Imagine a world in which the most vulnerable, through their mobile phone, were able to receive government payments, buy food, receive a transfer from their family member living abroad, pay their children's tuition and even receive information on the price fish is selling at in a distant city? Would financial transactions be more secure in that world? Would they help to ensure that funds reach the vulnerable at less cost? Would it lead to less corruption in our assistance programs? Could it even open up new markets for the fisherman in a distant rural village? Would it bring dignity to the 2.5 billion unbanked in the world?
So agreed the panelists in this morning's "Better than Cash" breakfast at the World Economic Forum. They included Peru's Prime Minister, the Colombian Minister of Finance, the Budget Secretary of the Philippines, the CEO of Mercy Corps and the Chairman of the Society for Worldwide Interbank Financial Telecommunication (SWIFT). These leaders of government, the private sector and development organizations were in agreement that the possibilities are there . . . and realizable.
But what of the challenges? As the CEO of Haiti's largest microfinance institution - Fonkoze Financial Services - I can elaborate on a number of them in my country. First, is the challenge of democratizing cell phone usage so that everyone has a cell phone and indeed knows how to use it. Digicel has achieved that in Haiti. Then comes the problem of ensuring the phone is charged in a country where electricity is nonexistent in many areas. From there, the person we want to receive a payment must understand the concept that the cash exists on their phone and they can access it - certainly not an easy concept for even the educated.
Then comes the decision of whether the system will be telecom-led or led by the banks. That problem has been solved in Haiti with a system in which the telecoms and the banks have formed alliances. And then there's the regulatory framework designed by the Central Bank. It has the potential to be the biggest obstacle in the system or, on the other hand, the biggest facilitator.
But what about the fees? All the panelists agreed that lowering the transaction costs are essential if the poorest are to benefit from the system. "If the government wants to make a conditional cash transfer, it is the government that must pay the fee," proclaimed one panelist. Moreover, government cannot impose burdensome taxes on the transactions.
Finally, the government has to see the advantages of building its social safety nets through a system like this. Fortunately, in Haiti, the Prime Minister envisions a world in which the elderly, students, the handicapped, mothers living in poverty who send their kids to school, and victims of natural disasters could all receive financial assistance through their mobile phones.
Does this mean for the benefits of mobile payments to be realized, we need ALL these stakeholders to come together: the government, the regulatory system, banks, telecoms, NGOs, merchants in both the formal and informal markets, and the most vulnerable? Indeed, that is the case. Is Haiti poised to make all this finally come together in the interests of economic growth and financial inclusion? It's close, but the ecosystems to support mobile cash are waiting to be built and will require everyone's participation.