Country: Samoa

Key institutions: Vodafone, Digicel

Introduction

The World Bank estimates that 82 per cent of the population live in rural areas.[1] Remittances are an important part of Samoa’s development as it is in the top ten countries that rely on migrant remittances making up 32 per cent of Samoa’s GDP.[2] Ensuring access to low-cost digital payments are important, and this is especially true for poor Samoan families who are more likely to rely on remittances. 98 per cent of the population in Samoa has mobile phone coverage, which is the highest in the Pacific region, and 71 per cent of the population use a mobile phone with an equal distribution between men and women. This means Mobile Money Transfer Operators (MTO) are an ideal platform for remittance payments.[3] Samoa has only 4 commercial banks, 25 banking branches, and 14 money transfer operators meaning accessibility is the biggest barrier to financial inclusion in the country.[4]

Intervention

Mobile wallets by telecommunications companies Vodafone and Digicel have become Samoa’s solution to low-cost payments that serve both the banked and unbanked populations. The strong competition between these products has resulted in less expensive mobile data and phone packages.[5]

M-Tala is a Vodafone-powered mobile money transfer product that enables utility payments, Echarge for mobile phones, can enable business activity for entrepreneurs, and enables remittance payments to be received in real-time. Given the significant importance of remittances for Samoa, M-Tala partnered with Rocket Remit in Australia for real-time and affordable remittance payments.[6] The success of M-Tala can be seen in adoption of the product beyond these services including by the National University of Samoa for fees payment.[7]

Similar to M-Tala, MyCash powered by Digicel removes the need for a bank account and enables fast and reliable daily transactions.[8] MyCash can be used to receive remittances, make person-to-person (P2P) payments, merchant payment via a QR code, and instant bill payments.[9]

Lessons learned

The uptake of digital payments by M-Tala and MyCash is high, but the ongoing challenge is active usage, stickiness, and a continuous diversion from cash. Given the easy access and affordability of mobile money payments, more needs to be done to understand the causes of low adoption over the longer term. There are several arguments for what is driving these low rates. The first is stakeholder engagement, where in the relatively small market of 200,000 people, operators act independently and encourage dual SIM and bank account ownership. Lack of interoperability entrenches this problem where it is difficult for users to move from one platform to another. The second is the trust in mobile money services, which is largely due to a cultural preference for cash. Customers revert back to cash if there is any problem easily accessing their account when needed, which may be compounded by the poor agent-to-customer ratio. Third, increased financial literacy and awareness is required to ensure assurances about their money and the collection of fees.

Impact

Access to digital financial services has increased the financial inclusion of Samoans overall, and this has largely been driven by the integration of mobile payments into the high rates of mobile phone ownership. It has also been driven by the increased Internet usage across the country, from 13 per cent in 2013 to 64 per cent in 2018. The impact of mobile payments in Samoa goes beyond the increased access to financial services for all. Easy bill payments through mobile wallets have also had a positive impact on the water sector, as digital payments has increased revenue for water consumption.[10]

Additional resources

[1] World Bank, ‘Rural Population (% of Total Population) – Samoa | Data’, 2022, https://data.worldbank.org/indicator/SP.RUR.TOTL.ZS?locations=WS

[2] International Bank for Reconstruction and Development and World Bank, ‘A War in Pandemic: Implications of the Ukraine Crisis and COVID_19 on Global Governance of Migration and Remittance Flows’, Migration and Development Brief, May 2022, https://www.knomad.org/sites/default/files/2022-05/Migration%20and%20Development%20Brief%2036_May%202022_0.pdf.

[3] ‘Second Voluntary National Review on the Implementation of the Sustainable Development Goals to Ensure “Improved Quality of Life for All”’ (Apia, Samoa: Government of Samoa, 2020), https://samoa.un.org/sites/default/files/2020-07/Samos2ndVNR2020_LowRes.pdf.

[4] Vodafone Samoa, ‘M-Tala’, Vodafone Samoa (blog), 2022, https://www.vodafone.com.ws/m-tala/.

[5] ‘Second Voluntary National Review on the Implementation of the Sustainable Development Goals to Ensure “Improved Quality of Life for All”’.

[6] Samoa Global News, ‘RECEIVE MONEY FROM AUSTRALIA DIRECTLY TO VODAFONE M-TALA USING ROCKET REMIT’, Samoa Global News, 10 November 2020, https://samoaglobalnews.com/receive-money-from-australia-directly-to-vodafone-m-tala-using-rocket-remit/.

[7] National University of Samoa, ‘M-Tala Master Services Launch’, 24 February 2021, https://nus.edu.ws/m-tala-master-services-launch/.

[8] Digicel, ‘What Is MyCash’, 2022, https://mycash.ws/.

[9] Digicel, ‘My Cash Samoa’, 2022, https://mycash.ws/template/files/Brochures/MyCash%20Samoa%20Brochure.pdf?_t=1615489310.

[10] ‘Second Voluntary National Review on the Implementation of the Sustainable Development Goals to Ensure “Improved Quality of Life for All”’.