The modelling assumed a high rate of adoption of mobile payment systems. Known rates of mobile penetration in each market were used as a good indicator for the proportion of people with access to mobile phones. The frequency of transactions per month was based on a previous M-PESA study.
Mobile payment systems offer people without access to financial services an affordable and secure way to transfer and save money using their mobile phones. By enabling smallholder farmers to save small amounts of money, receive payments promptly in times of need and pay for agricultural goods via their mobile phone, mobile payment systems replace costly traditional transfer services and the need to travel long distances to collect funds. They also provide a secure means for employers to distribute wages to agricultural workers, and for governments and NGOs to ensure agricultural subsidies go directly to farmers.
Farmers simply register with an approved agent to use mobile payment systems. They can then pay in or make withdrawals, receive funds from members of their family living away from home, and pay for goods or services – all for just a small transfer fee. There is no time limit on funds in the system so smallholder farmers can accrue savings, helping them deal with the impact of unpredictable weather and crop yields. Migration from rural areas to urban centres is common in developing countries as people seek employment to increase their earning potential. In India alone, there are an estimated 100 million internal migrant workers.27 Rural communities can benefit from urban workers sending money home to their families. Mobile payments make these transfers faster, cheaper and more secure. Receiving timely one-off payments at critical times – to buy extra seed or other inputs for instance – can also improve farmers’ agricultural productivity and, in turn, their livelihoods. A 2008 study by the Consultative Group to Assist the Poor found that urban migrants from two Kenyan communities using the M-PESA system over 14 months had to make fewer home visits.28 Sending money directly via mobile avoids the need for farmers to travel long distances to collect payments, saving time and money, and reducing environmental impacts from transport. This could save an estimated 0.4 Mt of carbon emissions in 2020 from reduced journeys. Mobile payment systems give farmers a more secure way to pay for agricultural products and provide suppliers with enhanced reliability and traceability of payments. The service can also enable wages and subsidies to be transferred confidently and securely without the need for employers and government agencies to deal in cash. A key benefit to the recipient is that they get the full intended value without others making deductions. Empowering women with the ability to perform key financial transactions via mobile could also enable more efficient allocation of rural household spending.