The impetus for the Prepaid Economy project came from field observations during other projects which focused on the design and development of products and services for those at the BoP. It was noted that the majority of the BoP lived on irregular incomes derived from a variety of sources, while few business models or payment plans were flexible enough to accomodate this variance in cash flow, imposing their own schedule and billing cycle on the customer.
The only exception seemed to be "Prepaid" services such as "airtime" – the purchasing minutes of use for voice or text on the mobile phone, prevalent across the globe; electricity and other utilities in certain regions such as The Philippines or rural South Africa; all of which were bought in advance and then used for as long as possible before the next "top up" was required.
The best designed products or services to improve the wellbeing or enable social and economic development would not be able to make a difference in the lives of the 'poor' if their payment plans or revenue models were also not as carefully designed to accomodate the financial challenges faced by those at the base of the social and economic pyramid.
In order to do this, it was believed that an increased understanding of the way the BoP managed their daily needs, planned for major expenses or dealt with emergencies – that is, the household financial management – would provide insights that may assist in the better design of business models and payment plans meant to serve their needs successfully.
This specific project is the first step, and a small part of the larger unknown, towards this increased understanding and focuses on rural populations in The Philippines, India and Malawi. Restating the original general objectives of the fieldwork:
- Understanding the ways and means that value transactions take place at the BoP, how household incomes were managed and the conflict between regular payments on an externally imposed schedule against an irregular cash flow was being addressed by the families observed.
- Understanding the dynamics of practices that have led tto the development of prepaid payment as an efficient solution to the income stream vs. consumption pattern challenges.
- Understanding general strategies to combat these challenges through any innovative payment systems. Could a conceptual solution or payment strategies be recommended that:
- could cope with the diverse and unstable value flows of the BoP
- would be suitable for cooperative purchases at the community level, either based on existing practices or otherwise framed in the context of local socio-cultural norms and customs.
- is based on technology readily available to the BoP (if technology was considered part of the solution)