Last month, the Bill and Melinda Gates Foundation released a report, “Fighting Poverty, Profitably: Transforming the Economies of Payments to Build Sustainable, Inclusive Financial Systems.”
One quote in the Preface really says it all:
Increasing access to high quality, affordable financial services will accelerate the well-being of households, communities and economies in the developing world. One of the most promising ways to deliver these financial services to the poor – profitably and at sale – is by using digital payments platforms.
The report discusses the role of governments in establishing regulatory environments for payment systems and the market effects of these environments. For example, in the Netherlands after World War II, the Dutch government, eager to re-establish its economy, provided free checking accounts through the Post Office, and banks soon followed suit. As a result, today, merchants pay a low price of just $0.01 per $10 debit card transaction and 98 percent of the poorest 40% of adults have a formal bank account.
Among its recommendations, the report lists three key ingredients for a payment system to be successful in emerging economies:
- Robust functionality: Consumers must have reliable access to the system
- Low cost and low price: Providers must tamp down costs to ensure a level of profitability that makes serving the market attractive
- Effective coordination: Market structures need effective coordination to ensure the system evolves successfully over time
Finally, the report lists four recommendations for private sector players, payment system providers, policy makers and regulators:
- Establish a solid economic baseline for the system, to improve oversight, and better guide system development
- Incorporate “best of breed” providers into the system, to lower costs
- Actively apply innovations from other markets, to improve performance
- Focus on the system as a whole instead of individual institutions, to improve regulation
At Payza we appreciate the comprehensiveness of the report and agree with its core premises and recommendations. Many of these recommendations are already reflected in our current business practices. Because Payza is active in over 190 countries, we are able to take the lessons learned in one market and either apply them globally or in specific regions where they are best suited.
Empowering the entrepreneurs of developing nations and underserviced markets is part of Payza’s core mission. We are strongly committed to creating a level playing field that will help connect underserviced markets with the global marketplace, markets that have long been neglected by online payment platforms. These are places like India and Bangladesh, countries that have a rapidly growing base of IT professionals who are otherwise cut off from the opportunities they deserve – says Alastair Graham, CEO of Payza.
Our goal is to provide Payza’s members – in developed and developing nations alike – with a low-cost, secure and convenient means to send and receive money, or accept payments for services rendered. So whether you are a freelancer in India, an online shop owner in Kenya or a professional living abroad with family back home to support, we want you to be able to take advantage of the Payza platform to improve the quality of life for you and your loved ones.