For many of us, it’s easy to overlook the immense impact that digital financial services have on our lives. Paying bills digitally or receiving money on a mobile phone is often seen as a given, something taken for granted.
Yet, despite more than 100 countries adopting mobile money services, 1.7 billion people the world over — most with a mobile phone — lack access to the digital economy, according to
High fees and payment systems that don’t interoperate with each other are both barriers that keep underserved women from becoming economically active. Without change, it could take women an estimated 250 years to erase the economic gender gap, according to
Yet, if nations adopt real-time payments designs that add interoperability and financial inclusion principles, then more of the population — especially women — would be connected to the global economy and more emerging countries’ GSP would gain $3.7 trillion by 2025, according to
Open, accessible, affordable real-time payments systems would have a tremendous positive impact on unbanked women.
Closing the Financial Inclusion Gap Involves Reducing Barriers, Especially for Women
So why, given the rise of mobile wallets making cashless transactions easier all over Africa, does there remain such a wide financial inclusion gap to fill? Two key barriers to financial inclusion remain. Both are seen in numerous economies, including many across the African continent.
The first is the lack of interoperability with mainstream financial providers, such as banks, microfinance institutions, and other digital financial services providers. This keeps customers in silos and puts a limit on potential transactions. These silos and high fees keep those underserved with a mobile phone using cash instead of digital financial services.
Second, there is the expense of building out proprietary networks and systems. It can be costly and complex to build interoperable systems that are inclusive to all, which means providers often end up charging high transaction fees — or not building anything at all for developing markets.
An open-source interoperable payment blueprint offers a way to reduce the cost and complexity of adopting payment interoperability more broadly by more countries, systems integrators, aggregators and other payments innovators.
It’s a path more emerging countries — and even huge regions like the continent of Africa — are starting to take to build interoperability and inclusion into the backbone of their systems.
Using an open-source interoperable real-time payments blueprint, they can influence the platform’s strategy and leverage the efficiencies of a local and international development community, respond rapidly to security fixes anchored on systemwide fraud and security protection, and encourage their local technology communities to build what is truly meaningful and relevant to their countries.
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Open source brings a unique opportunity for tech startups and developers to be the builders and shapers of inclusive payments systems of tomorrow for emerging economies. They can also help innovate for other nations. For example, if one country adds an innovative new feature, it will be relatively simple for other countries to add this feature as well. With many countries contributing to and using the same system, the benefits of the platform can be scaled up and thereby extend to everyone.
By incorporating interoperability and financial inclusion principles, women benefit. In developing countries such as Kenya, Côte d’Ivoire, Bangladesh, Nigeria and South Africa, women found it easier to access and use digital financial tools designed with financial inclusion principles in mind, according to research by DFS Labs. Not only did the research find that lower and more transparent fees have a potentially greater impact on women’s limited budgets and may create a differential positive impact for women, but it also revealed the following impacts: More digital financial services innovation, variety, and choice results in a more positive effect on women than men, both in time and cost savings; application of the financial inclusion principles payment model design positively impacts women more than men.
Let’s think of it this way: Suppose there is a vibrant ecosystem that makes money movement fast, easy and safe. Having a “hub” that connects payments initiation service provider (PISP) banks, central banks, mobile network operators, digital payment providers with the users and merchants they serve creates an inclusive environment that helps the unbanked thrive, especially women. From paying bills directly from their phones, seamlessly connecting with their employers’ bank accounts, and easily completing monthly transactions with their children’s schools — even if these payment transactions need to be done across different platforms.
An open loop PISP-enabled real-time payments system will accelerate the adoption of digital payments by making it easier for users to spend money at merchant organizations utilizing any of their financial service providers. It helps to equalize the playing field for those using the latest mobile money wallets or traditional banking services.
Governments would have the power to deliver support payments directly to citizens’ mobile wallets, for example. And local developers could focus on innovating, such as building out systems that would allow for part-time employees to receive their pay directly into their mobile wallets.
Open, affordable real-time payments systems have the potential to include all and help turn underserved women into the newly served, enabling them to become economically active. More opportunities for women ultimately create a positive add-on effect of improving the health and education of their local communities, as well as contributing to the entire global economy.
