Can training increase migrant workers’ use of digital payment apps? Hint: it’s not what you think.
Our RCT showed training only slightly increased migrants’ use of digital payments due to other barriers.
To read the full policy brief with findings from a pre-COVID-19 randomized controlled trial that assessed whether training increased individuals’ use of digital payment apps (especially for remittances), click here. We conducted this study in partnership with Good Business Lab.
By Ishita Batra and Sonakshi Sharma
Digital payment platforms, using a phone to send or receive money,[1] can promote financial inclusion of vulnerable populations and people living in poverty. A number of digital payment platforms are available in India, such as mobile wallets, Unified Payments Interface (UPI) apps, and banking apps, all of which are free to use and allow money to be transferred instantly and securely to another bank account or mobile wallet. For migrants, a large and often vulnerable population in India, digital payment platforms allow them to remit money quickly, safely, and for free. However, despite the convenience, only seven percent of individuals sending remittances within the country are using mobile money.[2]
Our team at IDinsight partnered with Shahi Exports, India’s largest apparel manufacturer, to see if we could increase the use of digital payment apps, especially for remittances, by improving potential users’ knowledge of these services. We recruited ~600 female migrant workers for our study.[3] At the beginning of the study, 86 percent of workers reported remitting money in the previous month. However, only 5 percent of remitters had sent money using digital payments with 91 percent of remitters conducting over-the-counter transactions, where they paid an agent or a shopkeeper a small fee to transfer the money for them.
How did we try to increase the use of digital payments?
We provided workers hands-on training for the UPI BHIM digital payments app,[4] which included a practical component: participants were given Rs. 50 for sending money to other training attendees. We randomly assigned participants to a classroom-based training, a more intensive individualized training, or a control group. After the training session, we sent SMS messages to participants, reminding them to use digital payment apps for remittances.
Can training improve uptake of digital payments?
● We found that training on how to use digital payment apps was effective at addressing knowledge barriers, but it only marginally increased the use of digital payment apps (5 percentage points in the classroom training and 10 percentage points in the individualized training).
● Usage remained low in spite of training because migrant workers were not able to meet many requirements for setting up a digital payments account on UPI. Forty-four percent of the participants invited to the training could not set up an account because they did not meet some of the basic requirements, for example phone number-bank account linkage and balance on their mobile phones.
● Individualized training did not produce markedly improved results over classroom training. Once the basic requirements for digital payment apps are addressed, a well-designed classroom training could be sufficient in most contexts, as it has comparable effect sizes and is more cost-effective.
Recommendations
To increase the use of digital payment apps, we need to address knowledge barriers and infrastructure barriers, such as access to smartphones, reliable internet connection, and phone number-bank account linkage. It is also important to be mindful of the additional support vulnerable populations may need, for example, gender-based differences in access to mobile phones makes it harder for women to meet the infrastructure requirements for using digital payment apps.[5]
With these insights in mind, we provide recommendations for a variety of actors, from NGOs to banks to private sector organizations, to increase the use of digital payment apps:
For organizations who work with migrant workers
- Communicate the utility of digital payment apps and the importance of linking phone numbers to bank accounts. Migrants should be encouraged to maintain linkage even when they change their phone numbers.
- Provide assistance to migrants on how to link their phone numbers or how to use digital payment apps.
For organizations who provide financial literacy training
- Support participants in meeting infrastructure requirements before the training session. For example, organizations can conduct a workshop before the training session where individuals can submit forms to link their phone numbers to their bank accounts, or send reminders to participants to bring all the items required for training.
For Private sector organizations designing digital payment solutions
- Design digital payment platforms that are easily accessible to feature phone users.
- Design platforms keeping the needs of low-income and vulnerable customers in mind. For instance, account for variations in language, differential access to technology, lack of technological familiarity, and digital literacy.
For banks looking to support increasing digital payment solutions
- Encourage use of UPI among less active bank account holders. UPI presents a user-friendly opportunity for account holders to use their bank accounts more frequently — encouraging inactive account holders to use UPI may result in higher uptake of UPI and more transactions in the formal financial sector.
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We followed up with our sample one month into the COVID-19 lockdown in India, to understand the effects of the pandemic on female migrant workers’ remittance behavior and expectations of future employment. Read about our findings here.
[1] The definition of digital payments usually covers all cash-free channels, including debit cards. However, in our study, we have used digital payments to cover only those methods in which a phone is used to send or receive money. This definition was explained to study participants during each survey and the intervention.
[3] We recruited only workers with smartphones, as the digital payments app we use in our study is a smartphone app.
[4] BHIM (Bharat Interface for Money) is a mobile app for smartphones that leverages UPI technology to allow people to send and receive money directly from their bank accounts. We used the BHIM app because it was offered in our sample’s native languages and had a simple interface; however, we expect our results to be generalizable to any UPI app, since they offer similar functionalities.
[5] In India, only 38 percent of women own mobile phones, compared to 71 percent of men. A Tough Call: Understanding barriers to and impacts of women’s mobile phone adoption in India. Cambridge, MA: Evidence for Policy Design, Harvard Kennedy School, 2018.
