Helene Smertnik and Savita Bailur
“Social media is something that is used by everyone these days. Rather than sell my products at the market I think it’s better to use social media.” Sarah, owner of an online beauty business in Sri Lanka.
Sarah is one of the 15 online workers we interviewed in Colombo and its outskirts, to discuss the opportunities online work have opened for women and the role of identification credentials (ID).
Caribou Digital’s When ID works for women’s research aims to understand the relevance of ID for women and work. To what extent does ID lead to a wider range of income generating opportunities, or safer work, or the ability to protect and grow income for women?
To explore this, we looked at the segments of domestic workers, factory workers and online workers in Bangladesh and Sri Lanka — two countries with a growing, but not always protected, female workforce. Here, we share thoughts from our Sri Lanka fieldwork on the segment of online workers*.
When working online, ID isn’t always required
Small entrepreneurs can start out/do their business online, informally
“I get most of my orders through known contacts and some online. I have joined a women entrepreneur’s group on Facebook and get some business through that once in a while. I haven’t formally registered my business.” Cynthi’s Kitchen, a caterer selling food online, described to us how she gets her business.
Most online workers we spoke with leveraged existing social media platforms — creating their own page on Facebook or using e-commerce platforms such as ikman.lk. This choice illustrates how micro-entrepreneurs may decide to grow their businesses: they will create a webpage on an existing online platform and receive orders through internal messaging apps. In fact this is how many respondents operated — at least to start their business.
This means that small entrepreneurs do not necessarily need to go through the step of formally registering their business and therefore, having a National ID is not needed at that stage. This informality is also possible because small businesses often deal with cash on delivery payments and do not go through formal payment platforms.
Freelancers don’t always need to provide ID to work online
Similar to business owners starting online, freelancers who work for outsourcing platforms do not necessarily provide their ID when they join. A person will, for example, do a translation service, or provide social media support for a client and will not provide an ID — only a bank account.
“When I hire freelancers, I may not ask them for their ID immediately, the references are what matter, as well as providing a bank account.” Jameera, owner of online work platform.
Another online platform, Second Team, has the same approach, the ID may not always matter, depending on the work. This said, the requirement for a bank account does suggest that the worker has an ID, only the online work platform does not position itself as the gatekeeper.
But ID is required as a business grows or work becomes more formal
Business owners who formally registered their online business do need an ID, in addition to a bank account and a permanent address.As seen in Sarah’s interview, she developed her beauty business both informally, through social media platforms and formally, by registering her business. Kiruthiga, owner of an online service company, went through the same process as Sarah:
“I registered my business using my identity card at the registrar. My financial accounts are being reported every year under my national ID.”
In addition, depending on the type of work being done, freelancers may also need to provide an ID.
“If the freelancer starts dealing with a lot or sensitive client data, they will sign a non disclosure agreement and we will do more formal ID checks.” Tina, founder of an online work platform.
As seen in the photo above, during the research we attended a workshop for small entrepreneurs, who were mostly women, to join Grasshoppers, an e-commerce platform. We observed that for them to register, they had to fill a form, which also required their National ID. This did not constitute an obstacle to any of the women as they all had an ID.
Beyond ID, what limits women’s financial inclusion?
As illustrated through online workers’ experiences, working online doesn’t necessarily lead to a formal business — at least in the early stages — and therefore may not require ID, if only leveraging social media and cash payments. However, when ID is required, it does not pose any limitation given the prevalence of ID in Sri Lanka. This allows us to see what other barriers exist in terms of women’s financial inclusion, for women who do have an ID.
Cash payments are often preferred
None of the small businesses interviewed had integrated payment platforms (i.e. online payment methods), the two ways described to pay for an order were either cash upon delivery or a bank transfer to the business owner’s personal account.
The former — cash upon delivery — does not require any usage of an ID and may be a preferred payment method. Krishna, who runs a small online business said:
“In Colombo, where I do 60% of my sales, I often do cash upon delivery. I deliver the goods myself with my car. For deliveries outside of Colombo, I rely on a courier service and therefore ask for the payment in full, ahead of time. This is done via bank transfer.”
Sarah leverages a delivery company and only does cash payments for the benefit of her customers rather than her own as she has a bank account.
“All my customers pay cash on delivery. I use a delivery company to deliver the parcels to the customer. At the time of collection the customer pays the full amount. That is good for the customer as well because she gives the money only after she gets the parcel to her hand. That is the most trusted method because if we ask the customer to deposit the money into an account, they are not sure whether they will get the product.”
Cash is preferred for many reasons but not because of lack of ID
Entrepreneurs we spoke with often preferred cash payments for different reasons, both practical and cultural — though not because of lack of ID given the prevalence in the country. Reasons for not using formal financial services include:
- Logistics: the time consuming process of getting to a bank when outside of city centres
- Digital literacy: the fear of making a mistake when setting up or using mobile money, the fear of hacking
- Cultural norms: the concern that the husband may think they are using the phone too much
As a result, women would either use a relative or their husband’s account to get paid or opt to be paid in cash. In a few cases, they may also get paid in airtime, sent through by a relative who receives the money on their behalf.
Non-traditional employment may make financial inclusion more difficult
Some women entrepreneurs mentioned the difficulty in explaining their situation to their banks who did not have a ‘box’ to fit in their type of income as freelancers or online workers.
“It takes a lot of explaining everytime I check in a salary because it doesn’t always come from the same client and the amounts vary. The bank doesn’t make it easy for us to work in this way.” Dinudi, online worker
The hope is that procedures will adapt as the number of online business entrepreneurs grows in Sri Lanka but in the meantime, the difficulty in cashing in their income or the questions as to where their income comes from may act as a deterrent to financial inclusion.
Takeaways and thoughts
- For online work, ID only really comes into question when an online business is formally registered or when the online freelancer is doing a job that requires more guarantee — and none of the women we spoke with said this was an issue. This possible (but not systematic) transition from informal to formal online business is worth exploring more to understand how female business owners encounter the process and the challenges they face — beyond ID.
- Some interviewees from online platforms said checking ID was not a priority for them, unless it was to link bank accounts for payments. Others made it a basic requirement to register on their platform. In our report, we’ll explore the role for platforms to become ID gatekeepers — how responsible do they need to be? There is a major question of ID needed by women for financial services/banking and the link with online work.
- As cash on delivery is still very common for online sales, online work doesn’t necessarily imply formal financial inclusion. This is not because of lack of ID for women but rather a need to raise awareness, break down misperceptions, and make access to these services easier for women.
*There are different types of online work: physical work found online (e.g. home baker who uses an online platform to get orders) or online work (e.g. translator or a person doing data entry who does small outsourcing jobs). In this blog, we see how ID requirements may vary depending on the type of online work as well as the stage of maturity of an online business.
Caribou Digital is publishing a series on insights derived from our research on women, work and ID in Sri Lanka and Bangladesh. This is the fourth and last of our blogs from Sri Lanka.
Previous blogs are here:
On initial findings on When ID works for women in Sri Lanka
On ID and garment factory workers
This research is funded by Australia’s Department for Foreign Affairs and Trade, via its support for the Commonwealth Digital ID Initiative. We would like to express our thanks to all our respondents, the DFAT iXc team, DFAT Sri Lanka, Sparkwinn Research, Big Blue Communication and our advisory panel for their support.
Savita Bailur 