Institute for Money, Technology and Financial Inclusion

Over the past decade, mobile phone-enabled financial services, such as those made famous by the Kenyan mobile money platform M-Pesa, have been heralded as a means of poverty alleviation andfinancial inclusion. The mobile platform represents an exciting possibility as a delivery channel fordigital financial services and as a technology that, like money, connects people with one another. Yet mobile money deployments around the world have not had unequivocal success. In this working paper, we survey lessons from the first decade of research into mobile money, focusing on anarchive of studies produced by fellows funded by the Institute for Money, Technology and Financial Inclusion (IMTFI), based at the University of California, Irvine. We describe mobile money’s primary use case—P2P money transfer—and argue that both the “Ps” and the “2s” of this model (mobile money’s “peers” and the technological and social infrastructures that intermediate them) must be understood in context. We then outline ten insights from the IMTFI research archive that demonstrate the contextual complexities involved in introducing and scaling mobile money,including discussions of: agent networks; physical infrastructure; location, place, and space; kinship and family; gender and gender inequality; class, caste, and rank; religion and ritual; time and tempo;government and regulation; and the persistence of both cash and non-currency stores of value. We conclude by raising issues that promise to be critical provocations for the next decade of mobile money research, making an argument for methodological diversity, and interrogating the limitations of the “financial inclusion” frame within which mobile money has been situated as a development intervention. If mobile money is, at its core, a technology of communication and circulation, it is also a central means of distribution and redistribution. What would it mean, then, to shift the conversation from debates over financial inclusion to questions about financial justice?

Over the last decade there has been a revolution in payment technologies. Digitization of bank accounts, new digital payment applications, and an array of new kinds of financial products and services have opened up a wide range of choices for storing, saving, sending, and receiving money. Digital finance has become an important tool in efforts to facilitate formalfinancial inclusion across the globe.

And yet, cash has also remained an essential tool for people’s financial practices and lives alongside these new payment forms. Evidence from both developing and developed payment markets shows that while digital payments may have increased exponentially, the demand for physical banknotes and coins has kept up with the pace of digital finance. Physical currency or physical accounting devices are ancient and crosscultural technologies, in continuous use since at least 1600 B.C. Aside from risks and benefits, they are wedded to an incredibly durable set of behaviors and social practices.

People use diverse payment methods (from cash, to cards, to payment applications and other alternatives) together. However, the ability to move between diverse payment forms, especially cash, has also featured prominently in criminal activities, including money laundering, tax evasion, and terrorist financing. This has led government authorities, law enforcement, and other entities to target cash in particular as the supposed core method – and problem – in such activities. The European Commission proposes to institute a cash transaction limit across the EU, claiming that it will prevent money laundering, terrorism, and crime. This follows the decision by the European Central Bank to end issuance of the 500 euro note beginning in 2018.

Why do financial intermediaries persist, despite the promises of disintermediation that accompanied the diffusion of digital technologies?Through a comparative qualitative study of financial intermediation in rural markets in Shan State, Myanmar, and Kerala, India, we map out and make visible official and unofficial roles played by different types of brokers (traders, hundi, transport companies, etc.), and different financial  tools (cash, gold, land, banks, etc.), and look at how information and communication technologies  (ICTs) fit in the interactions between the two. ICTs and human brokers perform functions that are sometimes  complementary, sometimes in conflict, and sometimes simply different from each other. In examining the range of roles that (human and non-human) actors and material practices that are involved in  conducting financial transactions have, we show the central role that historical legacies and politics play in explaining why both cash and financial intermediaries persist in the digital age. Focusing on the different values that human and non-human intermediaries bring to financial encounters helps explain what characteristics make each resilient or replaceable in a time of change, and furthers understanding of which of the many functions embodied by humans can be replaced or supported by digital technologies, and which ones are likely to remain the domain of humans. We conclude that the “expertise” inscribed into technological artifacts such as mobile phones tends to be fixed, whereas human expertise can be more flexible and quicker to react to changing political or economic situations.