Who get the money matters: Can cellphones make remittances more efficient? By Oscar Barriga-Cabanillas

As part of my current research as a Ph.D. student in UC Davis, I spend a few weeks in Haiti studying the role remittances play in the financial security of Haitian households. The objective of my visit was the establish the potential impact of a remittances services that delivers the money directly to the user’s mobile phone savings accounts.

I was surprise by how advance mobile money is in Haiti. It offers a wide range of services that are beyond what is offered in any other Latin American country. Mobile money, in Haiti known as MonCash, can be access in small shops. Shops that are part of MonCash network act as an intermediary between the customer and the mobile company. They sell merchandise and provide MonCash services to attract visitors to the shop. The convenience of mobile money does not stop with the availability of a large network of agents that can be used to deposit and withdraw funds, in country where bank branches are difficult to find. The real advantage is the security it can provide to users, as they can carry money in the mobile wallets, transfer money between them, and pay for goods and services. 

Two examples of MonCash agents. Small shops that sell merchandise, but act as agents to attract customers.

As part of the expansion plan, the mobile company will start allowing remittances from abroad to the mobile money wallets. We believe this new service can have potential impacts beyond an increase the convenience since it avoids lines in the transfer bureaus. For example, we think that the capacity to transfer smaller amounts to specific people in a household, and soon, direct payment of services from abroad, like school fees, will increase the willingness of sender to transfer more money.

We conducted a series of Focus Groups (FG) know who receive transfers, and how this money is used. Finding recipients to interview was not a difficult task. Because of the economic performance of the economy, and the constant political instability, a large diaspora exists in the United States, the Dominican Republic, and France, and it is not an overstatement to say that every family has a member abroad.

Around 70% of participants in our FG receives remittances. However, we found that there are two types of recipients. A first group, is composed of people that have a dependency relation with someone abroad, they receive remittances on a regular fashion, usually once a month. A second group, is made of people that do not have a dependency relation with someone abroad, but still receives transfers from family or close friends only in times of need or special occasions.

We believe that the second group has very little power over the way the money is send, with all the potential adoption impacts of mobile transfers in the first group. From the discussions, we learnt that people that receive infrequent transfers have very little power over the amount, or service used to send the remittances. Whereas, people that receive remittances frequently can influence the sender by providing them with their opinions on quality of the service of the transfer bureau used. It is in this group that the flexibility mobile remittances offer can have larger potential impact in terms of amounts sent to a wider number of household members.

Participants in some of the Focus Groups.

Some challenges and unanswered questions still exist. People have a strong preference to keep the transfer in dollars. Not converting the money into Haitian Gourde is perceived as a way to save by avoiding casual spending. The high variability of the exchange rate adds to this problem. At the same time, household power relations can be affected by decentralizing the administration of remittances. Right now, there is not a culture of dividing the money among different intended beneficiaries. In general, the person that withdraws the transfer administers it providing smaller amounts to other members of the household as he sees the need to, but not because an obligation or agreement exists with the sender.

Once the service is launch, we will go back to find the answer to these questions. In the meantime, my next blog will discuss some of the challenges and solutions we had, when trying to find the right sample of people for the FG.