Payment strategies for irregular income streams in the lower income demographic

Study goal: How do they manage their household finances on irregular income streams?

Study focus: Rural bop households in Philippines, India and (remotely) in Malawi

Study Findings: Actionable insights for business transaction models (design of products and services)

Seasonality

Lack of liquidity/rapid conversion of cash to goods

Increase span of control over timing and amount for the end user (why prepaid works)

Framing the problem correctly

What led to this research project – nicknamed “prepaid economy”

• Observed “failures” in the marketplace such as consumer durables purchased by time payments, health schemes, microfinance loans, insurance programs

• Problem statement: Inherent conflict between rigid payment plans and irregular income streams

• Yet prepaid models very successful – what can we learn about how and why they work to inspire better design of products and services for informal and cash based economy?

Exploratory Research using design ethnography methods

• Identifies gaps in existing solutions versus customer needs – unmet needs, inappropriate or insufficient solutions

• Uncovers opportunities for innovation

• Leads to insights for relevant and appropriate products, services and messaging

Sampling across a scale of uncertainty of income – time and money

Rapid prototyping in the field refines focus and orientation

Complex protocol distilled into to three and half simple questions:

• How do you manage your daily expenses?• What do you when there is an emergency?• How do you plan big ticket (expected) items – buying a

house, a funeral or a wedding etc?• And is there any influence of seasonality in your income

stream over the course of the natural year?

emerging futures lab

Narrow perspective, broad focus – regional clustering

Seasonality

emerging futures lab

Pattern recognition

Broader perspective but narrower focus – behavioural clustering

emerging futures lab

Stored wealth

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Stored wealth

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Cashless transactions

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Cashless transactions

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Investment

emerging futures lab

Investment

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Insurance

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Conversion to goods

emerging futures lab

Conversion to goods

emerging futures lab

Cooperative Economy

Niti Bhan

www.nitibhan.com

This research study was carried out with the aid of a grant from the iBoP Asia Project (http://www.ibop-asia.net), a partnership between the Ateneo School of Government and Canada's International Development Research Centre (www.idrc.ca)