FusionWire, December 2016.
Brixton Pound: How fintech boosts the local currency agenda
The notes are eye-catching, but South London local currency Brixton Pound is most commonly traded in the form of text messages. We sat down with B£ Communications Manager Marta Owczarek to talk about how technology is furthering the local currency cause.
The Brixton Pound has just turned seven years old, making it one of the most successful local currencies in the world. Maybe you’ve seen the notes – the one with David Bowie is best known – you can get them from the B£ cash machine in Brixton Market, the first ATM of its kind. Or maybe you’ve been to the shop in South London – B£ has just moved to a new location on Atlantic Road, operating a pay-what-you-feel café and community space.
Walking up to the café through the local market, seemingly every shop or restaurant has a B£ symbol in the window. This is a currency, yes, but more than that it’s a community interest project, says Marta Owczarek, Brixton Pound’s Communications Manager. As we’re sitting down on the hottest day of the summer, Owczarek gives me the breakdown: Brixton Pound is a non-profit organisation employing five people, running a local currency accepted by around 250 businesses. 200 of them also operate the B£ pay-by-text scheme, which has over 2000 registered users. This is what I want to talk to Owczarek about: how technology can help future-proof a local currency that ultimately depends on social goodwill to survive.
The technology behind the current B£ pay-by-text system is simple, and that may well be the key to its success, says Owczarek: “It’s a pay-by-text system that doesn’t need internet. You just need a phone that operates text messages.” She explains that the B£ notes have become a collector’s item, which is good PR but doesn’t actually help the local economy. Because of this, the electronic payment system has been an important tool for getting people to actually spend Brixton Pounds.
People can top up their B£ pay-by-text account at any time with a transfer from their bank accounts, or with cash at one of the dedicated outlets. “Lambeth Council has a payroll scheme for local employees, who can dedicate how many Brixton Pounds they want to receive as part of their salary every month,” says Owczarek. She takes out her phone to show me how the electronic payments work. It’s easy: just type out a text message with the amount and the name of the recipient (a shop or a person), and send it to the B£ phone number. Then each party gets a text message confirming the transaction – that’s it.
The case for local currencies
Brixton Pound is tied to Pound Sterling, meaning this isn’t actually a separate currency – there incentive to use it isn’t financial. But there’s a strong community message attached – it’s a symbol of belonging to Brixton, and wanting to support the local community in an area where rapid gentrification is affecting local businesses’ ability to keep up with rising costs. This means B£ is mostly an independent business thing, but not exclusively; Honest Burgers and Franco Manca are both London restaurant chains that started in Brixton, so they accept B£ at their Brixton outlets as a signal of their dedication to the area.
But while B£ has a strong social element, this is very much a financial enterprise: “Brixton Pound was set up by a group of local activists who wanted to do something in response to the financial crisis,” says Owczarek. “Many [local] currencies are about alternative banking, or alternative value systems.” Take the café we’re sitting in – people can pay however much they feel is appropriate. “When we at Brixton Pound started to ask questions about money, we were also asking what is value, or what is money in a wider sense,” says Owczarek. “Nobody is going to be using Brixton Pounds for profit. … [But] it really does start conversations. It means people are connected to each other, to their local community, and to their local business community.”
There are significant financial advantages to keeping money local. The New Economics Foundation concluded that spending money in local shops means that cash circulates in the local economy up to three times longer than if it had been spent in a national chain. The think tank also reported that £1 spent with a local shop is worth £1.76 to the local economy, while being worth just 36p if it is spent out of the area.
“We’re in touch with lots of other local currency worldwide and in the UK,” says Owczarek. “In the UK, we were the first to launch in an urban area. The ones that were operational before us, like Totnes, Stroud and Lewes – the initial idea was more about local supply chains, to be able to grow your own food and supply it locally.” Bristol Pounds has been a particularly successful addition to the local currency family, allowing individuals to pay council tax in Bristol Pounds. In comparison, Lambeth Council will accept Business Rate payments in Brixton Pounds, but individuals have to stick to Sterling.
Owczarek is eager to point out that local currency is only one aspect of the Brixton Pound. “That’s is how it started, but we’ve now developed other projects.” She tells me about the Brixton Bonus, a lottery with a monthly draw of B£1000 – individuals can’t cash out their B£ so it has to be spent. The surplus of the Brixton Bonus, as well as 1.5% from each pay-by-text transaction, go into the Brixton Fund. This is a micro-grant awarded to organisations whose work fulfils three criteria: it furthers Brixton communities; takes action for social justice; and increases local employment opportunities. “The [second round] was completed in June, and we gave grants to nine local organisations,” says Owczarek, adding she was surprised to get 60 applicants for a grant with such narrow criteria. “We’re trying to have a business focus and community focus at the same time.”
As electronic spending has taken over from cash as the most popular way to pay in Britain, I ask Owczarek if she thinks technology is key to future-proofing the Brixton Pound. The B£ cash machine empties out on a weekly basis, Owczarek points out, suggesting there may be a novelty factor drawing people to the paper money. But there’s no reluctance at Brixton Pound to go high-tech. Just over a year ago, Brixton Pound piloted a contactless payment scheme, but Owczarek says it was unsuccessful: “It was a pioneering scheme, and it didn’t quite … there wasn’t a lot of take-up. People were maybe interested, but not enough to make it work.” Owczarek adds there were some issues around hardware – traders already had one terminal, and weren’t so keen on adding another. “It’s interesting to follow these bigger trends, but what we observe on a smaller scale is often its own thing. Pay-by-text has been incredibly successful, and it really took our currency to another level. It’s the most hassle-free payment option.”
Brixton Pound has also experimented with a payment app, which was closer in function to the current pay-by-text system. This was scuppered by technical problems, preventing the app from working after B£ updated their systems. “We’re looking at developing another version of the app that would work with current system. But I think even with the app, most [electronic] payment was pay-by-text.” One reason for this could be that you don’t need a smartphone to use the old system. I ask Owczarek if she thinks the current pay-by-text system is actually working fine as it is – maybe less is more? But Owczarek won’t go that far – she says it would be very nice to have the money to build a great app that looks professional and runs smoothly. But the B£ motivation is clear: “Our priority isn’t to make Brixton Pound as technologically advanced as possible. Our ambition is to make it work for the local area, and for the local community.”