Challenge
Billions of dollars in cash payments and transfers are made daily in emerging and developing economies, including payment of salaries, social welfare and relief, payments to suppliers, remittances, etc. The problems with these cash payments include a lack of transparency, accountability and security, as well as inefficiency.
Furthermore, the individuals who receive the cash payments are often part of the 1.7 billion excluded from the formal financial sector. This means they are excluded from access to a range of appropriate and affordable financial services to help them save safely take advantage of economic opportunities and reduce their vulnerability to risk.
Shifting these payments from cash to digital has the potential to improve the lives of low-income people, particularly women, while giving governments, the development community and the private sector a more transparent, time and cost efficient, and often-safer means of disbursing payments.
Towards a solution
The Better than Cash Alliance partners with governments, companies, and international organizations that are the key drivers behind the transition to make digital payments widely available by:
Advocating for the transition from cash to digital payments in a way that advances financial inclusion and promotes responsible digital finance.
Conducting research and sharing the experiences of our members to inform strategies for making the transition.
Catalyzing the development of inclusive digital payments ecosystems in member countries to reduce costs, increase transparency, advance financial inclusion– particularly for women– and drive inclusive growth.
A main component of the Alliance is sharing good practices around digitization of payments. The Alliance has done this in three ways:
- Diagnostics and case studies documenting experiences from countries around the world on what has worked and what hasn’t in specific countries in the transition from cash to digital. For example, the Alliance carried out a diagnostic study with the governments of Ghana, Bangladesh, Senegal, Philippines, to document the current state of digital payments in the country.
- Peer exchanges that bring together different governments members to learn from a specific country. The Alliance has already organized government-to-government peer exchanges in member countries around a specific topic. For example, government members traveled to India to learn about the digitization of social welfare payments and to Rwanda to learn about digitization of taxes and payments for government services.
- Specialized workshops in which the Alliance brings experts on different topics to share knowledge with government members and chart a path forward for the digitization of payments.
More people than ever have access to mobile phones, the internet, and other digital services like prepaid cards, with the number growing every day. How can this digital revolution help us reach the 2030 Sustainable Development Goals more quickly? One important answer is through digital financial inclusion. Financial inclusion means affordable, effective, and safe financial services for everyone.
Inclusive digital financial services mean that poor people can store and increase savings, cope with unexpected economic shocks, access social benefits more cheaply, and make investments in economic opportunities that can lead them out of poverty. For example, the widespread use of digital financial services in Kenya helped lift around 1 million people out of extreme poverty between 2008 and 2014. Farmers are managing risks and making investments that result in higher yields and incomes. Women are gaining more control over their finances and greater economic opportunity. Businesses are accessing working capital to grow and create new jobs.
The Alliance is a member-driven organization and it responds to its members needs around digitization of payments. Part of the work we do in partnership with them is to make sure that there is a champion in those governments and that the knowledge is shared broadly across, so that governments can take ownership of the digitization agenda. For example, in Senegal, the Alliance carried out a digital payments diagnostic research and, in the process, helped trained officials from the local statistics agency so that they were trained in the methodology and data collection methods. In this way they will be able to keep monitoring the progress moving forward.
The Alliance is focused on a very specific issue: digitization of payments. It is member-driven and it can draw knowledge from all different members of the Alliance. These would be the key elements to keep in mind if it were to be replicated.
Countries/ territories involved: Bangladesh, Columbia, Peru and 67 other countries
Supported by: Bill & Melinda Gates Foundation, Citi Foundation, Mastercard, Omidyar Network, USAID, UNCDF, Visa, Sida
Implementing entities: Better than Cash Alliance
Project status: On-going
Project period: 2015- Present
URL to the project: https://www.betterthancash.org
Contact Information:
Tidhar Wald
Head of Government Relations and Public Policy
Better than Cash Alliance
Tidhar.wald@uncdf.org
+1 917 623 7179
