More than a third of the world’s population is excluded from the formal financial sector, mainly due their inability to pay for goods and services electronically, according to statistics from the Better Than Cash Alliance, a digital payments advocacy group.
To some degree this is starting to happen, for instance payments via mobile phones in Africa (see related story here). In some areas Africa, prior to mobile payments, payroll was delivered via a chain of Land Rover convoys, mules, goats and bicycles, often at the mercy of bandits and bad weather. But most everywhere else, digital is still a slow go. Better uptake will benefit all. That’s because in addition to expanding a particular market base, the roll-out of electronic payments significantly reduces costs, improves transparency and provides greater security than the cash-only method.
The Better Than Cash Alliance (BTCA) is a UN-based partnership of governments, companies and international organizations that accelerates the transition from cash to digital payments in order to drive economic growth and empower people.
At a recent meeting of The NeuGroup’s Treasurers’ Group of Thirty 2, members discussed the advancement of digital payments and what they are doing to encourage the expansion of electronic payments within and their organizations and without. Here are some featured takeaways:
For many companies in the group, accounts payable (AP) lags other areas. AP processing is least sophisticated when it comes to electronic payment processing, with only 46 percent of respondents processing 75 percent or more of their payments electronically. One discussion surrounded the advent of Bitcoin. Based on pre-meeting survey statistics, Bitcoin is not being accepted by members as a viable payment currency because of the perceived risk in the value proposition and the lack of regulations.
One member is taking a lead role in digital payments, dabbling in global markets but still primarily a cash-based business in emerging markets. The company joined the BTCA to help advance the adoption of digital payments in the historically challenging markets and are the first fast-moving consumer goods company to join the network
The company has participated in several BTCA pilot projects, including India, Mexico, Cambodia, Vietnam, the Philippines, South Africa, Nigeria, China and Peru. One thing it has learned from these projects is that sometimes it is necessary to pay the small mom-and-pop shop owners to join the platform, and then it’s a constant collaboration to generate interest and encourage engagement. There is still a strong propensity to revert to cash after the initial incentives elapse. There is a period of adjustment and acceptance that the entire BTCA network is working through.
With more than 30 percent of the global population living on less than $2 per day and nearly 90 percent of this population “unbanked,” there is a significant opportunity for consumer-based businesses to reduce processing costs, improve cash handling efficiencies and transaction traceability with the rollout of initiatives like the BTCA. With cooperative initiatives that combine the efforts of global governments and international corporations, the global advancement of digital payment options will continue to grow well into the future.