Mexico’s digital money revolution
How the Prospera Digital e-banking program could put money in the hands of Mexico’s low-income families with just a few taps — and transform their lives in the process
Posted by Alanna Mitchell on June 20, 2017
Every two months, millions of Mexican women make a pilgrimage to travelling government caravans and other official gathering points to meet representatives who hand them envelopes filled with cash.
They do so as part of a national financial inclusion program called Prospera, which is designed to help low-income women feed, clothe and educate their children. And it is vast, supporting seven million women across 120,000 communities who collectively receive US$4 billion a year.
But why do they have to travel? Why not just wander down to the bank? About 5.6 million of the women are “unbanked” — they have accounts at Bansefi, the national savings and financial services bank of Mexico, but they live in rural communities where banks, automated tellers and even point-of-sale terminals don’t exist.
The process to get the money to the women is expensive and time-consuming, both for families and for the government. Women often spend money on buses to collect their cash. Not only that, but many women fear that they will be robbed or attacked once they have it.
The solution is digital money, says Gloria Mayne Davó, a program coordinator based in Mexico City with DIRSI, a regional organization that conducts research on information and communication technology policies and regulations and their impact on poverty. DIRSI is working with the office of Mexico’s President Enrique Peña Nieto to determine how to get the money to women more safely, cheaply and easily via a program called Prospera Digital. While rural communities don’t have banks, many do have mobile phone coverage, and some families already have mobile phones. That means, if trained, the women could collect Prospera benefits as electronic payments.
But how to nudge them in a cashless direction?
With a starting grant last year of $178,000 from the International Development Research Centre, DIRSI began to assess what it would take to help the women use digital banking systems.
That meant looking at other countries, including Paraguay, Colombia, Chile and Peru, to see how e-banking was working there. It also meant mapping the areas in Mexico that have mobile coverage and identifying small businesses that could serve as cash points, as well as figuring out the cultural barriers to e-banking.
A key was that the women tend not to trust the government and its services. They fear that the government will be able to track their electronic spending. Some also have trouble conceptualizing the idea of electronic money compared to cash in hand.
For example, the 1.5 million Prospera beneficiaries who live in or around cities and get their money from banks or automated tellers tend to withdraw all their money in one fell swoop, six times a year. Cash is king.
“They’re afraid that they’ll turn on the phone and the money won’t be there,” says Ben Petrazzini, a senior program specialist at IDRC in Uruguay. “Once we have some of them using it and relying on it, they’ll see it’s safe.”
The second phase of the program is a pilot project, supported by a $750,000 IDRC grant, that’s focused on two things: helping 30,000 of the urban women who already use debit cards to switch to mobile banking and helping a select sample of women in rural and semi-urban areas who currently receive cash transfers switch to debit and mobile banking. The goal is to extend the pilot project to some of the 5.6 million rural women in the Prospera program by early 2018. Overall, the plan is to show by the end of next year — when the presidency changes — how the digitalization of Prospera could benefit all seven million women. “We want it to become part of the core DNA of Prospera,” Davó says.
But it’s not just about money. Prospera Digital is also ultimately about helping low-income women gain digital skills and become more financially literate. Doing so could open other possibilities. Over time, Prospera Digital could help women save money, change their spending patterns and maybe even open a line of micro-credit to start a small business.
It’s a strategy that has worked in other countries, Davó says. In Kenya, where low-income families have embraced the digital banking concept, rates of poverty have fallen, women have gained more control over family finances and some have begun businesses, she says.
“It’s the gateway to digital life,” says Petrazzini of Prospera Digital’s potential. “It opens up a whole new world.”
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This is part of an ongoing series of stories on international development projects supported by Canada’s International Development Research Centre, presented in partnership with Canadian Geographic. The stories appear online once a month at idrc.canadiangeographic.ca.
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