Published by Electronic Payment International, March 2012
The earthquake-stricken Caribbean island of Haiti is the location for an innovative mobile money service which is bringing financial inclusion to the unbanked. Robin Arnfield reports.
In November 2010, Canada’s Scotiabank, Caribbean telco Digicel and Latin American mobile banking and payments software firm YellowPepper launched the TchoTcho Mobile service in Haiti.The mobile wallet service, which as of March 2012 is run by a network of 960 agents, enables Haitians to carry out cash withdrawals, deposits and person-to-person transfers via their mobile phones, without needing traditional bank accounts.
YellowPepper supplies and manages the agent network, the IT infrastructure and payments software for TchoTcho Mobile. Scotiabank, which only has four branches and four ATMs in Haiti, is responsible for registering agents and for ensuring compliance with Haitian financial regulations. Prior to the launch, Scotiabank, YellowPepper and Digicel ran a pilot with World Vision, involving 160 of the charity’s employees using TchoTcho Mobile for cash-for-work payments. Cash-for-work involves NGOs (non-governmental organisations) hiring labourers on an occasional basis.
According to USAID (U.S. Agency for International Development), only 10 percent of Haitians had bank accounts in 2011, although 80 percent of households have access to a cellphone. After the January 2010 earthquake, a third of Haiti’s bank branches were destroyed, which further weakened financial inclusion.
“We currently have 500,000 users of TchoTcho Mobile,” says David Sharpe, Digicel Haiti’s head of products and pricing. “Since Digicel has 4 million cellphone subscribers in Haiti, this means that one in eight of our customers is a TchoTcho Mobile user.”
“TchoTcho Mobile processed 6 million transactions in 2011,” says Kareem Aziz, an investment officer in the Telecoms, Media and Technology Unit of the International Finance Corporation’s (IFC) Global Infrastructure Department. The World Bank subsidiary made an equity investment in YellowPepper in 2010, and has provided funding for Digicel’s mobile infrastructure in Haiti and other countries where Digicel operates.
“We have seen up to 300,000 transfers per month via TchoTcho Mobile,” a Scotiabank spokesperson says.
“The growth in subscribers and transactions is very impressive, given that full rollout of TchoTcho Mobile only took place in April 2011,” says Aziz. “TchoTcho Mobile has more agents than the formal Haitian banking system has bank branches. There are an estimated 200 bank branches and 200 Western Union offices in Haiti. What TchoTcho Mobile offers in Haiti is cutting-edge technology in a very poor environment. Mobile banking isn’t a necessity in a country such as the US, but it is a necessity in Haiti, due to the lack of other alternatives. For example, it’s very important for people working in Port au Prince to be able to send money electronically to their families elsewhere in the island.”
Digicel has around 70 percent of the Haitian mobile phone market. “Digicel’s goal is for one in two of its Haitian GSM subscribers – i.e. 2 million Digicel subscribers – to sign up for TchoTcho Mobile,” Sharpe says. Digicel, which operates mobile phone networks in 31 countries in the Caribbean, Central and South America, and the South Pacific, provides mobile money services in four other countries apart from Haiti, says Sharpe.
Two types of account
“TchoTcho Mobile offers two types of account, both of which function as mobile prepaid debit cards,” says Sharpe. There is no cost to open either account or for depositing cash, and transaction fees for cash-out, transfers and point-of-sale payments are very low.
“The basic account has a maximum account balance of HTG 4,000 (US$100),” Sharpe says. “To open a basic account, you enter *202# on your handset and select a PIN, and there is no requirement for identity documents when you deposit your funds at an agent location.”
The other type of account has a maximum account balance of HTG 10,000 ($250), and requires users to provide a national identity document such as an ID card, passport or driver’s licence when they open the account.
Users are required to provide ID when taking more than HTG 4,000 ($100) out of their basic or full accounts. The maximum daily transaction total for the basic account is HTG 4,000, while for the full account the total daily limit is HTG 20,000 ($500) and the total monthly amount is HTG 60,000 ($1,500). The maximum value per transaction on the full account is HTG 10,000.
These maximum amounts are in compliance with the transaction limits stipulated in the mobile money framework established in September 2010 by La Banque de la République d’Haïti (the Central Bank). Another requirement of the framework is that participating banks must take full fiduciary responsibility for mobile money services, including the approval of agents, says‘Haiti Mobile Money,’ a case study by US-based consultancy Dalberg Global Development Advisors.
There are two categories of TchoTcho Mobile agent, super-agents and standard agents. Sharpe says that 15 percent of TchoTcho Mobile’s agents are super-agents.
“Super-agents provide e-money to agents, have a relatively large start-up capital, are usually established enterprises and must keep enough cash on hand to execute transactions for agents and TchoTcho Mobile clients,” a Digicel presentation about TchoTcho Mobile says. “Their daily transaction limit is HTG 1 million ($25,000). Standard agents register and‘train’ new TchoTcho Mobile clients, and perform cash-in and cash-out transactions. Their daily transaction limit is HTG 200,000 ($5,000).”
Currently, a large number of TchoTcho Mobile users are concentrated in Port au Prince. “The challenge is to get more transactions from users across Haiti, so that our agents are incentivised to hold more liquidity,” says Serge Elkiner, YellowPepper’s CEO and co-founder. “The more people use TchoTcho Mobile for cash-in and cash-out, the greater the incentive for our agents to be liquid. They will hold cash in their stores if they know TchoTcho Mobile users have a demand for it.”
TchoTcho Mobile offers payroll and cash-for-work payment services to NGOs, private businesses and the Haitian government, enabling them to pay workers direct via the mobile money service. In addition, TchoTcho Mobile offers domestic P2P transfers, bill payments to registered billers, and airtime top-up for Digicel accounts at a discount.
Instead of using SMS text messaging, TchoTcho Mobile uses Unstructured Supplementary Service Data (USSD), a protocol which enables GSM-based cellphones to communicate in real-time with a service provider’s computers.
“We currently have four billers signed up for our bill payment service, including a catalogue company that customers can pay via TchoTcho Mobile for their catalogue purchases,” says Sharpe. “We have more billers waiting to join.”
“More than 1,000 people per month are receiving their pay through Tcho Tcho Mobile,” the Scotiabank spokesperson says. “There are around 3,000 retail locations in Haiti where you can buy goods and services using Tcho Tcho Mobile payments.”
A market that Digicel intends to tap for TchoTcho Mobile is conditional cash transfer payments, where NGOs or the Haitian government disburse cash to social welfare recipients, provided they meet certain criteria. “Conditional cash transfer is still embryonic in Haiti, and is in the process of being rolled out by NGOs,” says Sharpe. “But we think that conditional cash transfers will be a very big part of TchoTcho Mobile’s business model in the next few years, and could potentially be our number two revenue-generator. We have had a lot of interest from NGOs and government programs in Haiti about using TchoTcho Mobile to make conditional cash transfer payments to recipients’ cellphones.”
Sharpe says that, having originally launched TchoTcho Mobile with Scotiabank, Digicel intends to widen the number of banks that it works with. “Our goal is to have a multi-bank model,” he says. “We are planning to sign up five other banks, all of which are local Haitian banks.”
“We have a switch in our platform in Haiti which enables the banks taking part in TchoTcho Mobile to be inter-operable,” says Serge Elkiner, YellowPepper’s CEO and co-founder. “But this switch only works inside TchoTcho Mobile.”
Currently, there is no interoperability between Haiti’s banks, although the country’s Central Bank is in the process of implementing a national payments switch, according to Dalberg.
The Central Bank’s regulatory framework for mobile money services includes a requirement that rival m-wallet services should be interoperable. Dalberg says that a truly interoperable mobile payments architecture will take time to develop in Haiti, because of the need for rival schemes to achieve technical alignment between their platforms. “As a result, requirements for interoperability currently are not being enforced in Haiti,” the consultancy says.
“In April 2012, Digicel and one of our new local Haitian partner banks will trial a service enabling TchoTcho Mobile users to receive international remittances,” says Sharpe.“This bank owns an international remittance business. The plan is to launch an international in-bound remittance business for TchoTcho Mobile in summer 2012.”
Several of the other Haitian banks that Digicel intends to partner with, have international money transfer licences, as well as current arrangements with international remittance companies. Sharpe says that Digicel wants to offer international mobile money transfer services with these banks, but that it will need to set up separate integrations with the banks and their international remittance partners.
“Digicel’s five new bank partners are looking to offer loan accounts and savings accounts on TchoTcho Mobile,”Sharpe says. Another advantage of working with these banks will be that they are keen to increase the number of registered TchoTcho Mobile agents in Haiti, and are flexible about the registration process.
“As we get into the payroll and cash-for-work markets, then we need to have a wider cross-Haiti agent network,”says Sharpe. “To become a TchoTcho Mobile agent or a merchant or biller who accepts TchoTcho Mobile payments, you need a bank account with a TchoTcho Mobile partner bank.”
“In summer 2012, TchoTcho Mobile will offer microinsurance, loans, savings accounts and conditional cash transfer programs,” says Sharpe. “We will also be focusing on B2B market, for example food distributors and soda bottle refilling companies that send out drivers to bars to collect empty bottles and restock with filled bottles. We will offer TchoTcho Mobile payments to these firms, which means that their delivery drivers won’t be accepting cash payments and run the risk of being robbed. Another benefit of using TchoTcho Mobile for the food and beverage companies is that they will get an electronic timeline of when their drivers delivered their goods to merchants.”
“YellowPepper’s plan is to offer mobile banking services in Haiti in partnership with TchoTcho Mobile to consumers who have bank accounts,” says Elkiner. “They would not sign up for a TchoTcho Mobile wallet, but would use YellowPepper’s mobile banking platform to make payments out of their bank account. They would also be able to deposit and withdraw cash from their accounts at agent locations via TchoTcho Mobile.”
The mobile banking service would be branded as TchoTcho Mobile, Elkiner says.
Haiti’s other mobile money service is T-Cash (telephone cash, and referred to in Creole as Ti-cash, or petty cash), provided by Haitian bank Unibank and Voilà, a subsidiary of Seattle, Washington-based Trilogy International. Trilogy also owns mobile carriers in the Dominican Republic, New Zealand and Bolivia.
T-Cash, which uses mobile wallet technology from US-based MoreMagic Solutions (which agreed to be acquired by Oberthur Technologies in February 2012),was launched in December 2010 following a nine-month trial with US-based NGO Mercy Corps.
Voilà customers are able to activate the T-Cash service by entering *700# on their Voilà phone and can deposit up to HTG 2,500HTG ($62.50) in their mobile wallet at an agent location.
According to Trilogy, as at October 2011, T-Cash had 300,000 registered users who had conducted 3 million payments transactions on their Voilà phones, and 1,100 T-Cash agents and merchants. Voilà provided payroll services to 20,000 people in partnership with NGOs such as Oxfam, World Vision and Mercy Corps as at October 2011.
Both TchoTcho Mobile and T-Cash have benefited from the Haiti Mobile Money Initiative (HMMI), an incentive fund established by USAID and the Bill and Melinda Gates Foundation to encourage Haitian mobile carriers to launch mobile money services. To qualify for funding, carriers have to actually launch mobile money services and achieve specific rollout criteria.
In January 2011, TchoTcho Mobile received $2.5 million in funding from the HMMI, and T-Cash received $1.5 million in July 2011. A further funding round is expected to take place in 2012.
Transferring airtime to Haiti
“Haiti is a massive market for transferring mobile airtime top-up from the US,” says Eric Barbier, CEO of TransferTo, a subsidiary of payments terminal vendor Ingenico. TransferTo provides cross-border mobile airtime top-up services globally.
“After the 2010 earthquake, we saw a big rise in airtime transfers to Haiti,” Barbier says. “Despite its small population, Haiti is among the top five country destinations for international airtime transfers.”
Barbier says that the average airtime amount transferred via TransferTo to Haiti is $6. “People send airtime to Haiti on average 3.4 times a month,” he says.