Cashless Options for Meeting the Needs of the Unbanked

Africa-PaymentsThere are already more mobile money accounts in Kenya, Madagascar, Tanzania and Uganda than bank accounts. Across sub-Saharan Africa, there are almost 57 million registered mobile money users – that’s twice as many users as the seemingly ubiquitous Facebook – and mobile money services are available in 34 of the 47 countries that make up the region. Not only that, but mobile money users don’t just make occasional payments – in June last year, more than 30 million customers undertook 224.2 million transactions totalling US$4.6 billion. In Kenya, the value of mobile money transactions is equivalent to more than 60% of the country’s GDP.

The rapid urbanisation of Africa has meant that mobile money is going part of the way towards meeting the needs of the unbanked, and overcoming the limitations of a banking infrastructure still playing catch-up. Developing nations, particularly those in sub-Saharan Africa, are now the innovators embracing new payment technologies. Countries generally seen as technologically advanced have only just switched from magstripe to EMV and cannot yet let go of their chequebooks.

Driving financial inclusion in emerging markets is important to VeriFone. We are working with customers, partners and governments in many developing nations to bring electronic payments to the unbanked.

Alternative payment solutions
VeriFone’s payment devices offer contactless, NFC, EMV and magstripe acceptance –and biometric authentication is also an option. Whilst using fingerprint scans to pay for goods and services using VeriFone’s biometric technology, someone in one country could, via a retail agent, use a fingerprint scan instead of a card or other credentials to quickly send money directly to a mobile money wallet in another country. The security and convenience of this technology makes sense for developing markets.
A good example of this is what VeriFone Mobile Money has done for Digicel in the Pacific.

Developing markets are not uniform – within them are a range of needs to be met. For some, the more familiar mix of ATMs and debit cards will meet their needs, but for others, mobile money and biometrics will be more suitable. What is important is to have a range of payment options that meets these diverse needs.

Cashless initiatives
Mobile financial services overcome geographical and socio-economic challenges to open up electronic payments to many previously disenfranchised groups who could not access these types of services. Increased financial inclusion means an opportunity for banks to offer financial services to a new demographic and develop their payment infrastructure. It is an opportunity for all parties to move away from cash-based systems, which are becoming more expensive, less secure for users, and which limit the availability of payment services to those without a bank account.

As an example, VeriFone is helping Nigeria deliver ”Cashless Lagos” using VeriFone terminals to accept electronic payments. The initiative is designed to modernize payment systems for all e-payment types and converging mobile technologies and cut cash-handling costs.

Educating the market
Mobile money may be starting to meet the needs of the unbanked, but there is still some way to go. A recent study by Visa showed that the primary barriers to entry were ease of use and lack of trust in mobile money providers and agents. Both of these barriers can be overcome with education.

For some, mobile money will be their first encounter with banking. Electronic payments can offer extraordinary benefits for the unbanked, but these benefits need to be clearly communicated. How exactly this happens is currently up for debate – direct education may seem the most obvious route, but simply giving people the tools and allowing them to innovate can also so be an effective teaching method.

VeriFone and its network of resellers working on the ground in emerging markets understand the specific needs of banks and retailers in order to provide the right training, service, support and end user education to create localised solutions that consumers will understand and use.

Flexibility, connectivity, choice and customisation are essential to driving financial inclusion. By providing different ways to pay and working with governments, regulators and other industry players to drive mobile money and e-payment solutions, VeriFone is helping meet the needs of the unbanked.

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