The Utility of Retail Payments in Addressing the Financial Inclusion Gap in Developing Countries

Using mobile communication to transform financial access
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This article discusses the role of mobile phones in transforming financial access in developing countries. It focuses on the value of facilitating retail payments as the first step to financial inclusion.

The wide and deep reach of mobile communication networks has created an opportunity for a banking model that uses the mobile channel as a transactional platform. This new financial transaction utility uses technology and real-time communication for enhanced security and reliability, and allows low-income individuals to conduct basic transactions at their neighborhood store at an affordable cost. Remote payments and money transfers would provide a good start to a mobile money system because they:

  • Enable instant trust building;
  • Address the need of people in a cash economy for remote payments;
  • Help the mobile money provider get marketing access to the sender group which is usually more financially aware;
  • Enable providers to capture customer information.

The article identifies key challenges to the evolution of mobile money schemes from handling payments to driving financial inclusion. It states that such schemes offer a path to scalability and impact.

About this Publication

By Mas, I.