Prepaid & Pay-as-you-go Models for Asset Financing Analysis of Mobile-Money Business Models for Kickstart (irrigation pumps) and M-KOPA (solar panels) in Kenya

Abstract

Acceptance of the prepaid airtime model-along with the emergence of mobile money-sets the foundation for new business models that allow innovative financing for people living on irregular incomes or with an aversion to credit. The new pay-in-advance (prepaid) or pay-as-you-go models are electronic hybrids of oldfashioned savings and credit plans-but mobile-money systems give sellers and lenders the ability to collect millions of frequent micro-payments, which is impractical with manual or cash systems. The key to prepaid models is their flexibility-you buy (or pay down or pay forward) what you can afford when you want, with no pressure to buy more or adhere to a fixed payment schedule. In all, this nascent model suggests that it might be possible to scale new and innovative products much faster, with a highly efficient system of financing, than has been possible before.