And the Most Important Question- How Do We Collect the Money?

15 Sep

So assuming people like us and want to pay us, the next question we need to answer is…how do we collect money from people?  I don’t have a good answer yet (hope to have one in the next month or two).  But here’s what we have so far (in order of preference)

  1. People give us their bank account info and we directly debit 10 INR per month (Through the ECS facility) Initial research (i.e. Google) tells me that most banks (if not all the banks in Hubli) have this facility.  So the roadblock doesn’t seem to be capability.  Now the question is: will people give us their bank account info?  We think that if our customers trust us enough/like our service enough, they will give it to us.  Apparently a lot of companies use the ECS facility in India.  So how much is liking us/trusting us enough?  Don’t know.  But we are going to try to start asking people for their bank info next month and see what happens (when we come around to collect the first payment).  (Good) Press will help with the credibility part- so we are hoping to get some of that soon as well.  Also, if we find that the facility is there (which I”m pretty convinced there is), and people are willing to give it to us (possibly), then we need to figure out if this option is prohibitively expensive for the running of our business.  (And if so is there anything we can do to cut a deal- maybe we can get them more bank accounts or they give discounts for social enterprises/good press?)
  2. Partner with Hubli Dharwad One Centers:  Basically, they are the places people already go to pay utility bills.  This is what the Water Board Suggested we use, but I’m not the biggest fan for a couple of reasons.  First, it’s not scalable (i.e. not all cities have these) but more importantly, I”m not convinced people will actually make the effort to pay a 10 INR NextDrop bill (I mean the time taken to write the receipt is probably worth more than 10 INR).  One way around that is to require 3 month, 6 month, 9 month, or 1 year long subscriptions (i.e. collecting larger chunks of money up front) but it still doesn’t seem like the top choice because I believe inevitably, it forces us into the situation of cutting off services for people who don’t pay.  We will probably eventually encounter this, but I don’t want laziness to be the main deterrent to paying a NextDrop bill.  (Why put more barriers between us and money?)
  3. Tacking 10 INR on to the water bill:  This sounds like the best option but it’s still comes in second to last place.  At the end of the day, people complain about the water utility, but they complain about its billing processes even more. We want to use the water utility’s name for credibility, but not be associated with the things people really don’t like about it.  Also, internal sources tell me that it will take forever to actually see the money (due to the beauracracy which is inherent in any government institution) which is definitely not optimal for running a business (i.e. we need to pay people’s paychecks in a timely manner).
  4. Mobile Payments:  I thought this may be the first option until I actually asked people how they felt about it.  In 10 minutes I realized that this just plain wouldn’t work for normal residents in Hubli.  Why?  Nobody trusts mobile banking.  Period.  This may be a good solution for people who don’t have bank accounts (maybe based on papers I’ve read in rural areas) but I am not sure.  I don’t have any real evidence to back this up, but its still an option and honestly, not something we are immediately going to tackle.  If the percentage of the unbanked is less than 25% (as estimates indicate) then, I think it would be cheaper to just collect money from people.  We will have to run numbers and see, but at the end of the day, labor is really cheap in India and I still keep that as an option.
  5. Door to Door Collection:  I am putting this up here just to say that labor costs are really cheap in India (as stated above).  The prohibitive factor is not money (necessarily) but the fact we need that many people that we trust with money. Still the last option but I don’t want to completely rule it out.

That is currently, one of the main issues we are grappling with/trying to tackle.  First iterations/prototypes of a solution to come within the next few months.  

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9 Responses to “And the Most Important Question- How Do We Collect the Money?”

  1. Rajan December 21, 2011 at 7:08 am #

    Will be good to know about your learnings on this front.

    • anuday January 2, 2012 at 6:34 am #

      Deifinitely! That’s something we are focusing on the next few months. If we don’t update this blog, please comment/email us! I am hoping to have some sort of prototypes out this month so if we don’t have something that works, we can at least talk about what DIDN”T work so nobody else has to go through it!

  2. khoj4gyan January 23, 2012 at 11:36 am #

    A small observation ( you may or may not be already aware of this) from a lay person
    Mobile phones prepaid connections talk-time/SMS charge up used to be done via coupons initially
    Now most common way is
    Mobile Co. ties up with local shop mostly medical shops(they are licensed I think hence credibility)
    the shop owner is given an officially authorized mobile phone
    customer goes to shop with required cash
    the shop owner calls up a dedicated number with the officially authorized mobile phone
    punches in the customer’s mobile no. and the amt for which the charge up is required.
    An acknowledgment SMS/IVRS is sent to customer’s mobile no.
    I guess either the shop owner deposits money in bank a/c or representative of mobile co collects it
    Don’t know much about the back-end office/cost requirements of this method
    May be this method can be adapted to meet your needs

    • anuday January 23, 2012 at 12:57 pm #

      Interesting- thanks for the feedback. We’re actually going to conduct some billing experiments next month to see if customers will actually come to US and pay (which is also, something we haven’t proved). We have no idea how many people will actually make the effort to do so. If we prove that a significant number of people will make the effort to come pay us, then what you suggest may be an option. Or at least maybe making some abstracted form of this method seems incredibly intriguing. Mobiles, everyone has to pay because you really can’t function without your mobile. But how much do people value our service? Enough to go to the shop and recharge their NextDrop? And will shopkeepers trust us enough/think it’s good enough to actually do this twice? I don’t have good answers for you, but this is an interesting concept, and I’m hoping to have better answers in the next few months!

      Thanks for bringing this up- really appreciated it, and me made us think about this idea again.

  3. khoj4gyan January 23, 2012 at 2:22 pm #

    Do the households you service use gas cylinder ?
    then Another option is to try a tie up with gas agencies
    How many gas agencies are there in the area you service? HP, BP ?
    are the gas cylinders delivered to the house or collected from the shop ?
    if it is delivered to the household then a gas delivery takes place may be once a month ?
    average frequency of delivery has to be found out (may vary from house hold to household )
    People delivering the cylinders mostly temp workers or permanent don’t know
    whether they can be trusted with the money ? well the gas agency does (cylinder cost Rs 400 )
    What are operational feasibility/ impediments & costs VIS-À-VIS the other methods ? that will have to be looked into.
    just randomly bouncing some ideas that just pop in

    • anuday January 24, 2012 at 2:44 am #

      No- really good points. So we’ve realized that there are actually a lot of these types of services (from the gas people, to the milkman, to the newspaper guys etc…) I think at the end of the day, the bottom line is that labor is much cheaper than in the US. So going door to door to do this ourselves is definitely an option (because I don’t think it’s actually going to be more expensive to do it ourselves). The downside is that geographically, people don’t know where to go and find the people who sign up for our service (because addresses are not really well defined) so in that sense, partnering with another provider would be good (but you’ve already stated the negatives). Interestingly enough, when we had a bill collector go collect the bills, many people refused the service. However, when our business development person went back, they signed back. Which is very interesting. So our thinking is that we still haven’t got our service to the point where anybody can come and ask for the payment. Maybe they need more time with the service, or maybe we need to roll out a different version of the product. These are all options we are exploring.

      I guess at the end of the day, nothing works in isolation (product development effects billing which then effects development again). This makes it more challenging, but also a much more interesting problem to solve

      Thank you for these ideas- all great things, and things we continue to circle back on/see if its feasible

      • khoj4gyan January 24, 2012 at 6:29 am #

        Thanks for your patience and the feedback. Really appreciate what you and your team are doing. Also acutely aware of the challenges, the hard & sometimes bitter “ground realities” , throw back at you. To face and overcome them is a daunting task. Dealing with bureaucracy takes Herculean effort.But I am confidant that you and your team together with your supporters and well-wishers will emerge victorious.Hope to see your team nominated for the Ramon Magsaysay Award and many more. i know that i can only offer words of praise and encouragement.

  4. Pravin April 14, 2013 at 4:23 pm #

    I don’t see Premium SMS service in your money collection options. Have you considered it or is this service not available in India?

    http://www.mobilemoney.com/index.asp?channel=products&page=premiumsms

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  1. Freelancing for NextDrop – Swaroop, The Dreamer - April 5, 2013

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