Despite its proven benefits, take-up and continued usage of digital financial services (DFS) lags in many low- and middle-income countries. Though this challenge is multifaceted, the cost of using mobile money is a key barrier. Reducing the cost of mobile money can likely improve financial inclusion; however, little has been done to systematically measure and monitor the true cost of conducting common DFS transactions. 

To address this shortcoming, IPA is developing a transaction cost index (TCI) to capture the full cost of completing mobile money transactions. This includes measuring official listed prices of transactions and fees, unofficial prices like “off-the-books” agent fees, and non-pecuniary costs such as wait times, failed transactions, and security concerns. The index will capture three different mobile money transaction types: deposits, withdrawals, and transfers. 

Researchers will test four measurement methods in Tanzania, Uganda, and Bangladesh to develop the index: 

• Mystery shopping: Enumerators will pose as regular customers and record the official and unofficial fees charged by the mobile money agent.     
• Customer intercept surveys: Enumerators will intercept customers at various points of service (such as provisional shops or stores) and ask them about their experience.
• Remote mystery shopping: Enumerators will transfer money to local consumers and ask them to conduct and record transactions.
• Crowdsourcing: Ask consumers to download a unique mobile application and ask them to record transaction costs directly in the app. 

IPA will conduct a cost-effectiveness analysis, comparing the methodologies for their accuracy and efficiency in measuring the true cost and price of mobile money.

Learn more about IPA's Transaction Cost Index (TCI) in this blog post.