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The Digital Divide – Fact or Fiction?

At Payza, we strive to provide accessible and affordable payment services to everyone, including the underbanked people of the developing world. In places such as Bangladesh and the Philippines, we have had the opportunity to provide a payment platform which has allowed many people to participate in the digital economy for the very first time.

In our line of work, a common concern raised is that of the digital divide. It is often assumed that, as the developed world becomes more and more digitized, the more rural parts of the developing world are being left behind. But according to a recent study from CGAP, the digital divide may just be a myth.

The study, which looked at government-to-person (G2P) beneficiaries in the Indian state of Andhra Pradesh, shows that technology does not act as an economic barrier. G2P transactions almost exclusively target the very poor members of the economy – those most likely to have limited access to new technologies.

Impoverished G2P recipients in Andhra Pradesh have actually benefitted from the implementation of e-transfers for the disbursement of payments. On average, the distance traveled by recipients to collect their funds has been reduced by half, and overall trust in the system has increased.

This is an example of how, instead of creating a divide, the digitalization of the marketplace has had the opposite effect – a major increase in economic opportunity.

In another example, regions with high unemployment such as Bangladesh have benefited greatly from new technologies. In 2012, Payza became the first e-commerce processor to operate in Bangladesh, which allowed many IT specialists, who would otherwise be unemployed, to provide their services remotely to companies based elsewhere in the world, and get paid via Payza for their work.

Weightless Economy

It’s not so hard to understand why the rise of e-commerce and alternative payment providers has, instead of creating the predicted digital divide, actually helped people around the world. The benefits to business are enormous:

–          Digital information is weightless, virtual and instant;

–          The cost of materials, storage and transportation has been greatly reduced;

–          Digital networks have revolutionized communication by providing a platform for people to interact, collaborate, organize, strategize and share information instantaneously and at very little cost;

–          The communication infrastructure has globalized the marketplace.

The vast cost savings to businesses naturally trickle down to the individual. Data is cheaper to deliver and therefore access to it is more affordable and more universal.

The digital economy makes possible a world without borders. While differences in currency, culture, communication and regulation prevent that from being fully realized, we at Payza continue in our effort to provide accessible and affordable payment services to everyone, regardless of location. There are many challenges yet to be faced, but to Payza it is very much worth the effort to navigate those challenges in order to open up new markets and reach the billions of people in need.