Improving Public Service Delivery with

Mobile Payment Solutions

April 2013

Policy Brief:

Summary

Background

Financial Sustainability

Mobile-enabled payment methods are being used to facilitate revenue collection in public

service delivery. There are significant implications for governance, financial sustainability,

and the ease of payment for customers. Mobile options create a new context for the

improvement of water service provision specifically and public service delivery in general.

The water utility in Dar es Salaam, Tanzania

introduced mobile-enabled payments for water

services in 2009. In addition to area water offices

and bank branches, customers can now pay their

water bills using mobile money services, mobile

banking channels, and networks of wireless pay

points.

The system in Dar es Salaam is comprised of the

water utility, telecommunications companies, and a

third-party aggregator that connects all entities.

When a customer makes a payment using their

mobile phone or at a wireless pay point, these

payments are channelled through the third-party

company which then aggregates the respective

payments that are made to the utility and the

telecoms.

At the end of 2011, over 25% of customers had tried

these novel methods and over 15% of all payments

were being made via mobile money and wireless

pay points. Additional services were introduced in

2012 and the utilisation of these options continues

to increase. Little knowledge exists, however,

regarding the impacts of mobile-enabled payment

methods on water services provision

At the end of 2011, over

2255%% of customers had tried

mobile methods and over

1155%% of all payments were being made via

mobile money and wireless pay points

Issue:

Water providers often

struggle to collect

sufficient revenues to

cover their monthly

and annual costs of

service provision.

Key Findings:

Mobile payment innovations contribute to

greater annual revenue collection per

customer.

Customers using mobile payment innovations

make more payments per year.

Mobile payment innovations do not influence

payment timeliness.

Recommendations:

Raise customer awareness

of mobile payment methods.

Facilitate the establishment

of mobile-enabled payment

services.

Do not rely on mobile

methods to improve

monthly cash flows.

Professor Xiaolan Fu Technology and Management

for Development Centre

University of Oxford

Aaron Krolikowski mobile/water for

development (mw4d)

University of Oxford

Dr. Rob Hope mobile/water for

development (mw4d)

University of Oxford

Governance and Citizen Empowerment

Customer Choice in Household Finance

Engaging Target Populations

Moving Forward

Issue:

Corruption, a lack of

transparency, and

limited accountability

are common

characteristics of

urban water providers

in low-income

countries.

Key Findings:

Mobile payment innovations generate reliable

data that improve transparency.

Electronic payments remove opportunities for

petty corruption.

Mobile technologies give citizens power to

hold service providers accountable.

Recommendations:

Establish education

programmes for water

utility employees on the

operations of mobile-

enabled payment options.

Use data generated by

mobile payment methods to

support higher-quality

decision-making.

Issue:

Irregular incomes and

under-the-mattress

storage of money

prevent the ability of

customers to make

monthly payments.

Key Findings:

Mobile money services offer effective and

secure methods of storing money.

Customers using mobile payment innovations

are more likely to make multiple payments

each month.

A large percentage of customers need to save

each month to pay their water bills.

Recommendations:

Develop long-term

payment plans to enable

access by low-income

families to new connections.

Support customer

payment practices that

involve splitting monthly

bills into multiple payments.

Issue:

There is virtually no

information on which

customers are more

likely to use mobile-

enabled payment

methods.

Key Findings:

Water utility customers are socioeconomically,

geographically, and demographically diverse.

Lower-income customers are more likely to

use wireless pay points, while mobile money

payers are wealthier and tend to be well-

educated.

Recommendations:

Gather small amounts of

data on customers that opt

to use various methods.

Develop SMS-based

campaigns to encourage

use of appropriate options.

Mobile-enabled payment methods are still in the early stages of growth and adoption. Understanding how mobile

technologies are shifting key interactions within the water sector, particularly between customers and utilities, is

essential if future uses of mobile payment innovations will be effective. Revenue collection, governance, and household

financial management can improve through the use of these options, but only in proper institutional, political, and

regulatory contexts. This is an exciting opportunity to affect positive outcomes in public sectors that have been

characterised by chronic underperformance.

Acknowledgements

Thanks to Eng. Jackson

Midala and Mr. Kiula Kingu

for their assistance on this

project.

Funding

Funding for this project was generously provided by the Skoll Centre

for Social Entrepreneurship (Saïd Business School, University of

Oxford), Green Templeton College, and the Clarendon Fund.