This story originally appeared in the Beyond Profit April 21, 2011 e-magazine. Click here to subscribe.
Pre-paid mobile phone services are reaching markets that other technologies have not yet been able to penetrate. How can this model be leveraged in other areas of development?
For those at the bottom of the pyramid, income is not a certain entity. No fixed amount is deposited into their bank accounts – should those even exist – at the end of the month. Their income is changing—from month to month, week to week, even day to day.
Which begs the question: if a borrower’s cash flow is so uncertain, why do so many companies attempting to serve that demographic insist on fixed repayment amounts?
At least one technology, invented in the 1990s, attempted to work around that problem: pre-paid mobile services that allowed people with variable incomes and/or poor credit to use cell phones. Such consumers made an upfront payment of only as much as they could afford in return for wireless services. Continue reading →