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Smart Cards and Microfinance

How Do Smart Cards Work?
Achievements to Date

Smart Cards will eliminate the need to maintain manual collection sheets and passbooks, reducing the time of (center) meetings and thereby increasing the efficiency of field staff. Typically MFIs-whether computerized at the branch level or not-track member accounts at the village-level with handwritten collection sheets and passbooks. The majority of time at the center meeting is thus devoted to manually updating these records.

This "bottleneck" is a problem because the poor usually only have a small window of time in the morning-before they leave for work-during which meetings can be held. As a result, an SKS staffer can typically conduct only 2 center meetings a day. With Smart Cards, the time of a sangam meeting can be cut in half and a staffer can greatly increase his client-load. It will work as follows:

  • Each staffer will carry a palm-pilot sized Hand-Held Computer (HHC) to their sangam meetings -- the HHC will download collection information from the branch office computer, so no manual collection sheet is required.
  • In the village, each member will be provided with a Smart Card, which will electronically hold member information and a record of transactions.
  • During the weekly sangam meetings, each member's Smart Card will be inserted in the HHC and transactions will be updated both in the Smart Card and the HHC.
  • At the end of each day's sangam meetings, the staffer simply uploads the information from the HHC to the branch computer, and all transactions are uploaded and all accounts updated.
  • Meanwhile, a read-only HHC is left in the village so that members can check their account information in the same way that a person would check account information at an Automatic Teller Machine (ATM).

In this way, Smart Cards eliminate the need for manual collection sheets and passbooks, which will reduce the time of sangam meetings by one half. SKS staffers can thereby multiply their client load and the MFI will achieve financial sustainability more quickly. Additional benefits of the Smart Card include more flexible financial services and stronger financial controls.

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