For many of us, it’s easy to overlook the immense impact digital financial services have on our lives. Paying bills digitally or receiving money on a mobile phone is often taken for granted.
Yet although more than 100 countries are adopting mobile money services, 1.7 billion people worldwide – most with mobile phones – lack access to the digital economy, according to McKinsey Global Institute. No group is more affected by this challenge than women.
High fees and payment systems that do not interact with each other are two barriers that prevent underserved women from becoming economically active. Without change, it would take around 250 years for women to close the economic gender gap, according to World Economic Forum.
Yet if countries adopt real-time payment models that add principles of interoperability and financial inclusion, then more of the population – especially women – would be connected to the global economy and the GSP. more emerging countries would earn $ 3.7 trillion by 2025, according to McKinsey Global Institute.
Open, accessible and affordable real-time payment systems would have a huge positive impact on unbanked women. The United Nations estimates that there are over 740 million women in informal employment worldwide. Think about how female employees receiving their pay directly to their mobile wallet in an interoperable Mojaloop-based system could positively impact their communities, as well as education, health, and the emerging economy.
Closing the financial inclusion gap means reducing barriers, especially for women
So why, given the rise of mobile wallets facilitating cashless transactions across Africa, is there such a big financial inclusion gap left? Two major obstacles to financial inclusion remain. Both are seen in many economies, many of them across the African continent.
The first is the lack of interoperability with major financial service providers, such as banks, microfinance institutions, and other digital financial service providers. This keeps customers in silos and limits potential transactions. These silos and high fees prevent those underserved by a mobile phone from using cash instead of digital financial services.
Second, there are the costs of building networks and proprietary systems. It can be expensive and complex to create interoperable systems that are inclusive for everyone, meaning that vendors often end up charging high transaction fees – or not building anything at all for developing markets.
An open source interoperable payments plan offers a way to reduce the cost and complexity of adopting payment interoperability more widely by more countries, systems integrators, aggregators and other innovators. of payment.
It’s a path that more and more emerging countries – and even huge regions like the African continent – are starting to take to embed interoperability and inclusion into the backbone of their systems.
Using an open source interoperable real-time payment plan, they can influence platform strategy and leverage the efficiency of a local and international development community, respond to security fixes quickly anchored in fraud protection and system-wide security, and encourage their local technology. communities to build what is truly meaningful and relevant to their country.
the Bank of Tanzaniathe instant payment system (TIPS) and Mowali, which includes two of Africa’s largest mobile operators and mobile money providers, Orange Group and MTN Group, are the first to adopt the design of Mojaloop’s interoperable payment benchmark model based on the principles of financial inclusion. Here, interoperability is essential to enable low-cost, real-time interoperable payment services that benefit everyone.
Open source offers a unique opportunity for start-ups and technology developers to be the builders and shapers of the inclusive payment systems of tomorrow for emerging economies. They can also help innovate for other countries. For example, if one country adds an innovative new feature, it will be relatively straightforward for other countries to add that feature as well. With many countries contributing and using the same system, the benefits of the platform can be extended and thus extend to everyone.
By integrating the principles of interoperability and financial inclusion, women benefit. In developing countries such as Kenya, Cote d’Ivoire, Bangladesh, Nigeria, and South Africa, women have found it easier to access and use digital financial tools designed with them in mind. mind the principles of financial inclusion, according to a study byDFS Laboratories. Not only has the research found that lower, more transparent fees have a potentially greater impact on women’s limited budgets and can create a differential positive impact for women, but it has also revealed the following impacts: More results innovation, variety and choice of digital financial services in a more positive effect on women than on men, both in time and in cost savings; Applying the payment model design of financial inclusion principles has more positive impact on women than on men.
Think of it this way: suppose there is a vibrant ecosystem that makes moving money fast, easy, and safe. Having a ‘hub’ that connects the banks of payment initiation service providers (PISPs), central banks, mobile network operators, digital payment providers to the users and merchants they serve creates a inclusive environment that helps the unbanked thrive, especially women. Whether it’s paying bills directly from their phones, seamlessly logging into their employers’ bank accounts, and easily carrying out monthly transactions with their children’s schools – even though those payment transactions must be performed on different platforms.
A PISP-enabled open-loop real-time payment system will accelerate the adoption of digital payments by making it easier for users to spend money with merchant organizations using one of their financial service providers. This helps level the playing field for those using the latest mobile money wallets or traditional banking services.
Governments would have the power to make support payments directly to citizens’ mobile wallets, for example. And local developers could focus on innovation, such as building systems that allow part-time employees to receive their pay directly into their mobile wallets.
Open and affordable real-time payment systems have the potential to include everyone and help turn underserved women into new ones, enabling them to become economically active. More opportunities for women ultimately create a positive complementary effect of improving the health and education of their local communities, while contributing to the overall global economy.