You might not be familiar with the term, but “financial inclusion” is an important issue in emerging and developing economies. And that’s because many governments have identified it as one of the key enablers for sustainable economic growth.
When too much business activity is conducted informally, outside traditional financial systems, governments lack the controls they need to effectively manage their economies and stimulate growth. In some cases, operating outside the boundaries can be intentional (i.e. the black market), but for many, being “unbanked” is not a choice.
Although the need for financial inclusion is well understood, the solution has proved elusive. Access to education, communications services, and financial and banking services can pose special challenges in the Third World. And the barriers to inclusivity in developing countries are often formidable, such as distance from a financial service provider, lack of necessary documentation papers, lack of trust in financial service providers, low financial literacy rates, the high cost of making low-value transactions, and religion, to name just a few.
But, with the rapid spread of mobile technologies in developing countries, financial inclusion has never been more possible than it is today. Although some technologies have begun to make inroads into financial inclusion, digital payment innovation is still required to assist both merchants and consumers living in poor and remote communities to enter the financial system.
In this new whitepaper, we describe the challenges of financial inclusion, the costs and issues associated with it, and explore why emerging and developing countries are now primed for digital payment innovation.