The COVID-19 epidemic has disrupted every aspect of society, forcing governments, businesses, teachers and regular citizens to adapt to the “new normal” way of running daily activities. More specifically, the current health crisis has elevated the digital transformation in e-governance, remittances, and e-commerce.
Stay-at-home orders and social distance measures forced brick-and-mortar retailers to shut down or reduce their activity, leading to a surge in e-commerce sales. In the United States, online retailers that rely on digital payments run into the billions. The country’s two largest companies. Amazon and Walmart, together earned an additional $ 10.7 billion in 2020 – a 56 per cent increase in profits compared to 2019.
There are many advantages to using cash to transact financially, retail, trade and government transactions. In particular, the role of e-wallets in increasing financial is providing users with speed. And efficiency in commerce with added transparency and security.
As a result, digitization enabled 700+ million people in developing countries to utilize formal financial services between 2011 and 2014, with 62 per cent of adults having a bank or mobile phone account. In the long run, studies have also shown that digital financial services can help improve people’s income-earning capacity. Increase women’s economic participation and lead to more inclusive societies.
Since 2014, e-wallet Wallet App Deployment services have brought more than 240 million women worldwide into the formal financial services sector. However, progress has not yet reached the one billion women who do not have access to the formal banking system. In Kenya, for example, the proliferation of mobile money lifted one million people (2% of the population) out of extreme poverty between 2008 and 2014.
The importance of digital payments for equity, growth and security
With the digital transformation in countries and the expansion of digital payments, there are clear links with global efforts to create a more equitable, prosperous and democratic world. Although there is no specific development goal on “Digital Transformation”. It can cross-cut the 17 United Nations Sustainable Development Goals (SDGs).
In particular, it urges countries to “strive to increase access to information and communication technology significantly and to provide universal and affordable access to the Internet in at least developed countries by 2020,” while Goal 10. c recommends governments. And financial institutions Does “do less”. By 2030, reduce the transaction costs of remittances by less than 3% and eliminate remittance corridors that cost more than 5%.
Cost outweighs ease of operation
For users, e-wallet for e-ticket booking payment solutions offer many benefits to both the sender and the transaction recipient. Their ability to collect payments and reduce related costs outweighs the ease of operation. Unlike cash payments that travel at the speed of your carrier, digital payments can be made in real-time and prove to be a more secure transaction.
In addition to low cost and advanced authentication features, digital payments are often the first entry point into the financial system for individuals, opening the door to other products such as savings, lending and insurance. Digital payments can embed weak people into a system of automatic deposits, scheduled text reminders and other options. Which can help people overcome the psychological barriers to savings.
Also, digital payments connect individuals to the wider economy and can help people reduce the shock of unexpected income. Finally, digital payments can give recipients more agency in terms of using funds. For example, in the case of excluded groups such as women and other minorities.
Design of an inclusive digital payment system
Governments and businesses need to consider these different risks when designing and implementing an inclusive and secure digital payment system. In particular, countries need to attract women and consumers with the less financial and technological capacity to increase financial inclusion. And encourage societies to become more equitable.
The following six characteristics can define an inclusive digital payment system:
Accessible: Digital payment services should outstretch excluded groups and be easy to access and understand.
Reliable: Users’ money and information should be easily available and highly secure or protected against cyber theft, money laundering and other violations.
Valuable: Digital payment services should give people a clear advantage over cash.
Affordable: Services should be low cost or free for all or most people.
Profitable: The private sector should be fully involved in digital payment systems, and service providers should develop sustainable business models.
Interoperable: Digital payments should allow customers to deal with other customers regardless of the service provider.
International efforts to develop an inclusive digital payment system
With this in mind, several international efforts have been made to develop an inclusive digital payment system. The United Nations Capital Development Fund (UNCDF), The US Agency for International Development (USAID), the Bill & Melinda Gates Foundation, the City, the Ford Foundation, the Omidyar Network, MasterCard and Visa collectively have more cash than BTCA.
In 2012. In 2014, BTCA joined as the implementing partner of the Global Partnership for Financial Inclusion. (GPFI) An inclusive platform launched at the G20 Seoul Summit in 2010. To enhance the impact of its financial inclusion. The purpose of this global partnership is to bring together private sector companies, governments. And development agencies to promote the transition from cash to electronic payments. These global efforts have collectively yielded tangible results: Between 2011 and 2017. 1.2 billion people worldwide had access to bank and mobile money accounts.
Looking Ahead: The Role of the US in Developing an Inclusive Digital Payment System
As countries take different paths in their digitization journey, the US government is helping them by providing technical support and funding for physical infrastructure (mostly defined) and the skills, standards. And services needed to make them useful and secure. For such a connection. The United States has to play a leading role in both “hard infrastructure” (e.g., electricity grid, Internet connection and 5G technology). And “soft infrastructure” (e.g., policy, governance framework and digital inclusion standards).
It extends beyond basic mobile and Internet connectivity to a broad set of technology domains. And value-added digital wallet app development services that will define the twenty-first century. A range of artificial intelligence, e-commerce, data-based services and more.