Savings as Forward Payments: Innovations on Mobile Money Platforms

Presenting a framework for managing cashflows and savings from a single account
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This paper presents a new framework which allows people to manage their diverse payment, cashflow management and commitment savings needs simply and intuitively, from a single account. It builds on the logic of mobile money platforms, which provide customers with the ability to initiate real-time electronic payments from their mobile phone and to keep funds in a store-of-value account.The authors state that by introducing the notion of forward (or deferred) payments, it is possible to create a much richer set of uses for the basic transactional account which cater to people’s need for commitments and ear-marking of funds for specific goals. It is functionally equivalent to a system where the customer can create multiple sub-accounts, but it is much easier to conceive and manage by the customer since it does not entail multiple account opening or multiple account numbers. The paper concludes with suggesting ten implications and extensions for the scheme/framework, some of which are:

  • No commitment by the saver to a second party. The individual is making his/ her own savings decision and savings are pure custodianship;
  • Emphasis of savings is on consumption possibilities and goals rather than time periods;
  • Provision of education about this savings product is less demanding than for most financial products because of the fact that there is no transfer of resources to others.