%
3.7 million
MNO #2
24%
1.7 million
MNO #3
30%
160,000
MNO #4
10%
80,000
MNO #5
0.9%
N/A
Other MNOs
0.1%
N/A
Total
100%
5.5 million
The rapid growth of mobile phone subscriptions, as compared to the relatively slow
growth of commercial bank accounts over the same time period, is a clear indicator of
the ability of mobile money to extend financial services to new groups of people in
Tanzania, as seen below in Figure 1.
Figure 1: Mobile phone vs. Bank penetration
30000000
25000000
20000000
15000000
10000000
5000000
0
2004

2005

2006

2007

Depositors with commercial banks

2008

2009

2010

2011

Mobile cellular subscriptions

Still, despite this wide access to mobile phones, mobile money requires a network of
agents, which are existing businesses who earn commissions to facilitate registration of
new customers and conduct deposit and withdrawal transactions. Mobile money service
providers in Tanzania have developed an impressive network of cash-in, cash-out points
(agents) nationwide. A recent census of cash outlets in Tanzania conducted by the
8

Company names are withheld at the request of the service providers


Tanzania Communications Regulatory Authority September 2012
10
MNOs #1 and #2 are 30-day active rates based on primary sources, while #3 and #4 estimates are 90-day active
rates based on secondary sources.
9

10

Financial Sector Deepening Trust, found nearly 17,000 unique M-Pesa mobile money
agents throughout the country11. The census only mapped the M-Pesa mobile money
product; however, since most agents serve multiple mobile money services, this is likely
very close to the total number of mobile money agent locations. Figure 2 compares the
number of agents vs. other typical financial services access points in Tanzania.

Figure 2: Mobile money agents vs. Traditional financial service access points12

Agents facilitate the extension of financial services beyond the bank branch. At the
same time, agents are typically located in the general proximity of bank branches, since
agents eventually have to visit a bank in order maintain liquidity (as depicted in the
previously mentioned Intermedia Mobile Money Tracker survey.) In other words, if an
agent runs out of cash, they must visit a bank branch to receive more cash. In return,
the agent sends the bank electronic currency equal to the amount of cash received.
Because of this reliance on banks for liquidity, mobile money agents are are by and
large an extension, but not altogether a substitute for, banking access infrastructure. 13
The ability of mobile money to continue to grow and to offer sound financial services
requires an enabling environment facilitated by sound regulations, as described in the
next section.

Mas, Ignacio and John, Agathamarie. "Where's the Cash? The Geography of Cash Points in Tanzania".
http://www.cgap.org/blog/geography-cash-points-tanzania
12
Bank branch numbers are projected based on World Bank estimates (512), which is similar to the estimate from a
recent study released by Financial Sector Deepening Trust (FSDT) of Tanzania (almost 500 commercial bank branches.).
ATM and POS numbers come directly from the Bank of Tanzania Website. It should be noted that many ATMs are
located within bank branches. MFI branch numbers were pulled from FSDT (see footnote 12)
13
Mas, Ignacio and Agathamarie John, Wheres The Cash? The Geography Of Cash Points In Tanzania, CGAP Blog,
February 28, 2013
11

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REGULATORY ENVIRONMENT
There are two key sets of regulations in Tanzania that are relevant to mobile and
electronic payments: agent banking regulations and mobile payments regulations.
Regarding the former, the Bank of Tanzania (BoT) released agency-banking guidelines
for the first time on February 1, 2013.14 The guidelines allow commercial banks and
microfinance institutions that are authorized to take deposits to provide services through
agent networks. This may spur a rapid increase in branchless banking and further
innovation by leveling the playing field: previously, the banks could not compete with the
mobile money service providers who were offering services to poor and rural clients via
agents. With the new regulations, many banks are looking to add more services for rural
customers who are already using mobile money. This is likely to happen quickly since
two banks operating in Tanzania, Equity Bank and Kenya Commercial Bank (KCB), have
already implemented some form of agency banking in neighboring Kenya.
Key aspects of these guidelines include:

Under the guidelines, a bank that wishes to implement agent banking will submit
an application to the BoT, Bank Supervision Department, and receive an
approval if deemed suitable according to a risk-based assessment.
An agent can be any business that has been open for more than 2 years.
Technology is required at the agent location in order to facilitate real-time
transactions; in other words, every agent must be able to complete a transaction
in the course of one visit by using a mobile phone, computer with Internet
connection, or other device to immediately verify that the transaction is
successful.
Agents are not allowed to directly register new clients. However, they can
facilitate registration by sending the required information back to the bank branch
for near real-time approval by an official bank employee, using a mobile device,
computer with Internet connection, or other device.
The guidelines stipulate that agents are non-exclusive, meaning multiple
providers can leverage that one agent. However, the guidelines do allow for
constructive exclusivity, meaning that an agent is allowed to decide that it is in
their own best interest to serve only one bank.

The second set of regulations, those for mobile payments, are expected to be released
in mid-2013. These regulations will provide an additional legal framework specific to
mobile money, and will complement the broader National Payment Systems (NPS) Act.
Since these regulations have not yet been approved, mobile money service providers
are currently operating under a Letter of No Objection, which stipulates that they are to
hold all funds in a trust account at a commercial bank. The letter also requires operators
to report to the BoT on a monthly basis on transaction volumes and values, the number
of registered agents, and trust account balances. While this letter does provide a certain
level of control to the BoT, it does not provide for a full range of penalties in the case of
fraud or other issues with the operators. In addition, a company could technically
14

The full text of the regulations can be found on the BoT website at http://www.bottz.org/BankingSupervision/GUIDELINES%20ON%20AGENT%20BANKING%20FOR%20BANKING%20INSTITUTIONS%202
013.pdf.

12

operate mobile money without a letter, although they would have to do so without the
backing of the Government that would severely hinder public trust in the system.
In order to fill these gaps, the NPS team has put a significant amount of time and
thought into drafting the full mobile payments regulations, which are currently awaiting
final approval by the Minister of Finance (along with the full NPS Act.) As part of this
process, they issued draft guidelines several months ago, which were released to the
public for feedback. The latest version of the regulations includes feedback from public
and private partners in Tanzania as well as international support bodies including the
Alliance for Financial Inclusion (AFI) 15 . The BoT worked closely with the Tanzania
Communication Authority (TCRA) to develop these guidelines.
In addition to allowing the BoT to issue a full range of penalties, the suggested
regulations, if passed in their current form, will:

Require mobile money service providers to get a value-added service (VAS)


license from the TCRA before they can get BoT approval.
Provide for different business models, allowing for MNO-led, bank-led, or 3rdparty-led
Limit the size of the mobile wallet to USD 6,250 (TSH 10 million).
Require providers to establish a subsidiary company to open and manage the
trust account; in other words, a separate legal entity will manage all of the funds
deposited by clients, and these funds will be secured in a commercial bank.
Stipulate for Consumer Protection
Allow the market to determine if and when mobile wallets become interoperable
(in other words, the regulator will not mandate interoperability.)

The BoTs approach to regulation of both agency banking and mobile payments is
balanced, and clearly aims to allow continual innovation while implementing appropriate,
risk-based guidelines and restrictions through established licensing processes. While
the regulations have been slow to pass, the BoT has clearly signaled their intent to
operators. The regulations are now awaiting final approval from the Ministry of Finance,
at which point the BoT hopes to have fully regulated and secure mobile payments in
Tanzania to ensure continued and sound growth.

TANZANIAN MOBILE MONEY SERVICES


There are four mobile money services available today: Vodacoms M-Pesa, launched in
2009, Tigo Pesa and Zantel Ezy-Pesa launched in 2010, and Airtel Money, launched in
2011. All of these products are managed by an MNO (as opposed to a bank) and all
require a customer to register for a mobile wallet, or stored value account. The primary
use of mobile money in Tanzania is the ability to send and receive money to and from
friends and family, referred to as P2P transfers. At the same time, as mobile money has
matured, a variety of additional services have been applied to the product, increasing the
use cases for the mobile wallet. Service offerings can be broken down into five general
15

For more on AFIs work with the BOT, see this Knowledge Exchange Insights briefing: http://www.afiglobal.org/sites/default/files/afi_knowledgeexchangeinsights_tanzania_8dec2011_lg.pdf

13

categories, all of which are currently being offered by at least one of the four primary
mobile money service providers: Airtime Top-Up, P2P, Bulk Payments (B2P), Bill
Payment (P2B), Mobile Banking, and International Money Transfers.
1. Airtime Top-Up allows mobile money account holders to purchase prepaid airtime
from their phone, without having to visit an airtime reseller. This is one of the more
popular services - 46% of active mobile money users surveyed in 2012 stated they
had used mobile money to purchase airtime in the last four weeks16.
2. P2P is commonly used to send money to friends and family members across
Tanzania. The same survey mentioned above found that 85% of active mobile
money users had received money in the last four weeks and 62% had sent money17.
Similar to other countries, mobile money users in Tanzania can transfer money
directly to the mobile account of a registered user of the same service, to the mobile
phone of an un-registered user, or to a user of another service.
The following table presents a comparison of the cost of this service across all
mobile money service providers in Tanzania. The chart includes prices for deposit
and withdrawals as well, since these transactions are required in order to make and
receive a transfer.
Table 2: P2P Tariff Comparison for a transaction of TSH 50,000 / USD 30.5418
Tariff TSH
Airtel Money Tigo Pesa
Vodacom
MPesa
Deposit Money
Free
Free
Free
Send Money (Registered User)
Send Money (Unregistered
User)
Withdraw Cash (Registered
User)
Withdraw Cash (Unregistered
User)

TSH 500
USD 0.31
TSH 1900
USD 1.16
TSH 1500
USD .92
Free

TSH 500
USD 0.31
TSH 1900
USD 1.16
TSH 1500
USD .92
Free

TSH 500
USD 0.31
TSH 1900
USD 1.16
TSH 1800
USD 1.10
Free

As the mobile money service providers use different pricing strategies, the table above
compares transactions cost for a transfer of TSH 50,000 (USD 30.54). See full tariff
sheets in Appendix 3.
3. B2P, business-to-person, or Bulk Payments. This service allows an organization,
whether it is a business, government ministry or NGO, to pay multiple recipients at
one time by transferring money (also referred to as pushing funds) into their mobile
money wallets by signing up for a corporate account. Organizations in Tanzania are

16

Intermedia Tanzania Mobile Money Tracker Study Wave 3 Report November 2012 page 21
Intermedia Tanzania Mobile Money Tracker Study Wave 3 Report November 2012 page 21
18
Exchange rate of 1637 TSH: 1 USD used throughout the document.
17

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starting to use these services in order avoid the risk and costs associated with cash19.
In fact, Airtel uses their own product, Airtel Money, throughout their distribution
channel, and has experienced significant cost savings and efficiency gains by
making all payments to airtime dealers and field representatives via mobile money.
The B2P product is the focus of this report, and specific case studies highlighting
opportunities and challenges for organizations already using bulk payments in
Tanzania are detailed in Section VII.
In terms of costs, mobile money service providers often offer lower transaction fees
for B2P than are offered to individual users of P2P, since they are using the product
in bulk. This discount does not apply for off-net payments (i.e. a payment from an MPesa bulk payments user to a recipient registered with Airtel Money). As additional
benefit to bulk payment users, mobile money service providers often increase the
amount of money that can be sent/received at one time, raising the limits above
those defined for individual users. The rates in the table below describe the cost per
transaction for a company making a payment of USD 30.54 (TSH 50,000 TSH).
Tariff TSH

Table 3: Illustrative B2P Tariff Comparison


Airtel Money Tigo Pesa

Vodacom MPesa
No Limit

Transaction Volume Limits

No Limit

No Limit

Transaction Amount Limits


(per transaction)

TSH 1 million
USD 610

TSH 1 million
USD 610

Deposit Money

Free

TSH 3
million
USD 1832
Free

Send Money (Registered User)

TSH 200
USD 0.12
(Flat Fee)
TSH 1900
USD 1.16
TSH 1700
USD 1.04
Free

Free

Free

N/A

TSH 1900
USD 1.16
TSH 1800
USD 1.10
Free

Send Money (Unregistered User)


Withdraw Cash (Registered User)
Withdraw Cash (Unregistered
User)

TSH 1500
USD 0.92
N/A

Free

To compare mobile money to other options for moving money, the table below compares
the transfer fees associated with checks and EFTs and mobile money bulk payments for
a value of USD 30.54 (TSH 50,000). In this case, it is assumed that the organization
making the payments will absorb the withdrawal fee charged to the recipient.

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Bulk Payments also have reporting systems associated with them using a web interface. They can
provide both stand alone documents and excel-type of documents that can be downloaded, providing
proof if funds have been transferred to an individual, when, and how much. For more information about
this, please see Appendix 4, which includes a draft Financial Documentation Guide, showing standard
Mobile Money processes, internal controls and documentation produced by these web-based bulk
payment client interfaces.

15

Cost of a
money
transfer

Table 4: Cost Comparison of Money Transfer Fees


Airtel
Vodacom
Check
Send + withdrawal
Send + withdrawal
TSH 3000
fee to on-net client:
fee to on-net client: USD 1.84
TSH 1900
TSH 1800
USD 1.16
USD 1.10
Send to off-net
client: TSH 1900
USD 1.16
(No withdrawal fee)

EFT
TSH
10,000*
USD 6.12

Send to off-net
client:
TSH 1900
USD 1.16
(No withdrawal fee)

*EFT charges are fairly uniform across the banking sector and TSH 10,000 is a flat rate
for transfers of any size.
4. P2B, person-to-business, or Bill Payments: This service allows an individual to send
a payment to a company using their mobile money account. Although not as popular
as P2P services, bill pay products are offered by every mobile money product in
Tanzania. Customers have the ability to pay for a variety of services from satellite
television to basic electricity and water bills. Vodacom's M-Pesa has the most robust
bill pay product with 67 registered companies accepting bill payments via M-Pesa20.
This service provides a great alternative to traveling and waiting in line at a bill pay
location. However, the value proposition needs to be more clearly communicated to
Tanzanians, as only 5% of active mobile money customers use the service21. In
addition to paying bills, this service is can also be used by microfinance institutions
who use P2B capabilities to collect repayment for loans. FINCA, one of the largest
microfinance institutions in the world, is using Vodacoms M-Pesa in Tanzania to
collect loan repayments, and is successfully collecting approximately 30,000
transactions per month. This initiative is described in more detail in Section VIII.
5. Mobile Banking: This is a term used to describe a product that allows a client to use
their mobile phone to access a formal bank account, allowing customers to use their
mobile phone to access formal financial services. This product enables a customer
to either pull funds from the bank account onto their mobile wallet, or vice versa. In
Tanzania, many banks have partnered with mobile money services to provide this
service. The following table lists a sample of the bank partnerships already
established by three of the major mobile money service providers.

20
21

http://www.vodacom.co.tz/vodacom-m-pesa/m-pesa-business/pay-billers
Intermedia, Tanzania Mobile Money Tracker Study Wave 3, November 2012, page 21

16

Table 5: Partnerships for Mobile Banking, by Provider


Mobile Money Product
# of Bank Partnerships
Examples
Airtel Money
6
BOA, CRDB, NBC
Tigo Pesa
2
N/A
Vodacom M-Pesa
8
NBC, Standard Chartered

Although this product is readily available, it has yet to be widely adopted in the
Tanzanian market. One potential reason for this could be the majority of bank
account holders already have access to a bank branch or ATM, making the ability to
transact from their mobile handset less relevant. Another reason may be lack of
knowledge of the new service among potential customers who aren't within a close
enough proximity to a financial institution and are therefore likely to see the most
value in the product.

Innovative Application of Mobile Banking


Mobile banking can be used by individuals and organizations in a variety of ways.
One innovative application could provide a significant amount of value to the more
established Village Savings and Loans (VSL) programs in Tanzania. VSLs are,
simply put, groups of peers within communities who pool their own funds together for
savings, insurance, and credit services22. Care's Access Africa program works with
VSLs throughout Tanzania. As these programs mature, they begin to generate
larger sums of savings, and are therefore required to store and secure an
increasingly unwieldy amount of cash. Programs over 10 years old can end up with
between USD 10,000 to 13,000 (TSH 1.6 to 2.1 billion) in savings by the close of one
year23. Vodacom has partnered with Care to provide customized M-Pesa wallets
that each VSL can use to store money electronically. This product has been very
helpful in mitigating risks of theft or damage to the savings. The next step, which
CARE is currently exploring, is to use the mobile banking service to link the savings
groups directly to a bank account, so they can store their savings in commercial
accounts, increasing security and the ability for the groups to qualify for commercial
loans and potentially earn interest on deposits.

6. International Money Transfer: Vodacom's M-Pesa has partnered with Western Union
to allow mobile money subscribers in Tanzania to send and receive money to and
from countries where Western Union operates. To use this service, senders transact
with Western Union as usual, by visiting a Western Union agent location in their own
country or visiting the Western Union website to send money online. When the
intended recipient in Tanzania receives the transfer, he can either withdraw as usual
at a Western Union location, or cash out at an M-Pesa agent.
This service takes advantage of the vast network and experience of Western Union,
while providing the convenience of receiving money directly to a mobile phone and
allowing customers to store this money for future use in a secure manner.
22
23

For more on the VSLA model, visit vsla.net


Interview with Lauren Hendricks; Access Africa, Care. Tanzania, February 6 2013

17

Table 6: Mobile Money Services in Market Today


Airtel Money
Tigo Pesa
Vodacom MPesa
Airtime Top Up

P2P

Bulk Payments

Bill Pay

Joint Offer w/
Bank Account

International
Money Transfer

Three MNOs, Airtel, Tigo, and Vodacom have answered specific questions asked by
implementing partners surrounding the mobile money services offered. A document
reviewing these questions and answers are contained in Appendix 5, and provides a
more detailed look into these services, as well as issues such as fraud control, policies
around in-network and off-network transfers.
THIRD PARTY SERVICE PROVIDERS
As the success of mobile money continues, entrepreneurs in Tanzania's technology
sector have begun to develop new and improved products to add value to the services
developed by the MNOs. These service providers are often referred to as third party or
value-added service (VAS) providers, as they are not an MNO or a financial institution.
Many of these companies already provide other services related to the mobile voice
market, including bulk text messaging and airtime distribution services, and are now
starting to do the same for the mobile money market. In Tanzania, at least three of
these companies are now acting as aggregators for mobile money services, Selcom,
Maxcom and E-Fulusi. They have established agreements with the major MNOs in
Tanzania that enable them to provide solutions that span across networks. This is
important in the context of this report, as both are now offering bulk payment products
that allow organizations to send money to a registered user of any of the four mobile
money service providers at the same time.
As will be discussed in more detail later in the report, many of the early adopters of bulk
payments products in Tanzania have faced the challenges due to the lack of
interoperability between mobile money platforms. When an organization decides to use
mobile payments, they usually establish a partnership with one of the four mobile money
service providers. This means that they can only send money directly into the mobile
wallet account of customers registered with that same service provider. On the contrary,
when they send money to phones that are not registered with that same service
(referred to as off-net payments), the money is not deposited directly into the person's
electronic wallet, but rather is sent in the form of a token that expires in seven days if not
reimbursed at an agent for physical cash. In addition, this token is not received if that

18

person is out of network or if their phone is off, both of which are common in rural areas.
While mobile wallet interoperability is certainly one solution to this problem, the most
immediate solution is for organizations to use third-party providers, in order to deposit
the funds directly into any mobile money wallet regardless of the MNO. Recipients still
have to own a phone and to register for a mobile wallet; however, it does overcome the
key obstacle to adoption of bulk payments, as will be more apparent in Section VII,
which discusses Pathfinders use of mobile payments to pay community healthcare
workers (CHWs.)

MNO
Customers
Bulk
Payment
Pricing

Functionality

Table 7: Third Party Bulk Payment Product Profile


Selcom (Pay Point)
Maxcom (Maxmalipo
E-Fulusi (MFIN)
Payer)
Airtel, Tigo, Vodacom
Airtel, Tigo,
Airtel, Tigo (only for
Vodacom, Zantel
collections),
Vodacom, Zantel
TSH 120
TSH 100
750/1250 USD fixed
USD .07
USD .06*Flat Fee,
fee, plus traditional
*Flat Fee, negotiable
negotiable
sending and
withdraw fees as set
by the mobile money
service providers
Selcom's bulk payments
Maxcom's bulk
MFIN has a maker
product has a
payments software
checker functionality
maker/checker system.
does contain a
within its graphic
The bulk payments
maker/checker
user interface. An
product requires a user
system for dual
Administrator can
to be registered with at
authorization of
assign authorities to
least one mobile money
payments. The bulk other staff members.
provider.
payments product
The bulk payments
requires a user to be product requires a
registered with at
user to be registered
least one mobile
with at least one
money provider.
mobile money
provider. Offer
ability to advance
you the funds to load
your mobile wallet if
the transfer to the
mobile money
service providers is
delayed of takes too
long.

19

CONSUMER PROTECTION
While each mobile money service provider has a different set of standard operating
procedures, each institutes their own set of internal controls to prevent fraud within the
corporate structure, amongst agents, and against clients/users. The following is a brief
overview of the general consumer protection measures that MNOs in Tanzania
implement.
Table 8: General Consumer Protection for Mobile Money
General Consumer Protection for Mobile Money
PIN Number

All mobile wallets are protected by a PIN number (usually 4-digits),


which is selected by the owner of the mobile wallet and can be changed
at any time. Mobile handsets often provide customer the choice to
require a separate passcode to enter the mobile phone, which provides
an extra level of security.
Clients can get different registered SIM cards and use them in the
shared handsets on receipt of money and during transactions without
compromising the accessibility of funds by third parties.

Customer
Care

Each mobile money provider has a customer care line separate for
users, corporate clients and agents. These customer care lines vary in
user experience, but the purpose is to avail them to report issues of
fraud, consumer challenges, and consumer protection issues.

Agent
Network
Management

Most mobile money service providers also monitor their agents closely,
as the agent is the point of contact for the customer. Providers are in
essence outsourcing customer service to a network of agents, and
therefore in order to ensure a high quality of service there must be
significant attention paid to recruitment, training, and monitoring to
ensure that agents are well prepared to manage the customer
relationship. This management is also critical to ensuring that agents
maintain a balanced liquidity of cash and electronic float, since both are
necessary to allow customers to transact. Each provider in Tanzania
uses a similar system that generally involves multiple levels of agents
(including bank branches to ensure liquidity) and regional managers to
monitor liquidity and to respond to customer complaints.

Bulk
Payments

In the bulk payments process, it is standard practice to require dual


authorization before payments are made. In other words, each payment
requires a maker and a checker, with different user names, mobile
numbers, and passcodes. This is standard in most financial systems to
protect against fraudulent incidents. Depending on the system, the
mobile money provider may have more than one verification unit within
their corporate operations. The specifics of each service offering are
described in more detail in the USAID Draft Financial Documentation
Reference Tool (Appendix 4).

20

THE COST OF CASH


The previous section stated that organizations are increasingly using bulk payments
services to bypass the risks and costs associated with the transport and distribution of
cash. This is the key interest of this report, as it has the most relevance to
USAID/Tanzanias implementing partners.
The USAID Mission in Tanzania actively supports four key areas: democracy, education,
health, and economic growth. A significant portion of the overall budget is devoted to
health and to agriculture; the latter as part of USAIDs global Feed the Future (FTF)
initiative. Due to Tanzanias overall stability, economic growth, and commitment to
democracy, financial support from USAID has grown significantly over the past five
years. The analysis here seeks to understand what portion of that money ends up
being spent as cash in the field, and the impact that the use of cash has on both
programmatic objectives and operational efficiency of each implementing partner.
Each implementing partner conducts many activities as part of their program, and many
of these programs do not involve cash payments. In Tanzania, the assessment found
that cash payments are most often used for two key payment streams.
1. Per diem payments for training participants
2. Per diem payments and cash for operating costs issued to field staff.
For this assessment, the consulting team interviewed Mission staff in addition to
eighteen Implementing Partners (IPs). The IPs meetings included, the majority of the
time, both program and administration/financial team members of the organization. In
each meeting, these staff members detailed how, in their own view, they perceive the
risks and the cost of cash payments in their program's operations. The main risks of
cash reported were:
1. Risk of theft or loss: Any time that cash is transported, there is a risk of theft or
loss. Staff members do not like the liability that is placed in their hands when
managing cash. In addition to the lost money, this presents a risk to any staff
member that is asked to transport cash via car, plane, or foot.
2. Security of Program Participants: Relatedly, distributing a large amount of cash
to participants at a training makes them a target once they leave they training. It
also does not facilitate easy use of the money for subsequent financial
transactions.
3. Lack of transparency: Cash payments are hard to track, and since cash leaves
no digital trail, it can be very hard to prove that cash payments are given to the
intended recipient. Many organizations report a problem with ghost payments.
One example of this occurs when someone puts extra names onto an attendee
lists for trainings in order to issue per diems for people who did not actually
attend the training. This is seen by organizations as both a financial cost and a
threat to programmatic objectives, as it is vital that participants attend trainings in
their entirety in order to benefit from the content. Organizations reported this
problem more widely in Tanzania than in other countries, although it is unclear
whether this is because the problem is more widespread, or simply because the
problem is more openly acknowledged.

21

While all organizations are concerned about the cost of cash, they expressed more
concern than implementing partners in other countries about the risks to having staff
carrying and responsible for large amounts of cash, as well as the lack of transparency
when using cash payments. As a direct result, all eighteen partners interviewed reported
that they are minimizing cash payments and have made significant efforts to reduce the
distance and time over which they transport of cash. None of these organizations are
currently transporting large amount of cash at one time over long distances from
headquarters to field offices, as they did in the past. Rather, they have found ways to
minimize the need to transport cash strategies that have their own strengths and
weaknesses, as discussed below.
The first way that most organizations minimize their use of cash is through EFT. IPs are
actively encouraging vendors, from hotels to newspaper delivery men, to open bank
accounts, if they do not already have one, to ensure that all vendors are able to accept
payment via EFT. A few of the organizations are making these EFT payments directly
from an online banking platform provided by the bank, thereby replacing the need to
write checks. Removing the need to issue and sign checks saves a significant amount
of both administrative and management staff time. In addition, EFT is a safe and secure
way to make payments. However, the use of EFT is limited by the fact that
organizations cannot always convince vendors to open bank accounts and that they
often work with vendors and participants that do not live in close enough proximity to
bank branches to receive payment in a timely manner these are the last mile payments
that are still made in cash in almost every country where USAID works.
For these last mile payments, organizations are using bank branches in the field. This is
very different from EFT because the payment is not made directly to the intended
recipient. Instead, the organization will send a finance staff member out to the field, who
is responsible for withdrawing cash from the closest bank branch and then distributing it
to the intended recipients. This is possible since, while the bank branch penetration in
Tanzania is low as described previously, there is one local bank, the National Bank of
Commerce (NBC), which operates at least one branch in each of the 114 districts in
Tanzania.
Therefore, the use of NBC (or another bank nearby, depending on the
district) can drastically reduce the need to transport physical cash across long distances.
Organizations in Tanzania report that both the costs and the challenges associated with
this strategy are significantly less than the alternative of transporting cash all the way
from the headquarters office. However, they are still concerned about the costs of time,
transport, and per diem payments for the finance officer who is required to travel to the
field to conduct the payments. They are also highly concerned about the risk of
providing one person, even a finance staff member, with access to a large amount of
money. Sometimes the money is transferred to this persons personal bank account,
which is a less than ideal scenario; other times, the person is provided access to a
company account. Either way, many financial managers reported they are not entirely
comfortable with this strategy, nor are the comfortable asking a staff member to assume
this level of cash risk.
The following section provides a more detailed look at the costs of using cash, based on
two health organizations which have already implemented the use of bank branches in
the field in order to issue per diem payments for trainings.

22

CASE STUDY: COST OF CASH IN THE HEALTH SECTOR


Two IPs in Tanzania, both running large health programs, estimated the costs of paying
per diems in cash for one training program, using the USAID Cost Analysis Tool
designed to help organization assess the costs of transitioning from cash to electronic
payments. Both organizations requested that their names be withheld for privacy
reasons.
Organization 1.
Payment Process
This organization conducts trainings at least every three months as part of their objective
to strengthen health systems through capacity building for government health officials.
To prepare for a training, the finance staff estimates how many participants will attend
the training, and how much they each need to be paid according to the GoTs official per
diem rates. The total amount of money needed is then divided and sent in five
installments to the personal bank accounts of two finance staff, which results in ten total
payments over the span of one training. The two finance staff travel to the training in
order to withdraw money from a nearby bank branch and to issue the payment in cash.
The financial staff members are there to ensure that payments are made only to actual
participants, and that all necessary back-up paperwork is collected. Financial staff are
also liable for returning any additional cash that was not spent during the training.
Non-Financial Costs
The Country Director is very concerned that sending the transfers to the personal
accounts of finance staff required the staff to assume a high-level of risk, both in terms of
potential fraud and the risk of theft. In addition, the organization often conducts more
than one training at time, and therefore they send out as many as six finance officers
into the field at one time, for up to three weeks. This effectively paralyzes the home
office in Dar Es Salaam, as finance staff are spending all of their time issuing payments
for trainings, when they have many other tasks that they could be completing if they
were able to spend more time at the home office. This drain on human resources limits
the number of trainings that the organization can conduct at one time, and therefore is a
hindrance to scale and overall program impact.
Financial Costs
The following table represents the costs of cash payments for six finance officers to
attend back-to-back trainings in three different regions, each only conveniently
accessible from Dar Es Salaam by plane. Each training lasts for four days, and a
finance officer will attend four trainings in a region in one trip therefore, one trip lasts
twenty days once travel time is accounted for. The organization provided this example
as a typical case, in which all six finance staff to be out of the main office at the same
time for twenty days.

23

Table 9: The Cost of Cash for Health Trainings, Organization 1

Organization 2
Payment Process
This organization is also conducting trainings to build the capacity of health systems in
Tanzania, and has similar processes as those described for Organization 1. The key
difference is that the policies of Organization 2 stipulate that a financial officer from the
main office is only sent to a particular training if that training requires the distribution of
more than USD 18,000 (TSH 30 million). If the total is below this amount, then the
training coordinators will issue the cash payments directly. Out of all of the training
conducted thus far, 40% have been under the limit, while the majority (60%) required a
financial officer present as they were over this limit.

Non-Financial Costs
Organization 2 also experiences a significant drain on human resources when they have
to send a finance officer to a training. When the trainings require less than the cash limit
and the responsibility falls to the coordinator, there are additional programmatic costs.
Dealing with cash takes away from the time that the coordinator has to spend on training
content and methodology, which can potentially impact the quality of the training. In
addition, the organization is accepting a higher level of risk by asking a non-financial
staff member to assume the responsibility of cash, and to account for any shortages or
overages that occur if the actual numbers of attendees varies from the estimate.

Financial Costs

24

The following is an estimate of the costs associated with one training lasting ten days,
and requiring one finance officer to issue payments. The training is in Mwanza, a region
most accessible from Dar Es Salaam by plane.
Table 10: The Cost of Cash for Health Trainings, Organization 2

Summary
The following chart shows the unit costs for the four line items for each organization that
is absorbing the cost of cash transfers, per the previous analysis. This illustrates the line
items in a program budget that are most impacted by the cost of cash transfer.
Understanding where these costs are will help all organizations to properly assess the
costs associated with cash in their current operations.
With this information,
organizations can conduct a comparison of the cost of cash in their program with the
projected costs associated with mobile payments, in order to assess the benefits of a
transition to electronic payments. The costs and benefits of electronic payments are
outlined in more detailed in the following sections.

25

Figure 3: Breakdown of the Line Item Costs of Cash Payments for Two Health
Programs (USD)
300
250
200
150

Organization 1
Organization 2

100
50
0
Finance Team Finance Officer Transport Costs
LOE
Accomodation
(Airfare)
and Per Diem

Bank Fees

TRANSITIONING MOBILE PAYMENTS TO THE LAST MILE


As discussed, mobile money provides a third option for organization to make payments.
Of the eighteen organizations interviewed, four are already using mobile money to make
payments. These four organizations had already implemented EFT for as many
payments as possible; however, they were not satisfied with the cash payments that still
occurred in the more rural and isolated regions they worked. Many organizations,
beyond these four, noted the rapid expansion of the usage of mobile money in Tanzania,
and have started to internally discuss the potential to use these payment services for
their own operational and programmatic payments.
The following case studies should help those organizations to understand the
opportunities and challenges that mobile money presents to their peers that have
already been using this payment mechanism.
PATHFINDER: USE CASE FOR MOBILE PAYMENTS AT SCALE
This section will take a closer look at one organization, Pathfinder, which has made a
comprehensive commitment across the organization to stop using cash entirely. The
experience clearly shows how a commitment to cash-lite operations requires a
combination of strategies, including the use of both EFT and mobile payments.
Pathfinder is an international organization which focuses on building community health
systems in 35 districts in Tanzania in order to support a range of health challenges from
HIV/AIDs to family planning. Their program includes a network of 3,500 community

26

health workers (CHW) that receive monthly stipends as well as a significant capacity
building component. They have historically used a large amount of cash in the field to
pay CHWs and to reimburse training participants. This all changed when the
organization hired a new Chief Financial Officer (CFO) who believed that the use of
physical cash was both an unacceptable risk of fraud and an unnecessary operational
cost, and therefore committed to removing all handling of cash from the organizations
operations.
The first step was to switch to EFT payments through an
online banking platform, which reduced the use of checks
Going cash-lite required
eventually to only four per month a significant time
organizational behavioral
savings for the Country Representative who reported that
change driven by an internal
he used to spend hours signing checks, whereas he can
champion committed to
now push one button on the online banking platform to
ending the use of cash in order
complete all payments at the same time. In order to
to manage risk and reduce
achieve this reduction, the organization had to advocate
costs.
for all of its vendors to open bank accounts, and even
convinced the newspaper delivery man to open a bank
account by telling him that he could only receive payment electronically.
The second step was to tackle the last mile payments those payments that could not
effectively be made through bank transfer. For Pathfinder, these payments are mainly
made to their network of 3,500 community health workers (CHWs), who support efforts
to improve health systems at the community level. CHWs attend initial training and then
annual one-day refresher trainings, and receive USD 27 (TSH 45,000) in per diem to
cover the cost of attending each training. They then receive a small, monthly allowance
of USD 15 (TSH 25,000) to support their efforts in the community (CHWs in Tanzania,
and many countries, work as volunteers and are not salaried employees.) This totals at
least US 724,000 or TSH 1.16 billion in cash payments per year.

Pathfinder could have used a security company to deliver these payments in cash.
However, their initial assessment found that this option was too expensive. Therefore,
they set up a partnership with Vodacom to use M-Pesa to make these payments. It is
important to understand how extraordinary this decision was in 2010. At the time, there
was only one mobile money provider in Tanzania, usage rates were still low, and few if
any non-profit organizations were using mobile money for bulk payments. Pathfinder
has been a trailblazer, and their work with Vodacom to improve the bulk payment service

27

over the past three years has paved the way for other organizations to benefit from
these services as well.
Pathfinder started first using mobile money to pay CHWs in the urban center of Dar Es
Salaam, and eventually scaled up so that all CHWs nationwide are receiving payments
this way. They are now making as many as 12,000 payments per month, which qualifies
the organization one of the largest Super Users of M-Pesa in Tanzania. As they
expanded the program, they continually modified their Standard Operating Procedures
(SOPs) for making payments, learning through trial and error how to ensure that all
payments are delivered securely to the intended recipients.
Costs and Benefits
Pathfinder has not been able to do a full cost analysis of the M-Pesa program, because
of a lack of time and resources to do so. However, the Country Representative
recognizes that the use of mobile payments has allowed them to scale their program if
they were making the payments in cash, they simply would not have been able to train
so many people at once. With M-Pesa, all payments are issued and approved by two
finance team members located at the head office. With cash, they would have to send
finance staff to the field, paying for transport and accepting a much higher level of risk.
For example, the Country Representative remembers sending finance staff out to the
field with large sums of cash. For security reasons, finance staff members were forced
to sleep with the cash hidden within their pillows or take other extraordinary measures to
ensure the safety of the cash. Now, this money is sent in electronic form, directly to the
mobile phone of each participant. Pathfinder does not transport any physical cash at
any point, and participants have gained access to basic financial services, as they are
learning to use and store money in their mobile wallet.
The key successes of the
initiative, as described by Pathfinder, are:

Over 20,000 clients have been paid since November 2011


Over USD 1.8 million has been sent through the M-Pesa platform
Pathfinder Tanzania now writes only 3-5 checks a month
Ability to pay multiple groups at one time.
Reduce strain on staff since they are not travelling with cash to the field.
Unbanked recipients report using M-PESA as an account, and are increasingly
storing value rather than withdrawing at once.

Pathfinders efforts to go cash-lite have not been without obstacles and challenges. The
organization has learned through trial and error, and both the management and staff are
committed to troubleshooting and to ensuring that all payments are complete. The
commitment to learning and continually modifying processes and procedures is a critical
part of Pathfinders success. The following is a summary of the main challenges that
Pathfinder has faced, as well as an overview of some of the creative strategies that they
have developed to continue to scale.

28

Table 11: Pathfinder Mobile Money Challenges and Troubleshooting


Challenges
Troubleshooting Strategy
Training is an on-going challenge as many Pathfinder will re-instate weekly group
CHWs are not proficient with a mobile
meetings in some areas where education is
phone or mobile wallet.
particularly challenging, in order to
increase both understanding of M-Pesa
and to reinforce new healthcare skills
learned in the larger trainings.
Agents have reportedly charged
This problem is best mitigated through
withdrawal fees although Pathfinder
training of clients and agents, and
covers this fee.
diminishes over time as clients learn to
understand and articulate the appropriate
fees.
When Pathfinder experiences issues with
Pathfinder has now been identified by Mthe M-Pesa service and reports them to
Pesa as a Super User and has a dedicated
the service provider, these issues
client manager to support them.
problems are not always addressed in a
timely and sufficient manner.
The M-Pesa system sometimes rejects
The organization hired a dedicated M-Pesa
correct numbers, causing accounting
accountant and established new SOPs for
difficulties.
tracking successful and unsuccessful
transactions reported by the M-Pesa bulk
payments systems
Sending money to those users who are not The organization continues to work with
registered with Vodacoms M-Pesa is a
CHWs who do not have a Vodacom Mchallenge, since these messages are sent Pesa account in order to help them
in the form of a flash message, rather than understand that they need to be in-network
an SMS, and flash messages are not
with their phone powered on at the time of
received if the phone is out of network
payment. However, Vodacom has not yet
coverage or turned off (as described in
developed a complete solution to this
Section V in the Third-Party Service
problem. Pathfinder is exploring other
Providers discussion.) When the client
options, such as partnering with additional
does not cash out the money in 7 days, it
mobile money service providers, or
is sent back to Vodacom. When the
alternatively, with a 3rd-party provider which
money is then transferred back to
can send money to all four mobile wallet
Pathfinder, they are not able to track which types at the same (for more on this option,
recipient the money came from originally.
refer to section V.)
Key Factors to Success and Lessons Learned
Pathfinders experience as a both a trailblazer and as a Super User of M-Pesa has not
been without its challenges. Yet, despite these challenges, the organization has paid
out over USD 1.8 million in 18 months, and has used this payment mechanism to scale
up working with a larger number of CHWs than they would have been able to using cash
payments. What has made this work?
1.

Full support from Senior Management and a CFO who championed the need
for cash-lite operations.

29

2.

3.

4.

5.

Buy-in from internal staff was critical in hindsight, they would have benefited
from having all staff use the system first, as understanding of internal staff
(especially field staff) is critical to recipient understanding and training.
New SOPs: Electronic payments required an adjustment on the part of the
finance staff, and they adapted their standard operating procedures to better
fit the mobile payments modality. It was important for the staff to stay flexible,
and continue to receive support from key leadership as instituting behavior
change can be challenging.
Time and staff devoted to troubleshooting. Because the organization was
committed to going cash-lite due to the risks associated with cash, they have
worked through challenges with M-Pesa and found creative solutions to
issues.
A devoted point-of-contact in the mobile money operator to support in the
scale-up of the initiative.

D-TREE: A PROGRAMMATIC USE CASE FOR MOBILE PAYMENTS


While one of the largest users of mobile money for bulk payments in Tanzania,
Pathfinder is certainly not the only organization doing so. More so than other countries
where USAID has conducted similar assessment, implementing partners are quickly
moving towards mobile money, either currently piloting use of payments products,
conducting feasibility assessments, or planning to use mobile money in their programs in
order to support programmatic objectives.
D-Tree is a small health organization focused on prenatal care and increasing maternity
care for mothers during pregnancy. The program is piloting the use of mobile money
with a network of Traditional Birth Attendants (TBAs) on the islands of Zanzibar and
Pemba to encourage mothers to visit clinics on a regular basis. The global public health
community recognizes that lack of transportation is one of the key obstacles to
encouraging mothers to give birth in formal clinics, which is critical as clinical births
drastically reduce the risk to both mother and infant. To support the increase of clinical
births, D-Tree sends a small sum of money via Zantels Ezy-Pesa to the TBA. This
money subsidizes the TBA for performing prenatal care as well as ensuring the mother
has transportation to the clinic at the time of birth.
D-Tree started a pilot of this program in 2011, and now sends 23 TBAs approximately
USD 163 per month (TSH 26,000) via Ezy-Pesa. The main indicator of success, the
percentage of births occurring in the clinic in the target population, has increased
significantly, from 30% at the start to 70% in February 2013. This success is facilitated
by, but not entirely attributed to, the use of mobile payments. In the next phase of the
program, D-Tree plans to collect additional data to better understand the different impact
of the many different aspects of this program.
Lessons Learned
D-Tree is working with Zantel, a company which has a very small share of the mobile
money in Tanzania as a whole, but which has the largest coverage on the islands of
Zanzibar and Pemba. Similarly to Pathfinder, D-Tree is frustrated with the lack of
appropriate customer care and follow-up to complaints. However, they do now have an
account manager, which has helped reiterating the lesson from Pathfinder that a key
factor to success is a dedicated POC at the provider.

30

The main challenge for D-Tree is that they do not have visibility into the transactions of
the TBAs, and therefore cannot confirm when they have withdrawn money or paid the
taxi driver. This is a common complaint from implementing partners. There is a good
reason for this lack of visibility: mobile wallets are personal accounts that facilitate a
variety of financial transactions and therefore transaction history is private to the
individual account holder (much in the same way that an employer in the United States
could not access an employees bank account.) These mobile wallets can be used for a
number of different transactions beyond those controlled by the program.
However, Zantel has offered D-Tree a solution. The organization and the TBA can
register for joint accounts, which work in a similar way (from technology standpoint) as
the accounts for Super Agents and sub-agents. Super Agents and sub-agents have
linked accounts, since the Super Agents manage sub-agents and their funds, and
therefore the Super Agents needs to view the account balance and transaction activity of
the sub-agent. Using a similar arrangement, D-Tree can register for a master account
and the TBAs can register with sub-account, directly managed by D-Tree. In this case,
the TBA is able to open a personal, individual mobile wallet with a provider of their
choice if they wish to make private transactions, which will remain separate from the
sub-agent account established purely for the D-Tree program. This is a reasonable
option for an implementing partner to explore who would like more visibility into the
transactions of their employees or participants with whom they have an on-going
relationship.

TOWARDS FINANCIAL INCLUSION


The theory of change behind the BTC Alliance expects that transitioning large payment
streams away from cash will increase the adoption of and demand for mobile and
electronic payments, thereby improving supply and encouraging positive regulatory
environments. Over time, this increase in demand and supply-side innovation will
eventually lead to increase ability for the poor to access financial services. In other
words, financial inclusion is the long-term goal, but it is not expected to be an immediate
outcome.
The goal of financial inclusion is critical in Tanzania, a country with a large gap between
the banked and unbanked. This gap exists in large part because of the high operating
costs for banks to open new branches in more rural areas where they typically find low
levels of lending and saving. At the moment, only 15% of the adult population has a
bank account, and the majority of these are in urban areas. Rural areas are largely
underserved, in large part due to the fact that Tanzania is Africa's 13th largest country,
with a few urban centers and a large rural population.
In Tanzania, it is clear that the first step outlined by the BTC Alliance, increased adoption
and demand, is already well underway, and that this demand is pushing providers to
innovate in order to remain relevant in a highly competitive market, as described in
Section V. This section will show how these two steps are indeed showing preliminary
signs of moving mobile money Tanzania into the final phase, that of actually expanding
access to convenient financial services to the previously un- or under banked.
FINCA provides a clear use case of mobile money for financial services in Tanzania, as
clients conducted 30,000 repayments via M-Pesa in January 2013 alone. FINCA is a

31

microfinance institution (MFI) which recently because the first existing MFI to receive a
license to take deposits24. The institution has 23 branches across the country, and 90%
of their loans are under USD 1000 (TSH 1,637,000).
Reaching this level of scale took a significant amount of planning and upfront investment.
FINCA began due diligence in January 2012, at which point they decided to partner with
M-Pesa based on an assessment of client preference. After initial talks with M-Pesa,
they signed a contract in April 2012 and started a three-month pilot using manual
processes. By that summer, they had completed a full integration of their own
accounting system with the M-Pesa system25.
Automation is a very significant achievement. It provides a much higher level of internal
control by eliminating the risk of human error in the accounting process. When a client
makes a repayment via M-Pesa, the client enters their own account number, and the
system can automatically credit their account with the repayment. This process became
even easier when M-PESA put FINCA directly onto the bill payment menu when an MPesa client selects the bill payment option on the mobile phone, they can a see a list of
companies that accept bill payments, one of which is FINCA. This means that clients
only have to remember their own account number, where in the past is was also
necessary to remember an additional identification code for FINCA.
However, FINCA found that a risk still existed: the manual transfer of money from MPesas bank account to the FINCA bank account during the settlement. Therefore they
set up a division of tasks, requiring three separate departments to approve this type of
transfer. This division of labor provides adequate mitigation against the risk of any one
employee disrupting or diverting this transfer.
Like Pathfinder, FINCA has yet to devote time and resources to a full cost analysis.
However, they are clearly seeing financial and non-financial benefits, as summarized
below:

Cost Savings: Rural clients use The M-Pesa repayment option most frequently.
These clients, who do not live close to a branch, were previous making
repayments at a different bank, which caused significant delays and was highcost. FINCA is confident that these savings will translate into lower interest rates.
Client benefits: Group meetings are shorter and clients feel more secure not
having to bring cash to meetings; at the same time, there has been no noticeable
impact on group solidarity. FINCA reports that they have received no complaints
at all from clients using the service.
Ability to Scale: 1 branch costs USD 100,000. In a country as large as Tanzania,
reliance on a branch network would severely restrict ability to scale, especially in
rural areas. With mobile repayments and future options for agency banking,
FINCA plans far beyond the clients who are convenient to their 23 branches.

24

Entrepreneurs Finance Centre received the first such license; however, they were not previously
operating in Tanzania.
25
The technical support for this automation was provided by Craft Silicon, a Kenya based company.

32

RECOMMENDATIONS

IMPLEMENTING PARTNERS
Through USAIDs commitment to the BTC Alliance, USAID is encouraging the transition
to electronic payments (including mobile money) in all USAID programs and operations,
where appropriate.
To do so, USAID is providing a variety of resources to assist
implementers in conducting proper due diligence to determine if electronic payments are
appropriate and beneficial to their program, and if so, which form of electronic payments
are most suitable (EFT, mobile payments, or card-based payments, for example.)
In Tanzania, where mobile money usage is growing rapidly and the USAID Mission has
expressed strong support for implementers to transition to mobile payments, where
appropriate, we recommend the following steps. These steps are comparable to the
steps suggested in a similar review document developed for Uganda, but may be
different in countries with less developed mobile money markets and/or with a USAID
Mission with different objectives.

33

Table 12: Suggested Due Diligence Activities and Tools for Implementers
Activity
Reference Document
Available
1

Conduct a preliminary assessment of where cash is


used in your program and your operations (for example,
per diems for field staff and workshop participants.)

Tanzania Mobile Money


Assessment and Case
Studies Document.
USAID Electronic Payments
Survey.

Based on this preliminary assessment, discuss with key


stakeholder if there is a potential for a transition of these
payment streams to mobile money to improve
operational efficiencies and/or programmatic goals. This
conversion should include both financial and nonfinancial considerations, such as safety and security of
staff.

N/A

Assess provider capabilities and get a better


understanding of products offered.

USAID Draft Financial


Documentation Reference
Tool26

Conduct a full analysis of the costs and potential benefits


associated with transitioning to mobile money.

USAID Costing Utility


Analysis Tool27

If you do find provider capabilities and clear benefits to


your program, develop an implementation plan and
begin considering SOP changes with the finance team
members

Demystifying Electronic
Payments: Lessons
Learned From Pathfinder
On Transitioning Away
From Cash28

USAID/TANZANIA MISSION AND OTHER DONORS


1) Hortatory language within procurement documents: Donors have the ability to
encourage implementing partners to reconsider how they are disbursing funds to
their own staff as well as their program participants by placing encouraging
language within procurement documents such as request for proposals. USAID
Washington has developed such language, and distributed it through a
Procurement Executive Bulletin (PEB).
To see the PEB, please visit
http://nethope.org/assets/uploads/PEB-july10.pdf.
2) Support for the development of new Standard Operating Procedures.
Organizations such as Pathfinder, D-Tree, and FINCA have benefited from
26 http://nethope.org/assets/uploads/Mobile_Money_Financial_Documentation.pdf
27 http://cloudportal.nethope.org/assets/collaterals/Payment_Innovations_Costing_Utility_Analysis_Tool.zip
28 http://kdid.org/events/demystifying-electronic-payments-lessons-learned-pathfinder-transitioning-away-cash

34

mobile payments by adapting their SOPs, including financial management and


audit requirements, to better fit the payment modality. The donor plays a role in
collecting this information and feeding it back to other partners through
documentation and technical assistance. Engaging auditors on both an internal
and external scale will also help organizations develop SOPs they can feel
comfortable are supplying the proper amount of financial controls for mobile
payments.
3) A Suggested Terms of Reference (TOR) for Service for mobile money service
providers so they can adjust their services to better serve this customer base.
One of the most common complaints from those organizations already using
mobile money is lack of appropriate customer care from the mobile money
provider. This is most likely due to the fact that providers are not familiar with the
unique needs of implementers. Crowdsourcing demand on requirements the
implementing partner community has for costumer service and bulk payments
products can be an excellent way to align demand with supply Therefore, a
suggested TOR for contracts and/or Service Level Agreements (SLAs) could
help to facilitate this type of communication, manage expectations, and improve
the experience for all partners involved.
4) Development of Additional Reference materials for example, it would be useful
if the USAID Mission had a list of service providers on hand that implementing
partners can access if they are interested in pursuing mobile money payment
solutions.
5) Support for small grants to give implementers funding and support for the
transition phase, which requires staff to proper due diligence and to analyze
costs and benefits of multiple payment options. This type of support could be
provided through a technical assistance or other appropriate mechanism.

FINAL ANALYSIS AND CONCLUSIONS


In Tanzania, both individuals and organizations are using mobile money on an
extraordinary scale and, as a result, knowledge and trust of the service are far beyond
most other countries. This presents a clear opportunity for development organizations to
leverage mobile money as a safe, inexpensive, and efficient way to send money around
the country.
Despite the fact that many organizations have already made the switch to EFT and use
bank branches in the field in order to minimize the use of cash, they are still struggling
with the costs and security risk of cash for last mile payments, mainly training per diem
and field staff payments. A few organizations are already using mobile money services
for these payments; in fact, Pathfinder is already sending up to 12,000 payments at
month and has been able to scale their health programming nationwide as a result.
Still, despite this wide success, the mobile money platforms are still relatively new,
compared to other payment systems. There are a few key challenges that remain,
including the lack of interoperability between mobile money networks that hinders the
ability to pay all beneficiaries in all areas of the countries. As a result, organizations that
see a possibility for the use of mobile money in their operations and programs need to
do thorough due diligence by assessing provider capabilities and conducting a cost-

35

benefit analysis of their internal operational costs, both financial and non-financial. In
addition, organizations need to ensure buy-in from all levels, including management and
field staff, and be open to modifying financial and administrative SOPs in order to adapt
to the new payment method.
Organizations who are using the bulk payments product at this time are early adopters,
and their communication with the mobile money service providers is helping to improve
the service and grow the mobile money ecosystem in Tanzania. They are not alone in
this effort. The Bank of Tanzanias National Payments System team is also supporting
growth by drafting thoughtful guidelines for both mobile money and agency banking.
USAID/Tanzania and other donors can also help by encouraging implementing partners
to explore mobile payment options through hortatory procurement language, technical
assistance, facilitation of partnerships, and support of innovation through value-added
services.
USAID recognizes that each implementing partner operates in a different country and
context, and those solutions that work in one place may not be beneficial in another.
Tanzania is one country where there is a clear opportunity to leverage mobile money for
payments to counter the challenges with cash. Through its commitment to the BTC
Alliance, USAID will continue to work with local partners to examine how electronic
payments solutions, including mobile money, can improve aid effectiveness in their
particular situation.

36

APPENDIX I: RESEARCH METHODOLOGY


This research consisted of a desk review of literature and data, a survey issued to USAID
implementing partners in Tanzania, and a 2-week in-country assessment. The
assessment included interviews with the following organizations:
Sector

Organizations

Mobile Network Operators (MNOs)

Airtel
Tigo
Vodacom
EFC
FINCA
Standard Chartered
Price Waterhouse Cooper
BRAC
Smart Money
Selcom
Kopo Kopo
Go Finance
Bank of Tanzania
USAID/Tanzania EG
USAID/Tanzania DG
USAID Tanzania EDU
USAID/ Tanzania Health
WFP
Gates Foundation
Financial Sector Deepening Trust
ACDI/VOCA
Care
Creative Associates
D-Tree
Datavision
Deloitte
Elizabeth Glaser PedAIDS Foundation
IMA
Intermedia
Intrahealth
Jhpiego
JSI
MEDA
Mkapa Foundation
PASADA
Pathfinder
Technoserve
WWF

Financial Institutions

SMEs

Government
Donors/NGOs

Implementing Partner / NGOs

37

APPENDIX 2: INTERVIEW QUESTIONS


The following is a sample of the guiding questions for the interviews which resulted in
the case studies developed for this report.

Organizational Objectives
Target geographies
Target populations types
What are your average transaction
frequency and amounts?
What are all of the areas within your
work where you must send and receive
money to individuals?
To organizations? What types of
organizations?
How are you currently processing these
payments?
Did you need to partner with and MNO
rd
or other 3 party vendor?
If yes, what was this experience like?
Were you able to negotiate bulk or
special rates for your organization?
Can you describe obstacles to this
change? Political, technical, training,
other?
How did you determine the level risk
associated with the new program?
Did you change the prices of your
products/services as a result?
How did you educate
consumer/beneficiaries about the
change? Do you have any lessons
learned as to how to best approach this?
How do you find the new system?
Are the back-end reports sufficient?
Have you received feedback from
employees/clients/beneficiaries?

38

Do you plan to expand the program?


Salaries (finance, HR, back office data
entry)
Cash transportation (vehicle, fuel,
security, insurance, courier charge,
accommodation for drivers)
Bank fees, check clearing charges
Errors & leakage
Technical Development
Training of Staff
Training for Clients
Transaction Fees
SMS reminders
Airtime
Head office processing
Phones for clients
Staff time for partnership
development/management
Travel time to conduct transaction
Training time
Training benefits (i.e. new skills learned)
Transaction Fees
Ability to track funds
Ability to respond to audits
Ability to innovate/digitize further
Ability to reach new target populations

39

APPENDIX 3: FULL TARIFF SHEETS


The following are the full tariff sheets for deposit, withdrawal, mobile money transfers,
and separately, bulk payments, for the three largest mobile money service providers in
Tanzania.
A. Tigo Pesa

40

B. Vodacom M-Pesa

41

C. Airtel Money

42

APPENDIX 4: USAID FINANCIAL DOCUMENTATION GUIDE


Working Document Modified for Tanzania as of March 2013

FINANCIAL DOCUMENTATION
IN THE USE OF ELECTRONIC PAYMENTS
REFERENCE TOOL

43

I.

Introduction

Electronic payment systems can be safer, faster and more cost effective than
cash disbursements. Various electronic payment systems are emerging in the
developing world that have the ability to potentially alleviate administrative burdens on
program operations as well as accelerate financial inclusion for billions of people who
would otherwise have no access to financial services. Increased innovation in this arena
has brought real and feasible electronic payment products to down market populations.
There are a variety of electronic payment methods available today and some
examples include electronic funds transfer (EFT), point-of-sale (POS) devices used in
conjunction with pre- and post- paid credit, debit and/or smart cards and more recently
mobile money.
i.

ii.

iii.

Electronic funds transfer this is the most popular form of funds transfer
originated by a bank when it transfers funds electronically to the bank account of
the recipient.
Point-of-Sale Devices with pre-/post-paid debit/credit cards and/or smart cards
Card-based payment systems utilizes magnetic stripes to store financial and
identification information that end users can swipe via a POS terminal. Cards
can be pre paid, meaning they have a pre-loaded value, or post-paid meaning
your payment will be reconciled at a date in the future.
Mobile Money - These are money transfer services usually offered by Mobile
Network Operators (MNOs) as seen in countries like Kenya, Haiti and
Afghanistan, or as a value-added service offered by banks (sometimes in
partnership with an MNO), or by third-party service providers typically
independent from any specific bank or MNO

Mobile money is not intended to replace established electronic payment systems


traditionally offered by the banking sector. Mobile money payment systems are suited
to replace disbursements that were typically undertaken via payment of cash. Mobile
money is a tool that allows individuals to safely and easily store, withdraw or transfer
money electronically without ever travelling to a bank. Its users are able to transfer
funds to other mobile phone users, pay for goods and services and access a whole range
of financial services.
To access mobile money, a mobile phone user visits a mobile money agent who is
typically a registered agent of a Mobile Network Operator (MNO) or a financial
institution such as a bank. The user then provides required national identification
documents and registers his/her mobile phone SIM card (i.e. his/her mobile number).
44

Vodacom (Tanzania) M-PESA Registration Requirement:


1) Fill in a registration form at any authorized M-PESA Agent (Look for signs that say
"M-PESA Available Here").
2) Full name
3) Gender
4) DOB
5) Type of IDs that are acceptable: passport, pension card, company ID card, voters
registration card, letter from a village/ward executive that includes your picture
and an official stamp
6) Nationality
7) Address, district, LC 1 area (specific neighborhood or area of residence within the
district)
Since mobile phone manufacturers typically do not include payment systems on
their phones, MNOs place their payment systems on the users phones using a SIM
toolkit, which is the software placed on the SIM card itself that holds the mobile money
application. The other way to load the mobile phone with the mobile money payment
software is through the use of the unstructured supplementary service data (USSD),
which is software available on even the most basic mobile phones that creates a direct
link to the MNOs central computer system. The individual then pays an amount of cash
to the registered agent and the equivalent of the cash amount is then loaded
electronically onto the users mobile phone to store, transfer, and pay for goods and
services as well as bills along with a range of other services. The ability to perform all
this activity without having to travel to a bank is critical for the 2.5 billion people
without access to basic financial services. It also directly supports the broader United
States Government goals of improving transparency, rooting out corruption, and
empowering the private sector and local entrepreneurs to develop innovative solutions
to poverty.

The Issue of Financial Controls


More and more USAID implementing partners are replacing cash disbursement
transactions with some form of electronic payment system with mobile money being
the new entrant into the landscape. Increasingly widespread use of mobile money
transfers has raised questions regarding transaction tracking, reporting and validating.
Financial controls exist on a variety of levels in order to ensure that documentation is
available to perform audits and also to prevent fraud. As such, payment transactions
are tracked as part of a system of internal controls and payment processes must be
tested and auditable.
45

II.

Proof of Funds Being Received

The scope of this guidance is to focus on the audit trails available when an
organization decides to utilize mobile money systems for payment in order to ensure
that the transactions are properly tracked, reported, and validated. As used here, an
audit trail is any information, paper, digital or electronic, that can be used to capture,
record, or recreate the events in the life cycle of a mobile money transaction.
An audit trail should answer questions such as:
1.
2.
3.

How does an organization verify that funds transmitted by a mobile


money provider reached the intended recipient?
What sort of customer confirmation, notification or follow-up for
transmittal of funds can the implementing partner rely on?
What is documented of the process?

MNOs offer Business to Person (B2P) services which enable organizations to


send money electronically to widely dispersed individuals through their mobile phones
as well as Person or Customer to Business (P2B or C2B) services, which allow mobile
phone users to use their mobile phones to pay an organization or other corporate
organization such as a utility company. Though each MNO surveyed tagged its service
by a different name (Corporate Account Services or Bulk Payment Services to name
a few), the services are similar across the board in that it permits entities (corporate or
non-governmental) through one transaction, to initiate payments to the registered
mobile phones of a large number of individuals who are usually widely dispersed.
For most entities, the process begins by registering for the corporate account
services with one of the MNOs. The MNOs typically require information such as the
corporate/business name, address, registration documents, certificate of incorporation
etc. The example below shows the registration information document required by TCash, the money transfer service offered by the Haitian MNO Voila, in conjunction with
Unibank.

46

As part of the registration process, some MNOs ask for the names of at least two
separate individuals within the organization, sometimes three or more, to act in the
capacity of Maker ,Checker and Verifier (others refer to it as the Initiator,
Authorizer and Administrator or Validator, Verifier and Confirmer the options
are varied).

The Maker is the designation for the individual who prepares and uploads to
the MNO systems the file containing the names, mobile numbers and payment
amounts for all individuals the organization desires to pay via the mobile money
system.
The Checker is the individual who verifies that the information loaded by the
Maker is accurate,
Most times, there is also the Verifier who actually authorizes the payment.

47

In the cases where the MNO requires multiple names on the account, each
individual is assigned a unique user name for the web based payments platform, with
their designated assignments, which dictates the level of functionality their account has
on the platform. Once the registration process is complete, the organization has
successfully set up a corporate account with the MNO and can begin the process of
making bulk mobile money payments.
Some MNOs allow its mobile money registered users to transfer mobile money to
mobile phone users on competitors networks, however, the recipient will typically need
to register with the MNO of the originating transferor in order to withdraw or transfer
funds or if registration is not required, s/he may pay a higher withdrawal or transfer
transaction cost. As such, most entities performing bulk payments will usually require
prospective recipients to register with the MNO whose mobile money transfer platform
they intend to utilize. This has the effect of lowering transaction costs for the payer
and/or receiver. Although this hasn't happened in Tanzania as of yet, some MNOs have
partnered with banks such that, at the point of registering for the MNOs mobile money
system, the user is also opening a bank account. This gives users the ability to withdraw
cash from the MNOs registered agents and also directly at the banks branches and at
its ATMs. Users are also required to set up personal identification numbers in order to
access any cash payments made to their mobile phones and to protect their mobile cash
balances.
Several countries, including Afghanistan, Haiti, and Kenya are already utilizing
mobile money systems ranging from the bank-led to the MNO-led models. Many banks,
as a value-added service to corporate customers, will perform the back office functions
typically performed by the payroll staff of the organization, and make bulk payments
through the MNOs systems to the individual recipients whose names and mobile phone
numbers have been provided by the organization. Some entities through its payroll staff
will directly interact with the MNOs to make bulk payments. Each model will typically
produce the same type of back-end report, which is an MNO report showing the
individuals paid, the amounts, their mobile phone numbers, and their transaction
confirmation numbers.
i.

Steps to effect a mobile money payment

The below are best practices and standards for bulk payments product, and do not
necessarily mean that each service provider will have all the functionalities listed below.
The list below should be used as a benchmark for organizations when scoping potential
bulk payments products.
1. Collection The organization collects the names, mobile phone numbers and
other information from the prospective recipients and captures the information
on a spreadsheet.

48

2. Validation The organization, through its operations/field staff, or, if using a


bank for back office operations, through the bank, will verify that the registered
mobile numbers match up with the names of the recipient and that the recipient
is registered with the appropriate MNO. Any discrepancies such as a mismatch
between the name of the recipient on the payroll and the name of the registered
user of the mobile phone are resolved at this stage in order to ensure the right
individual is paid. See Fig A. B.1
3. Payroll Preparation: The organization will prepare a spreadsheet with the name,
telephone number and amount to be paid by individual and the information is
verified by several layers of control personnel within the organization. Once the
information has been vetted, the information is then uploaded into the MNO
system for processing. See Fig B, B.1
4. Transaction Processing: The Maker logs into the MNOs systems and initiates
the upload of the organizations spreadsheet. After the upload is completed, an
automatic email is generated alerting the Checker that a file has been
uploaded and available for review authorization. After the initial Checker has
reviewed, another level of authorization is required for final approval of the
payment.
See Fig C.
5. After the transaction is complete, the entities corporate account is debited with
the payment sum and attendant transaction fees (if using a bank for back office
support, the bank transfers the required sum from the organizations bank
account to the MNO) and the payments are credited to the recipients mobile
phone numbers. The recipients are notified via short messaging system (SMS) of
the credit and amount. The MNO creates and retains a record of each mobile
transaction and generates a transaction report for the organization that should
show:

Start and End dates of bulk payment transaction


Bulk payment Identification number
Any unique identifying name for the bulk payment (e.g. Payments to
Field Workers for Agriculture Program or Payments to Election
Observers etc.)

49

The identification codes for the individuals within the organization who
acted as Validator, Verifier and Confirmer for the bulk payment
transaction
The total amount of the payment
The total fees
Name of recipient
Mobile phone number of recipient
Amount paid to recipient
Charges if any
Status (completed, in progress)
Payment Status (Paid, Not Paid)
Transaction Code (some MNOs create a unique transaction code for each
recipient payment made, while other MNOs can identify each transaction
made by using the just the mobile phone number.

See Fig D., D.1,D.2.


The information mentioned above, together with other associated documents
will form the organizations books and records which are maintained for audit,
regulatory, and recordkeeping purposes and preserved for the length of time as
required by law or by the contract or grant instrument under which the organization
operates.

III.

Conclusion

Electronic payment systems are dynamic and undergoing rapid change and
innovation. Paypal and other internet based payment schemes are not discussed here as
such, any changes to the books and records produced, maintained and preserved for
and by the organization for audit trail purposes must be clearly documented, including
the changes required due to a rapidly evolving landscape, in order to ensure clarity and
continuity during any examination process.

50

Example Screenshots
Fig. A. Example of validation report for transfer summary using Yo! Payments as well

*The Warnings column shows where unregistered clients are and warns that there may be an issue with the
payment before sending it.

Fig. B. Example of Tanzania Tigo Pesa's Bulk Payments upload screen where you
upload .csv document that contains the list of payment recipient information

51

Fig. B.1. Example of Airtel Money Uganda screen showing payment information
uploaded, the status allows you to see before sending the payment what accounts will
not work.

Fig. C. Example of Maxmalipo's (Tanzania) Maker/Checker functions, where in this case


the "Checker" is approving payment requests prepared by the "Maker"

52

Fig. D. Example of MTN MobileMoney Successful/Unsuccessful transaction report


screen, from here you can select the number under "Records Uploaded Successfully" to
see an excel sheet of all the successful payments, and click the number under "Failed
Records" to see an excel sheet of all the unsuccessful payments.

Fig. D.1. Example of Uganda Airtel Money completed transaction report screen

53

Fig. D.2. Example of Yo! Payments Uganda completed transaction

54

APPENDIX 5: MNO WORKSHOP Q & A


Q&A Synopsis with Tanzania Mobile Money Operators
USAID Workshop, February 5, 2013
(Summarized by NetHope)
Product Functionality and Pricing
1. What transaction limits do you apply to bulk payments? Do you limit the
volume of payments and value of payments disbursed by one organization in a
specific period of time (i.e. in 24 hours)?
Airtel:
Airtel does not impose a transaction value limit on corporate entity
payments.
Airtel does limit the volume limit of corporate entity payments to
9,000 payments in a single session using its Graphic User Interface
(GUI).
Airtel mobile money customers can receive an unlimited number of
payments equal to a monetary value of to 1 million Tsh in a single day.
Tigo:
Tigo does not impose any volume or value limits for
companies/organizations making payments.
Tigo customers can receive an unlimited number of payments equal to
a monetary value of up to 3 million Tsh in a single day
Vodacom:
Vodacoms bulk payment system allows an entity or organization to
upload a file in CSV format listing payment recipients and amounts.
The aggregate value limit on the payments to a single customer is 1
million Tsh. The volume set by system capacity is 250 people per file;
due to congestion Vodacom advises organizations limit each file to
100 to 120 people per batch.
Vodacom sets customer transaction value limits at two levels: Tier 1
and Tier 2. The limit per transaction for all Vodacom mobile money
customers is. 1,000,000 Tsh per transaction. Tier 1 customers can
keep and send 1,000,000 Tsh per day. Tier 2 customers can receive up
to 5,000,000 Tsh per day, which must be made in five separate
1,000,000 Tsh payments.

55

2. What are the transaction costs for sending bulk payments? Do the costs differ if
the recipient is not a registered user or is registered to a different mobile
money service?
Note for all: Transaction fees for sending bulk payments are only one side of
the cost, withdrawal fees may also be imposed and should be considered
when sending payments to registered customers. The normal withdrawal
fees found on the tariff sheets of each service provider apply. See Appendix 1
for links to the providers tariff information.
Airtel:
Airtel charges a flat fee of 200 Tsh per transaction for sending bulk
payments.
Airtels fee structure for sending payments to someone not registered
on the Airtel network is set forth in the table below. The prices are
tiered based on the transaction amount:
Cost per
transaction (TZS)
Type of customer

Unregistered

Range

1,000

9,999

550

10,000

19,999

1150

20,000

49,999

1200

50,000

99,999

1,900

100,000

199,999

2,300

200,000

299,999

3,500

300,000

399,999

5,000

400,000

499,999

6,000

500,000

1,000,000

6,500

customers

(The prices quoted are subject to change)


Tigo:
Tigo does not charge a fee for bulk payment disbursements. Normal
tariff fees apply to withdrawals.
Currently, Tigo does not offer the ability to send payments to
unregistered customers.

56

Vodacom:

Vodacom does not charge a transaction fee for bulk payment


disbursements sent to register M-Pesa customers but normal
withdrawal fees apply.

Vodacoms fee structure for sending payments to recipients not


registered with Vodacom is set forth in the table below. The prices
are tiered according to the transaction amount. Vodacom does not
charge withdrawal fees to unregistered costumers. Typically the
originator of the payment pays the transaction cost for sending to
unregistered customers. Organizations may opt not to pay the
transaction costs and the beneficiary will be charged upon withdrawal.
Transaction Band

Send money to unregistered customer

Transaction Cost

1,000

9,999

550

10,000

19,999

1,000

20,000

49,999

1,200

50,000

99,999

1,900

100,000

199,999

2,300

200,000

299,999

3,500

300,000

399,999

5,000

400,000

499,999

6,000

500,000

1,000,000

7,000

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3. Please clarify the policy for sending money to non-registered customers.


Including:
Airtel:

How long does the recipient have to cash out? A non-registered payment
recipient has up to seven days to cash out a deposit.
Where does the money go once it expires? The funds are returned to the
sender29 Alternatively, subject to knowing the token, the funds can be
retrieved by the sender from an Airtel Money agent.
Can I send payments to customers on different networks at the same time,
or do I have to send in batches according to the recipient's network?
Using the bulk payments process, transactions can be sent at the same
time in the batch mode irrespective of the recipients network.

Tigo:

Tigo does not currently support sending payments to unregistered Tigo


users but anticipates it will be available in the near future depending on
the cooperation of other mobile money operators.

Vodacom:

How long does the recipient have to cash out? A non-registered payment
recipient has up to seven days to cash out a deposit.
Where does the money go once it expires? After the seven-day period, the
funds are returned to the Sender.
Can I send payments to customers on different networks at the same time,
or do I have to send in batches according to the recipient's network? If an
organization is paying the withdrawal fees, Vodacom recommends
separating payments to numbers registered with other MNOs and
Vodacom numbers. This makes it easier to apply the specific withdraw
fees associated to on network and off network transactions. If the
organization is not absorbing the withdrawal fees, then an organization
can easily combine both on network and off network transactions onto
one batch.

In interviews with users of both M Pesa and Airtel Money bulk payment services users, it was
noted that the fund recovery process was more complicated than expired funds simply being
returned to the sender's account
29

58

4. Do you offer any discount on fees for non-profit organizations or for large
volume customers?
Airtel:

Airtel does not currently offer any discounts to non-profit organizations


or large volume customers.

Tigo:

Tigo does not currently offer any discounts to non-profit organizations or


large volume customers but bulk payments are free.

Vodacom:

Vodacom does not currently offer any discounts to non-profit


organizations or large volume customers for withdrawal fees (sending is
free large volume costumers).

5. Can your customers send multiple payments (bulk payments) directly from a
mobile phone?
Airtel:

AirTel currently does not offer the ability to make bulk payments from a
mobile phone.

Tigo:

Tigo customers can initiate bulk payments (by initial file upload) through
Tigos web interface. Customers can access the web interface through a
smartphone web browser making bulk payments possible from a mobile
phone.

Vodacom:

Vodacom currently does not offer the ability to make bulk payments from
a mobile phone. The bulk payment system is web based.

59

Bulk Payments Operational Questions

6. What is the process and timeline for opening a corporate account? Does an
organization need an account with the MNO or with a specific bank?

Airtel:

Opening a corporate account with Airtel can take up to five working days
subject to the provision of all applicable documents. The documents
Airtel requires are similar to those needed to open a bank account. Airtel
will open a mobile money account for the organization; this mobile
money account will be housed on the Airtel Money platform, although it
will be managed entirely by the respective organization.

Tigo:

Organizations seeking to use Tigo are required to have a pre-funded


wallet with the MNO. Organizations can pre-fund the wallet by making
deposits with one of the banks holding Tigos trust accounts. The process
for opening a corporate account would need to be discussed with the
MNO as interbank settlements vary from bank to bank.

Vodacom:

Organizations seeking to open a corporate account are required to fill out


a due diligence form (KYC) which requires an entity to submit all relevant
registration documents.
Vodacom will create an e-money dispersal account for a business. The
business needs to have an account with a bank, any bank, and be
registered and operating in Tanzania.

7. Does your system allow for dual authorization, much like a check requiring
two signatures?
Airtel:

Airtels system has a provision for maker and checker in the batch
creation module. The maker has to log in with the username and
60

password credentials and the checker is required to do the same prior to


any payment disbursement.
Airtels system also has the option of dual authorization parameters for
payments that are channeled through the GUI. Payments will be
processed only after both authorizers have approved.

Tigo:

Tigo provides a maker /checker functionality to require dual


authorization.

Vodacom:

Vodacoms system has a maker-checker functionality whereby one


person cant approve or withdraw money from M-Pesa account for
business. The maker and checker should have different roles or capacity
within the organization Finance Officer vs. Senior Finance Officer.

8. What is your customer care policy for corporate clients?


Airtel:

Airtel does not have a stipulated customer care policy. Airtel does offer
corporate customers front line support by assigning each corporate
account a dedicated Key Account Manager to whom all queries and
concerns can be raised.

Tigo:

Tigo has a corporate sales division that assists in any high level queries
from organizations. Tigo also has a customer care department to resolve
any issues experienced in the market.

Vodacom:

Vodacom has a special desk within Vodacom dedicated to dealing with


corporate clients.
Each business client is assigned a business relationship manager.
61

9. What level of support are you able to provide in terms of training, setting up
new internal procedures, and reconciliation of accounts?
Airtel:

Airtel offers full support to corporate customers through its Key Account
Manager (KAM). The KAM is responsible for setting up the corporate
account, training, and is empowered to address queries related to
reconciliation based on the reports that are system generated. In
addition, all other errors or difficulties faced by corporate clients when
using the Airtel Money application can be addressed to their KAM.

Tigo:

Tigo provides organizations and their relevant teams with the necessary
support and training to effectively perform the bulk disbursement
transactions. Tigo also provides the necessary reports to effectively
reconcile accounts.

Vodacom:

Vodacom training is conducted for all account users after setting up an


account for an entity /organization. M-Pesa provides an audit trail report
so its easy to reconcile the account by either exporting the file to excel or
in a PDF format

10. What kind of report is available for bulk payments transactions? How long does
it take to get the report of transactions?
Airtel:

Airtels system generates comprehensive reports detailing time,


reference ID, source #, destination #, balance before, balance after,
amount transacted, reference and status. The reports are available from
the GUI in real time and can be retrieved as and when the corporate
entity chooses. The transaction reports can be run to pull transactions
over a 31-day period. These reports can further be exported to Excel,
html,CSV and PDF.

Tigo:
62

Tigo provides normal summary and detailed reports on transactions


detailing dates, amounts and recipients for both completed and failed
transactions.

The reports can be requested through Tigos web interface and are
immediately available on the platform.

Vodacom:

Vodacom keeps a record of the uploaded bulk file remains in its system.
Organizations can choose the timeframes to view transactions. Vodacom
also can generate reports to view individual transactions.

11. Once the corporate client transfers money from a bank account to the Mobile
Money account, when are the funds available to make a bulk payment?
Airtel:

The availability of funds on Airtels system for bulk payments depends on


the originating banks for the funds. At times, it can take up to forty-eight
hours from the time the transfer is made from a bank account to a mobile
money account and is accessible to the corporate client to make bulk
payments. This timeframe can be significantly shorter depending on the
sending instructions, time and the originating bank for the funds. The
best-case scenario is six hours if the funds originate from a different bank
and are transferred to a bank holding a Airtel trust account. For accounts
within the same bank as an Airtel trust account, funds can be reflected
within two hours of transfer.

Tigo:

The availability of funds on Tigos system for bulk payments depends on


the originating bank for the funds. Typically, the process takes six hours
or less for cash deposits and intrabank (within the same bank) transfers.

Vodacom:

Vodacom monitors its accounts every two hours for deposits. Vodacom
recommends corporate clients notify M-Pesa when a deposit has been
made for ease of tracking. The availability of funds on Vodacoms system
for bulk payments depends on the originating bank for the funds.
Typically, funds are available within twenty-four hours.
63

12. What policies do you follow to comply with Know Your Customer (KYC)
requirements and to monitor transactions for possible money laundering?
Airtel:

Airtel has a compliance manager whose duty, amongst others, is to


ensure compliance with KYC standards. Airtels KYC procedures include
registering each individual with a SIM card through presentation and
review of a valid ID document.
Airtel has a division of revenue assurance that is mandated to monitor
suspicious transactions and administer procedures against any perceived
money laundering activities. Airtel imposes a daily transactional limit for
individuals to as part of its anti-money laundering initiative.

Tigo:

Tigos mobile money platform has AML (anti-money laundering) tools


embedded that comply with international AML standards and applicable
AML and KYC guidelines for mobile remittances.

Vodacom:

Vodacom has a policy of AML awareness and performing AML testing.


Before opening an account Vodacom screens the prospective business
customers to make sure they are reputable.

Agent Networks

13. How many agent locations do you have? How many are active (have completed
a transaction in the last 30 days)? Why is there a discrepancy between these
two numbers?
Airtel:

Airtel has approximately 22,000 agents countrywide of which


approximately 19,000 are active. The reason for this discrepancy is
64

Airtels definition of active as an agent that has completed a transaction


within the past 30 days and Airtels definition of agent which includes all
agents registered on Airtels system.
Tigo:

Tigo has a total of 15,000 agents of which 13,000 are active.

Vodacom:

Vodacom has approximately 43,000 M-Pesa agents of which 39,000 are


active. Vodacoms attributes the inactivity of agents to a variety of
reasons such as closure of other physical business, inefficient
management of M-Pesa capital, lost / damaged SIM cards (which is
considered the agent's "teller").

14. How do you address issues of agent liquidity, especially in rural areas?
Airtel:

Airtels most immediate solution for agent liquidity is to partner with


commercial banks that serve as super-agents for the provision and
exchange of cash for float and vice versa for the agents. At the time of the
workshop, Airtel had partnered with five commercial banks and was
working on adding two more commercial banks with extensive branch
networks at the district level.
Airtel also uses aggregators linked to its agents. The aggregators role is,
amongst others, to ensure that each of the agents in their designated area
of responsibility have sufficient float and cash holdings to serve the
customers.
Airtel uses a monitoring tool to generate a summary of agents activity
including agents float and transactions. This tool enables Airtel to
identify agents who are not transacting and target visits by Airtels area
representative, to assist in float replenishment and addressing the agents
challenges.

Tigo:

Tigo manages agent liquidity by working with cash partners including


banks and other 3rd party institutions.

65

Vodacom:

Vodacom has recruited super-agents with good peri-urban and rural


presence, for example banks like CRDB, Tanzania Postal Bank, Bank of
Africa etc. Vodacom is in the process of also recruiting National
Microfinance Bank as a super-agent network to improve agents access to
float.

Rural Coverage

15. Do you have any specific products or partnerships in place to support farmers
and/or agricultural value chains?
Airtel:

Apart from Airtels bulk payments platform and alternative collections


functionality, Airtel does not have specific products and/or partnerships
for farmers or agricultural value chains. However Airtel is in extensive
discussions with stakeholders in the industry with the intention of
shifting payments from cash to mobile money.

Tigo:

Tigo has launched the M-Farmer product a Tigo initiative supporting


farmers in Tanzania.
Tigo is also working with the Cherie Blair Foundation and its investment
in bringing mobile technology to rural women

Vodacom:

Vodacom is working with farmers and the agriculture sector through its
work with Care International and the Village Savings and Loans groups in
Arusha.

16. If an organization is working with rural populations, farmers, or agribusinesses operating in areas without coverage, is it possible for you to increase
coverage? If yes, how fast can we expect increased coverage?
Airtel:

66

Regarding mobile network coverage, Airtels decision on adding


additional mobile towers will rest entirely on the business justification
for incurring the capital cost of putting up a new tower. Currently,
Airtels is likely to encounter delays in making decisions on new towers.
At this stage, Airtels mobile network has extensive rural coverage with
100 exclusive rural sites and a network that covers 85% of the total
population.
Regarding coverage and availability of agents, Airtel is able to recruit new
Airtel Money agents relatively quickly with a maximum duration of 8
weeks from the time Airtel is notified of the organizations requirements
for an agent location.

Tigo:

Tigo will expand coverage based on the results of a demand and


feasibility study.

Vodacom:

Vodacom will expand coverage based on business viability. For Vodacom


to build the business case and obtain board approval takes a minimum of
six months.

Troubleshooting

17. How can the payer recover funds sent to the wrong account? How long does
this process take?
Airtel:

Airtel requires that the payer notify Airtel of the transaction details
immediately upon discovery that the funds were sent to the wrong
number. The reversal can take up to seven days subject to compliance
with Airtels internal process for reversals of incorrect payments.

Tigo:

Tigo handles recovery of funds through its corporate sales team or


customer care. Typically it takes approximately forty-eight hours,
67

provided that the funds have not yet been cashed out. Tigo usually
requires permission to return funds from the unintended beneficiary
similar to the process for reversing an incorrect bank transfer
Vodacom:

Vodacom requires that the payer immediately report the error to


customer care. Upon report, the transaction will be blocked immediately
and reversed within twejt7-four hours.

18. What kind of fraud is common in your business? How have you or are you
seeking to minimize the risk of fraud?
Airtel:

At the consumer level, the most common fraud experienced by Airtel is


SIM swapping which entails regenerating a SIM card belonging to a client
with the intention of gaining access to the funds in the mobile wallet.
Airtel mitigates this risk of fraud through multiple authorizations levels
for SIM cards with mobile money balances in excess of 8,000 Tsh (4.93
USD). Furthermore, SIM swaps can only be done with proper
documentation.
For the corporate account, SIM swaps cannot be done as the numbers are
placed in a special category, which results in no physical number instead
the number is on a virtual platform and blocked from the SIM swap
functionality.

Tigo:

Typically the most common type of fraud encountered by Tigo is some


form of identity theft that typically materializes when the users PIN
(Personal Identification Number) has been compromised in one form or
another.

Vodacom:

Vodacom has no reported incidences of fraud in its business accounts.


Misdirected payments that have occurred are attributable to the sender
within an organization sending the funds to an unintended recipient and
money being withdrawn.

Regulation and Oversight


68

19. Who regulates mobile money?


The National Payments Group in the Bank of Tanzania regulates mobile money
products

20. What is the current status of regulations?


Mobile money operators are currently operating under guidelines issued by the National
Payments Systems (NPS) team at the Bank of Tanzania (BoT). Currently, all MNOs that
are operating mobile money services have partnered with a bank to establish an escrow
holdings account and have received a letter of no objection from the BoT. Under this
letter, the providers report monthly to the BoT on transaction volumes, amounts,
number of customers, and number of agents. The official regulations, which sit under
the NPS Act, are expected to be approved by the Minister of Finance by July 2013.

Additional Products and Services

21. How can a corporate account receive funds from an individual (i.e. C2B)?
Airtel:

Airtel enables corporate accounts to receive funds through a mobile


wallet to mobile wallet transaction similar to a corporate to person
transfer.

Tigo:

Tigo provides cash collection by corporations through their Tigo account


via bill payment or merchant functionality on the Tigo Pesa platform.

Vodacom:

Vodacom requires corporations to open a separate account to receive


C2B payments.

69

22. Are there any plans to develop applications for smartphones, such as Android
or iOS?
Airtel:

Airtel does not have any immediate plans to develop applications for
smartphones, however, it does not rule out the possibility of development
subject to customer demand and requirements.

Tigo:

Tigo is in the process of developing smartphone applications.

Vodacom:

Vodacom does not have any plans, at the moment, to develop smartphone
applications.

23. Do you provide a function that enables the payer to restrict funds to certain
uses (in other words, do you offer coupons or e-vouchers?)
Airtel:

Airtel does not currently provide functionality to restrict funds to certain


uses.

Tigo:

Tigo does not currently provide functionality to restrict funds to certain


uses. The Tigo product is designed to mirror the same functionality you
would expect from cash and the currency can be used for any purposes
the recipient wallet authorizes.

Vodacom:

Vodacom does not currently provide functionality to restrict funds to


certain uses.

Appendix 1: Tariff Sheets of MNO mobile money products


Airtel Money:
70

http://www.africa.airtel.com/wps/wcm/connect/africaairtel/Tanzania/AirtelMone
y/get_airtel_money/tariff/
Tigo Pesa:
http://www.tigo.co.tz/pesa_tariffs.php
Vodacom M-Pesa:
http://www.vodacom.co.tz/vodacom-m-pesa/customer-tariff

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