According to statistics provided by the United Nations Capital Development Fund (UNCDF) and the World Bank Group, more thanadults all over the world don’t have access to formal financial services. Therefore, there is huge potential for expansion of financial inclusion and improve the livelihoods of people in developing countries.
For overall economic growth and individual financial empowerment, it is very important to integrate digital payments into the economies of emerging and developing countries.
It can be explained with the help of few examples. Cashless transactions in Latin America and Africa are on the rise. Based on the study done by the Better Than Cash Alliance, the Mexican government saves €10 billion each year due to its shift to electronic distribution of many government payrolls, allowances and social benefits.
In fact, Nigeria has officially launched a new government card pilot program called ‘eID’ in August 2017. Nigerian president Goodluck Jonathan himself participated in this official launch. In the testing phase, the government is distributing identity cards with electronic payments benefit to more than 13 million Nigerians.
The initiative represents the largest rollout of a biometric-based payment card in the country, and the broadest financial inclusion programme in Africa. If mobile and cashless transactions offer the developing nations a chance to play catch up with Europe and the west.
For millions of people in developing nations, the main mode of payment is cash. These people use cash for all their transactions. These developing countries, are already successful in creating a cashless society with significantly less sophisticated technology.
With the introduction of mobile phones, the 2.5 billion people who don’t have access to mobile phones can transfer money between each other across geographical boundaries. They can now use financial services for the first time.
The main advantage of this is that they don’t require a smartphone, the mobile number of a basic phone can become a bank account. If we go by facts and figures, in 2014 there were 103 million active mobile bank accounts where as in 2012, there were only 30 million.
This kind of services are responsible for vanishing cash in developing countries. There are now more than 250 different digital banking services worldwide resulting in around 480 million transactions every 30 days.
India is also set to become a cashless economy and organizations such as GoQLES are helping them achieving this target. It supports online payment of fee and helps parents to pay the tuition fee via cashless transactions. Colleges or Institutes also gets advantage of fee management software. It promotes cashless payment in a safe and secure way.