In many countries and industries, it is common for employees to receive their salaries via bank transfers. However, tea workers in Assam continue to be compensated in cash, resulting in significant negative impacts on their living standards. Professor Savita Shankar from Bloustein School of Planning and Public Policy, Rutgers University, assesses the benefits and challenges of transitioning from a cash-based to a digital payment system at tea plantations in Assam.

Brewing Change: Introducing digital payment systems to tea workers in Assam by CoBS Editor Celine Lüdtke. Related research: Empowering Female Tea Workers through Digital Payments – An exploratory study, Savita Shankar.

Historically, tea and payment systems have a long and closely intertwined relationship. In Southeast Asia, the expression “tea money” describes a bribe; in Afghanistan and Iran, the expression “poul-e-chai”, money for tea, has the same meaning. However, despite the nefarious implication of “tea money”, actual tea money as a currency was real.  

Between the 9th century and the mid-20th century, compressed tea bricks functioned as currency in China, Myanmar, Tibet, Turkmenistan, Siberia, Russia, and Mongolia. Their value was determined by factors like quality, weight, colour, fermentation process, and the proportion of tea leaves to twigs. Notably, the value of tea bricks appreciated over time, effectively accruing interest.

In the early 20th century, you could purchase a sheep in Mongolia for 12 to 15 average-value tea bricks. It’s estimated that at one point, the amount of tea money circulating in Asia reached 500,000 taels, with one tael being roughly equivalent to one ounce of silver. Tea money was prevalent in the remote regions of Central Asia and Siberia until at least 1935 when an average brick was worth one rupee. And the use of tea money continued even after 1949 when it was utilised as currency by communist government officials in China.

Nowadays, tea money would seem to be a thing of the ancient past. In times of QR codes and digital payments, large money transfers in cash are also becoming inconceivable. Ironically, however, the tea industry is very much stuck in the past. While no longer using tea money, many plantations still pay their workers’ salaries in cash. In a recent research paper, Professor Savita Shankar at Rutgers University analyses how and why these tea plantations should make the transition from a cash to a digital payment system for their female tea plantation workers.

Tea leaves and tech – new opportunities for Assam’s tea workers

Professor Shankar’s research examines the benefits and challenges of offering digital payments to female workers in Assam’s tea sector, highlighting how such initiatives can enhance their autonomy.

The COVID-19 pandemic and related digital initiatives have underscored the benefits of digital payments, including safety, security, transparency, and greater ease of saving. Prof. Shankar examines the notable social benefits, particularly for female workers, as digital payments contribute to promoting gender equality and financial inclusion. Her research highlights the benefits for tea plantations, such as lower administrative costs and the potential to forge stronger relationships with international buyers.

However, adopting a new payment method presents challenges due to the insufficient banking infrastructure in the remote regions where tea plantations are located. Deployment of digital payment systems must be carried out in stages, requiring careful adjustments along the way.

Banking on Equality –digital payments to improve financial autonomy

As financial technology and digital solutions evolve, new opportunities emerge to provide better access to financial services to women and other underserved segments of the population.

When people lack access to financial services, they face many disadvantages that can significantly impact their lives. Without a bank account, they have to deal with cash, which is very often unsafe. Additionally, this situation disincentivizes saving – beyond safety concerns, workers miss out on interest rate benefits typically provided in a formal system. This means that in case of emergencies, households are dependent on other, unregulated sources of financing such as “loan sharks” charging exorbitant interest rates that require default borrowings.

Moreover, being outside the formal banking system limits people’s choices for credit sources that they could reasonably use to make investments and, in turn, diversify their income sources and elevate their standard of living. On top of that, the lack of remittance and insurance products makes money transfers cumbersome and high-risk and limits opportunities for risk management.

Women, in particular, can benefit from digital payments. It protects against the risk of having their cash earnings taken away forcibly – sometimes even by members of their own household allowing them to take control of their finances. Through digital payments, women can more easily save their earnings and build assets in their own name, giving them greater autonomy over their money. Having savings also enables them to prepare for emergencies and important life events, making women more independent and self-reliant. As they establish a digital footprint, they gain access to loans in the formal financial system. Moreover, by using financial services such as insurance, they will necessarily increase their financial literacy skills.  

Understanding Assam’s tea gardens

The tea industry shapes an environment that has its unique reasons, challenges and requirements for introducing financial technology.

India is the world’s second-largest tea producer, and Assam the largest tea-producing state in the country boasting a 200-year-long history and 762 tea-producing estates. Assam produces nearly 700 million kg of tea annually, which is about half of India’s overall tea production. Large tea plantations typically employ 700,000 people daily, with about 50% of the workforce comprised of women who usually engage in low-paying work like tea plucking. Overall, the tea sector employs about one million women in Assam.

The tea industry is driven by seasonality. Tea is a nine-month crop, with harvesting taking place in three periods – called flushes – between March and November. The first flush between late February and April is in high demand as the tea is known for its light flavour and high quality. The second flush, between April and May/June, has a stronger and bolder taste due to the strong sun and is usually used for breakfast teas. The final flush is in October/ November. During harvest, plantations employ temporary workers to deal with the workload. And in the following winter months, work on tea plantations primarily consists of maintenance activities.  

Due to the labour-intensive nature of tea cultivation, the Assam tea industry has historically relied on migrant labourers. During India’s colonial period, workers from various parts of the country and different castes were brought in to work on the tea plantations, and their descendants continue to work there today. These individuals are referred to as “Tea Garden Tribes.” The Assamese government recognises them as a socially and educationally underprivileged group with low literacy levels.

Breaking through shopping and spending habits

Typically, tea workers live within the tea plantations, which are usually located in rural, remote locations. Weekly (cash) payments are supplemented with food rations, free housing, healthcare and primary education for immediate dependents as required by the Plantations Labour Act of 1951.

On payday, local businesses set up markets where workers can purchase groceries and clothing. Usually, workers spend their full cash payments that day and do not save. This makes them vulnerable to local moneylenders who charge exorbitant interest rates of 10 to 20% per month, whenever they are in need of additional funds. This can result in lifelong debt burdens. Additionally, moneylenders often seize the annual bonus payments immediately, as they usually know when they are disbursed.

While supervisory staff are paid through bank accounts – and most staff members and workers do have a basic bank account through the 2014 “Pradhan Mantri Jan-Dhan Yojana” government scheme – workers are still paid in cash. This is because, due to the remote location of the plantations, there are no ATMs or bank branches. Workers needing cash would be required to travel to a city with an ATM which would cause them to miss a precious day of work and income. Furthermore, many female workers are not comfortable using ATMs and may trust younger family members to make withdrawals, over which they have no control. Additionally, while many younger family members own smartphones, these are not widely available among female workers, making mobile solutions equally unviable.

Learning from pilot projects in Assam and Uganda

To understand the practical implications of introducing a digital payment system in tea plantations, Prof. Shankar analysed the strategy and learning outcomes of two pilot projects at Dikom Estates in Assam and  McLead Russel tea plantation in Uganda.

Dikom Estates, home to 8,000 residents, decided to transition from cash payments to a digital system for distributing annual bonuses. The switch was voluntary, receiving the workers’ union’s endorsement. To ensure a smooth transition, Dikom took several steps, first screening movie clips and cartoons highlighting the benefits of having a bank account and using digital payments. Furthermore, management encouraged workers to obtain national identity cards and assisted them with the necessary paperwork to open bank accounts. They collaborated with two public sector banks to facilitate this introduction. Workers could go to the administrative staff to submit their bank books. Once the bonuses were issued, bank staff updated the passbooks and returned them to the workers. Additionally, management strongly incentivised saving by offering monetary prizes for reaching certain savings milestones.

The McLeod Russel plantation in Uganda similarly faced challenges with cash payments. Here, cash needed to be dropped by plane to pay the workers, which was costly, labour-intensive, and risky. To address this, McLeod Russel partnered with local mobile network operators Airtel and MTN, along with UNCDF, to move payroll from cash to mobile payments. To find out exactly which financial services their workers needed, McLeod Russel conducted a survey, discovering that a central requirement was remittances to family members. Like in Assam, plantation management also conducted informational sessions to assist with enrolment. Overall, they estimate that this programme could save 6.5% of employee salary costs.

On another McLeod Russel plantation, this time in Rwanda, the UN Sustainability Goals played a role in the country’s economic digitalisation programme – successfully serving the transition to digital payments for workers in the tea sector.

Overcoming obstacles when introducing a new payment system

There are various challenges associated with introducing digital payments to female workers, which the pilot projects at least partly considered.

First, helping female tea workers develop their digital and financial literacy in order to confidently use digital payments is challenging, as more than half of Assam’s tea workers are illiterate. This can be overcome if such initiatives were to show cartoons to teach digital and financial literacy as well as setting up women-self-help groups.

A further challenge is to set up an eco-system that offers user-friendly and affordable avenues for workers to easily use their wages to purchase the items they need. In tea plantations, ATMs are uncommon as servicing them is unviable and expensive. The alternative, having individual agents act as customer service points (CSPs), is also not ideal as they sometimes demand a commission, alongside the possibility of them being robbed. Biometric identification is also not feasible for workers, as their work as tea pluckers corrodes the nature of their thumbs. On the side of businesses, QR codes sometimes allow workers to pay digitally. However, this system is by no means universally accepted. As such, the successful implementation of digital wage payments also requires a solution for a functioning, easy-access cash withdrawal system and/or the possibility of making digital payments in markets.

Lastly, a significant hurdle in implementing the new system involves the stakeholders: they must be encouraged to transition from cash to digital payments. Since this switch requires initial investments of time and money, stakeholders need to see the long-term benefits of this change clearly.

Driving success for all stakeholders

As mentioned, digital wages play a crucial role in integrating female tea workers into the financial system. Currently, these workers utilise their bank accounts sparingly, primarily for receiving government benefits. Digital payments facilitate easier access to funds, enabling workers to later benefit from financial services like insurance and microfinance. The latter is vital for helping tea workers enhance their income by starting other activities, such as raising livestock or cultivating vegetables. Temporary workers could especially benefit from such initiatives, as they do not earn a wage outside the harvest season.  

The Ethical Tea Partnership is currently conducting a pilot project with the International Institute of Information Technology in Hyderabad. This project tests a new web application aimed at helping workers access potentially available government schemes. Additionally, the ETP intends to train local youth to assist tea workers by connecting them with officials who can advocate on their behalf. Moreover, there are programs aimed at training tea workers to diversify their income. For instance, a Sunday school conducted by local government officials teaches tailoring, empowering tea workers to launch their own micro-enterprises.

Digital payments are also an important means of giving female tea workers greater control over their earnings. For example, in Bangladesh, 43% of women who worked in the textile industry reported that their husbands took away their salary when receiving cash payments, compared to 23% when receiving digital payments.

From a business standpoint, digital payments can lower administration expenses for plantations. Again in Bangladesh, managers observed a 53% decrease in administrative costs after adopting a digital payment system, allowing workers to extend their shifts by an additional 25 minutes.

Digital payments crucially also provide greater transparency for tea buyers regarding the wages that plantations pay to tea workers. International buyers from the EU and the US typically must adhere to stringent laws and regulations related to human rights and supply chains. Due to this increased transparency, plantations can foster stronger connections with international buyers.

No longer reading tea leaves – a blueprint for a successful transition

Overall, Prof. Shankar identified four essential steps that facilitate a successful transition to digital payments. Firstly, it is important that plantations raise awareness and educate workers on the benefits of digital payments. Secondly, they need to actively help their workers to fulfil the formalities to open a bank account or mobile money account. At the same time, the plantations need to make sure that the tea workers have an avenue to access their earnings conveniently without incurring additional expenses. Lastly, in order to achieve all this, they need to develop partnerships with appropriate agencies such as local banks, mobile companies and non-profit organisations.

To dive deeper into the details of this blueprint, Prof. Shankar proposes a phased transition. First, employers should pay lump sum payments like annual bonuses and retirement benefits digitally. Following that, they can partially digitise wage payments. Additionally, plantations can collaborate with non-profit organisations to provide workers with financial literacy training which demonstrates the benefits of saving. If workers then give their agreement, a suggestion might be automatically saving 10% of their wages in workers’ bank accounts while handing out the rest of the salary in cash. The savings amount can gradually increase, supported by a functioning cash withdrawal system. Establishing these systems requires partnerships with banks and secure, monitored additional CSPs. Furthermore, encouraging local vendors to adopt digital payments can reduce the need for a cash withdrawal system.  Ahmad Tea, a U.K. based tea company that sources tea from Assam, used Professor Shankar’s research to help guide their social impact in the tea gardens and in particular to support a pilot digital bonus scheme aimed at widening financial access and filling the living wage gap for tea workers.

All in all, when employers implement digital payments for tea workers in a phased manner, workers can get greater control over their earnings and gain access to a wider range of financial services, including savings, remittances, insurance, and microfinance loans, resulting in a positive impact on their lives.

Useful links:

• Link up with Prof. Savita Shankar on LinkedIn
• Read Prof. Shankar’s original research: Empowering Female Tea Workers through Digital Payments
• Read a related article: Empowering Microentrepreneurs Through Financial Inclusion
• Read Prof. Shankar’s chapter in the Routledge-CoBS book Responsible Finance & Accounting
• Discover the Bloustein School of Planning and Public Policy, Rutgers University

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