Agent liquidity is one of the most fundamental challenges mobile money providers face.  In order to be effective, mobile money agents have to have a fine-tuned understanding of their market, including an ability to predict when customers will come and what types and volumes of transactions they’ll want to perform.  This already difficult task is made all the more challenging when microfinance loan customers enter the equation, which is one reason why microfinance institutions (MFIs) and mobile money providers need to both understand one another and maintain clear, frequent communication. 

Like any mobile money customer, loan customers need to both cash-in and cash-out.  Unlike other customers, however, they receive one large payment upfront and then send frequent, smaller payments over the course of their loan lifecycle.  To serve these customers, mobile money agents need to have sufficient cash to cash-out at the time of loan disbursement (usually several hundred dollars per loan customer) and sufficient e-float to cash-in throughout the repayment period.  

In practice, the above proves too difficult for most mobile money agents, leading to disenchanted customers and a diminished value proposition.  Put simply, agents need help.  

For example, Kopo Kopo is currently working with an MFI and a mobile money provider in Sierra Leone.  Initially, most mobile money agents in Freetown were unable or unwilling to execute the necessary cash-in / cash-out transactions to serve their new microfinance loan customers.  As a result, the parties involved had to do the following: 

1.  Generate a list of top performing mobile money agents
2. Match each loan customer to the nearest mobile money agent
3. Generate a list detailing when and where loan customers would be transacting
4. Set up a system whereby the MFI shares an updated list with the mobile money provider on a daily basis 

Once the mobile money provider knew what was needed of its agents, it was able to ensure that they had the necessary liquidity.  As a result, everything began to go smoothly, prompting one happy loan customer (pictured here) to remark that repaying with mobile money was “more easy, more convenient, and less burdensome” than paying with cash.  

Mobile money and microfinance go hand in hand for a number of reasons: mobile money increases the efficiency, transparency, and security of microfinance; and microfinance lowers the customer acquisition cost and increases the average revenue per user of mobile money.  Nevertheless, everything hinges on the capacity of the mobile money agent network to serve microfinance loan customers.  

And that all boils down to good communication.